RMB 178.5 Million: "Shanghai Pharma Group" Sells Another Company

On August 25, Shanghai Pharmaceuticals announced that its wholly owned subsidiary Shanghai Pharmaceutical Co., Ltd. (SPH Holding) plans to publicly list for transfer a 51% equity interest in Shanghai Shangyao Xinte Dongan Pharmacy Co., Ltd. through the Shanghai United Assets and Equity Exchange, with the minimum listing price set at RMB 178.5 million and the final transaction price subject to the public listing results. Upon completion of the transaction, Shanghai Pharmaceuticals will no longer consolidate the target company and will formally divest its controlling stake in the pharmacy.

As a leading company in China's pharmaceutical distribution sector, Shanghai Pharmaceuticals' disposal of pharmacy assets is not an isolated capital move. Over the past year, it has been intensively restructuring its retail pharmacy assets nationwide, with multiple equity transfer projects completed in succession. Looking across the industry, major state-owned pharmaceutical platforms, including the China Resources group and Sinopharm, are all accelerating the divestment of non-core assets. An asset-optimization wave centered on "focusing on core business and improving quality and efficiency" is spreading from the distribution sector to the entire industry.

Shanghai Shangyao Xinte Dongan Pharmacy was established in September 2023 with registered capital of RMB 2 million, serving as an important vehicle for SPH Holding's expansion into the specialty pharmacy track. SPH Holding holds 51% as the controlling shareholder, with Shanghai Kangshi Medical Technology Service Co., Ltd. holding the remaining 49%. Before the public listing, Kangshi Medical, as the 49% shareholder, had explicitly waived its right of first refusal, removing the preliminary obstacle to the equity transfer.

From an operational fundamentals perspective, this pharmacy, established only three years ago, has demonstrated strong earnings resilience.

According to audit data from RSM China, the target company generated operating revenue of RMB 384 million and net profit of RMB 33.3817 million in 2025; in January–May 2026, the company maintained its profitability, with revenue of RMB 142 million and net profit of RMB 10.266 million.

However, from an asset-liability perspective, the target company exhibits the typical characteristics of a pharmaceutical retail enterprise: asset-light operations and a relatively high debt ratio. As of the end of May 2026, the company had total assets of RMB 82.9076 million, total liabilities of RMB 79.9076 million, and book net assets of only RMB 3 million, with an asset-liability ratio exceeding 96%.

It is precisely this book structure that has produced an appreciation far beyond the ordinary in this asset appraisal.

The appraisal, conducted by Shanghai Dongzhou Assets Appraisal Co., Ltd. with a valuation date of May 31, 2026, adopted both the asset-based approach and the market approach.

The asset-based approach, calculated solely from book assets and liabilities, produced an appraised net asset value of RMB 3.0164 million, an increase of less than 1% over the book value. The market approach, by contrast, referenced the EV/S (enterprise value/sales) valuation multiples of comparable companies in the pharmaceutical retail industry and took into account intangible resources not reflected on the books — including the target's prime location advantage in Shanghai, a stable patient customer base, specialty drug operating qualifications, and brand influence — ultimately producing an appraised value of RMB 349.8 million for total shareholders' equity, RMB 347 million above book net assets, representing an appreciation rate of 11,560%.

The appraiser ultimately adopted the market approach result as the pricing basis, corresponding to an appraised value of approximately RMB 178.4 million for the 51% equity interest. The minimum listing price of RMB 178.5 million is basically on par with the appraised value, and the pricing logic is consistent with the current fair valuation level of China's specialty pharmacy market.

For Shanghai Pharmaceuticals, selling the controlling stake at this time is not a simple asset monetization, but a key step in the strategic optimization of its new retail business segment.

According to Shanghai Pharmaceuticals' announcement, this transaction is an important measure to advance the overall development of its new retail business and enhance overall competitiveness, aimed at optimizing new retail business resource allocation through the integrated disposal of specialty pharmacy resources within the group, and strengthening resource synergy and value release across the specialty pharmacy segment.

