Against the backdrop of overall pressure on the traditional Chinese medicine industry in 2026, Jiuzhitang stood out with a third-quarter report showing a year-on-year increase of over 588% in net profit attributable to the parent company .
A rare "double increase" report card
In the first three quarters of 2026, Jiuzhitang achieved operating revenue of RMB 2.186 billion, a year-on-year increase of 34.34%; net profit attributable to the parent company reached RMB 304 million, a year-on-year increase of 100.33%; and net profit after deducting non-recurring gains and losses increased by 110.63%, outpacing the growth rate of net profit attributable to the parent company, indicating that the growth was mainly driven by the main business.
Even more noteworthy is the performance in the third quarter: net profit attributable to the parent company was 53.3756 million yuan, a year-on-year increase of 588.01%, and the gross profit margin rose by 1.72 percentage points quarter-on-quarter. Although the absolute value declined quarter-on-quarter due to seasonal factors, its year-on-year revenue growth rate accelerated from 20.80% in the first quarter to 52.65% in the third quarter, outlining a clear upward curve, which is a signal of an improving product structure.
This level of growth is particularly valuable within the industry context. Public data shows that among approximately 23 listed Chinese medicine pharmaceutical companies during the same period, only about 5 achieved simultaneous positive growth in both revenue and net profit attributable to the parent company, accounting for less than a quarter. Jiuzhitang's doubling of revenue against the trend is key to its shift in growth engines and improvement in internal management. Among these, Jixianglong is an indispensable driving force.
In October 2025, Jiuzhitang invested a total of RMB 310 million to acquire a 51.6667% stake in Harbin Jixianglong Biotechnology Co., Ltd., through a combination of RMB 210 million in acquiring existing shares and RMB 100 million in new shares. In early November 2025, Jixianglong was officially included in the consolidated financial statements. This acquisition became a significant variable in the company's performance growth in 2026.
Jixianglong is not an ordinary acquisition target. The company has deep expertise in the fields of generic peptide APIs, peptide drug formulations, customized peptides, and cosmetic peptides, holding 10 API production licenses, with 8 products included in national centralized procurement, covering multiple therapeutic areas such as reproductive assistance, liver and kidney, and digestive diseases; its simeglitide and telpolide have completed FDA DMF filing and NDC coding in the United States. Furthermore, Jixianglong is a national high-tech enterprise and a specialized and innovative "little giant" enterprise, and has participated in the formulation of quality standards for peptide APIs by the National Pharmacopoeia Commission.
Judging from its operating data, Jixianglong has already demonstrated profitability relatively quickly. In the first half of 2026, Jixianglong achieved operating revenue of 355 million yuan and net profit of 147 million yuan. If we perform a simple equity conversion based on Jiuzhitang's 51.6667% shareholding, the corresponding profit would be approximately 75.91 million yuan, equivalent to about 71% of Jiuzhitang's year-on-year increase in net profit attributable to the parent company of approximately 106 million yuan. This profitability performance exceeded market expectations.
More noteworthy is the fulfillment of performance commitments. According to the acquisition's performance-based agreement, Jixianglong's cumulative net profit for the three years from 2025 to 2027 was committed to no less than 165 million yuan, with targets of 50 million yuan, 55 million yuan, and 60 million yuan for 2025, 2026, and 2027 respectively. Data shows that Jixianglong achieved a net profit of 96.6624 million yuan in 2025, achieving 58.58% of the three-year cumulative commitment; while the cumulative net profit for the two periods of 2025 and 2026 was approximately 244 million yuan, already exceeding the 165 million yuan three-year cumulative commitment threshold.
This means that Jixianglong is not an acquisition target that needs to maintain its performance through short-term "performance guarantees," but rather already possesses strong profit-realizing capabilities. For Jiuzhitang, this not only directly improves its profit statement but also creates more room for future synergy between its peptide business and the parent company's resources.
Maintaining and improving the core business of traditional Chinese medicine
Although Jiuzhitang's core traditional Chinese medicine business is facing pressure, it has not lost its core business, and some sectors have shown signs of quality improvement.
Looking at the data from the first half of 2026, the company's OTC segment revenue reached 650 million yuan, a year-on-year increase of 11.49%, with a gross profit margin increase of 8.69 percentage points; while the prescription drug segment revenue was 558 million yuan, a year-on-year decrease of 12.29%, with a gross profit margin decrease of 2.88 percentage points. This indicates that the traditional business is not weakening across the board, but rather showing a clear divergence: the OTC segment is relatively stable, while the prescription drug segment is still undergoing adjustments.
The improvement in the OTC sector is even more significant within the industry context. In the first half of 2026, the overall retail market for traditional Chinese medicine declined by approximately 14% year-on-year. In this environment, Jiuzhitang's OTC revenue still achieved positive growth, and its gross profit margin improved significantly, indicating that its branded products still possess a certain degree of channel resilience and consumer awareness.
Jiuzhitang's core OTC products have a long history of market accumulation. Liuwei Dihuang Wan (Six-Ingredient Rehmannia Pill) achieved a 24.3% market share in China's retail pharmacy market in 2020, ranking first; Angong Niuhuang Wan (Angong Niuhuang Pill) saw a compound annual growth rate of over 50% in sales from 2017 to 2022, with its market share increasing from approximately 3% to approximately 6%, ranking fifth; and Donkey-hide Gelatin Blood-Nourishing Granules (Lvjiao Buxue Granules) achieved sales of approximately RMB 128 million in 2022, ranking seventh among gynecological traditional Chinese medicine brands, with a market share of approximately 2.66%. While these products may not all become high-growth blockbuster products, they constitute the foundation of the company's OTC segment.
The pressure on the prescription drug segment mainly stems from Shuxuetong Injection. Shuxuetong was once a key cash cow for Jiuzhitang, with sales reaching approximately 3.7 billion yuan in 2017. However, with stricter restrictions on medical insurance reimbursement for traditional Chinese medicine injections, its revenue declined from 829 million yuan in 2021 to 588 million yuan in 2023. In the first three quarters of 2024, Shuxuetong still accounted for approximately 24.18% of the company's revenue, thus its policy constraints have a significant impact on the company's prescription drug segment. The 2025 version of the medical insurance catalog further tightens the reimbursement scope to patients with acute cerebral infarction in secondary and above medical institutions, meaning that this product is unlikely to return to a high-growth trajectory in the short term.
However, the role of Shuxuetong is shifting from a "growth engine" to a "cash cow and support for hospital channels." The company is also extending the product's life cycle through academic promotion, real-world research, and the development of evidence-based medicine. A study on Shuxuetong injection for treating patients with ischemic stroke requiring intravenous thrombolysis has been published in the international core journal Phytomedicine (impact factor 8.3). In the context of the traditional Chinese medicine industry's emphasis on evidence-based medicine and high-quality clinical evidence, such research helps enhance the academic standing and policy adaptability of core products.
Therefore, the current state of the core traditional Chinese medicine business can be summarized as follows: OTC drugs are maintaining their market share while improving quality, while prescription drugs are facing pressure and need to shift gears. It may not be able to support the company's return to high growth on its own, but it has bought time and cash flow for the peptide business and innovation pipeline.
Innovation pipeline is progressing steadily.
The most common criticism of time-honored brands in the industry is that they "only sell old products." Jiuzhitang has been answering this question in the past two years through its R&D investment. In the first three quarters, R&D expenses reached 108 million yuan, a year-on-year increase of approximately 15.6%; development expenditures reached 8.55 million yuan, an increase of 49.99% compared to the beginning of the year. The growth rate isn't astonishing, but the direction is clear—the money is being moved towards the "future."
Both chemical drugs and biological drugs are being developed:
YB209 : A new anticoagulant drug, which has completed Phase I clinical trials and is expected to pass the final acceptance test of Heilongjiang Province's "challenge-based" project in the first half of 2026;
YB211 : The innovative cyclic lipopeptide antibiotic "carnomycin for injection" developed by the wholly-owned subsidiary Mudanjiang Youbo Pharmaceutical was approved to conduct Phase II clinical trials in February 2025. In the first half of 2026, 71 new patients were enrolled, bringing the cumulative total to 174.
Stem cells are the area with the most potential. The subsidiary, Beijing Meike, has three indications under development for its human bone marrow mesenchymal stem cell injection: ischemic stroke: follow-up of all 45 subjects in Phase IIa trial completed; autoimmune pulmonary alveolar proteinosis (aPAP): Phase IIa clinical trial completed; autism: dosage exploration completed in the adolescent group.
The value of this autism treatment is underestimated by the market. This product (application number CXSL2400859) received NMPA clinical trial approval in March 2025, and a launch meeting was held on August 26th of the same year at Beijing Anding Hospital affiliated with Capital Medical University, led by the hospital's president, Wang Gang, making it the first domestic trial to enter the clinical stage for human bone marrow mesenchymal stem cell therapy for autism. The time lag in this race is very telling: on October 28th, 2026, Guangzhou Saijun Biotechnology's similar product CG-BM1 only received implied IND approval for the autism indication and had not yet started dosing subjects, while Jiuzhitang Meike was already in the dosing and follow-up stage, a full step ahead.
What do we look to for the future?
Of course, a good financial report does not guarantee continuous linear growth in performance. Looking ahead, three things will determine where this company's ceiling is.
I. Can the peptide business be upgraded from API (Active Pharmaceutical Ingredient) to formulation-related business? Jixianglong's DMF (Digital Drug File) registration and NDC (Natural Drug Directory) code have opened the door to the US market, but DMF registration is not equivalent to formulation-related approval. The difference in gross profit and customer stickiness between selling raw materials and integrating into the customer's supply chain is enormous. Furthermore, the FDA issued a warning letter in May 2026 regarding microbial contamination control and labeling issues. The pace of compliance repair in the US channel directly determines when overseas growth potential will be realized. This is the area with the greatest potential for growth and requires the most close monitoring.
Second, can the core business of traditional Chinese medicine (TCM) transform quality improvement into increased sales? The 8.69 percentage point increase in OTC gross margin is a good sign. The next key areas to watch are the secondary development of existing products, the transformation of classic formulas, and whether the evidence-based support for Shuxuetong (a TCM formula) can be translated into stable prescription use. The policy direction of "high quality, high price" is favorable for exclusive products.
Third, when will the key data for the stem cell pipeline be available? aPAP has the FIC (First-In, First-Out) status for rare diseases, and if it is the first to market, it can leverage high-priced, niche payment methods; ischemic stroke is the largest indication, but also the most challenging; the progress of Phase I enrollment for autism is the most direct "execution indicator." The value of this layer lies not in next year's profit statement, but in the ceiling of the valuation system.
However, from a company structure perspective, Jiuzhitang has formed a relatively clear three-tiered business framework: the traditional Chinese medicine business provides brand recognition and cash flow, the polypeptide business provides a short- to medium-term profit engine, and innovative pipelines such as stem cells provide long-term growth potential. For a time-honored brand with over 300 years of history, this structure is more resilient than simply relying on a single Chinese patent medicine or a single injection.
Source: https://news.yaozh.com/archive/49333.html