In simple terms, by divesting control of a pharmacy with relatively limited synergy, Shanghai Pharmaceuticals can free up capital and concentrate resources on core retail businesses with greater network effects and scale advantages, improving overall operating efficiency and capital returns.

In fact, this is not the first time Shanghai Pharmaceuticals has divested pharmacy assets.

A review of Shanghai Pharmaceuticals' announcements shows that over the past 12 months, the Shanghai Pharma system has disclosed approximately 30 pharmacy equity transfer projects in total, covering more than ten provinces and cities including Hubei, Guangdong, Ningbo, Henan, Jilin, Lianyungang, Nantong, Liaoning, Qingdao, Shandong, Shaanxi, Chongqing, Sichuan, and Jiangxi.

For most regional ordinary pharmacy chains, Shanghai Pharmaceuticals has chosen to transfer equity to Shanghai Pharma Health Commerce Co., Ltd. within the group — essentially a consolidation and integration of internal retail resources to build a unified retail operations platform. For segment-specific assets such as Xinte Dongan Pharmacy, by contrast, it has chosen public listing for transfer to outside capital, forming a clear path in which internal integration and external divestment proceed in parallel.

It is not just the Shanghai Pharma group. Over the past two years, the entire state-owned pharmaceutical system has been undergoing a wide-ranging asset review and non-core divestment, with leading platforms such as the China Resources group and Sinopharm all acting frequently, driven by highly convergent core logic.

The China Resources group's divestment path is particularly typical: China Resources Sanjiu listed for transfer a 49.9% stake in Sanjiu (Anguo) Modern Traditional Chinese Medicine, divesting this TCM decoction-piece company that had been loss-making for years as a non-core asset, helping China Resources Sanjiu focus on its core CHC consumer health and prescription drug businesses. China Resources Boya Bio-pharmaceutical Group has likewise listed for transfer an 80% stake in Jiangxi Boya Seehot Pharmaceutical Co., Ltd. on multiple occasions, gradually clearing out this chemical pharmaceutical company whose core products failed to win central procurement bids and which had sustained losses, pushing Boya Bio-pharmaceutical to fully focus on its blood products main business. In addition, Golden Seed Winery, also under the China Resources umbrella, transferred a 92% stake in Ningxia Goldsun Medical Co., Ltd. at a discount at the end of 2025, completely divesting its pharmaceutical segment and returning fully to its liquor core business.

The underlying logic behind this series of moves is highly consistent: divest non-core, non-profitable assets and concentrate resources on core tracks.

Sinopharm is likewise advancing group-wide asset optimization, focusing on core businesses such as pharmaceutical distribution, biopharmaceuticals, and medical devices, and gradually divesting marginal businesses with low synergy and weak profitability to improve overall asset quality and operating efficiency.

Behind this industry-wide divestment wave is a fundamental shift in the development logic of the pharmaceutical industry.

Over the past decade, with the expansion of medical insurance coverage and market opening, the pharmaceutical industry experienced a period of rapid expansion, with leading companies rapidly scaling up through diversified M&A and continuously extending business boundaries. However, as medical insurance cost control becomes the norm, volume-based procurement expands across the board, and drug prices remain under pressure, the industry's overall growth has slowed markedly, the dividend of extensive scale expansion is fading, and high-quality development and quality-and-efficiency improvement have become the industry's core themes.

For state-owned pharmaceutical enterprises, many non-core assets accumulated through past diversification have become profit burdens or efficiency gaps. Divesting non-core businesses serves two purposes: on the one hand, it frees up capital to invest in areas with greater long-term value, such as innovative R&D and core channel development; on the other, it optimizes asset structure, reduces management costs, and improves overall return on capital and operating efficiency — an inevitable choice during the industry's transformation.

In the long run, this divestment wave is not a passive "offloading of burdens" but a proactive choice of strategic focus by state-owned pharmaceutical enterprises. Leading companies represented by Shanghai Pharmaceuticals are strengthening core business competitiveness through "advance and retreat" asset operations, driving the transformation of enterprises from scale-oriented to quality-oriented development.