Accelerate the integration of state-owned assets and consolidate its leading position; Private traditional Chinese medicine enterprises are facing operational difficulties and are being rescued by state-owned assets; Industrial capital enters the market, promoting upstream and downstream collaboration. The triple logic, combined with policy effects, further promotes the inevitable trend of the integration of the traditional Chinese medicine industry to the waist and tail enterprises by 2025.
In just two days since the beginning of 2025, two major events have already occurred: DLL3 has gone viral, and the new lung cancer star targets have attracted new trends; Shanghai Pharmaceuticals has locked in the exclusive large variety of traditional Chinese medicine, and plans to spend nearly 1 billion yuan to further integrate Hehuang Pharmaceuticals. With the state-owned "holding" of the traditional Chinese medicine industry, the value of once again has increased.
On January 1st, Shanghai Pharmaceuticals announced its intention to jointly acquire the equity of Shanghai and Huanghua Pharmaceutical held by Huanghua Pharmaceutical with Shanghai Jinpu Jianfu Equity Investment Management Co., Ltd. as the designated entity. Shanghai Pharmaceutical plans to acquire 10% equity with its own funds of approximately 995 million yuan (based on the final state-owned asset filing price). Prior to the transaction, Hehuang Pharmaceutical and Shanghai Pharmaceutical each held a 50% stake in Hehuang Pharmaceutical. After the completion of the transaction, Shanghai Pharmaceutical will hold a total of 60% equity in Hehuang Pharmaceutical and merge it to become its controlling shareholder.
This is another case of heavy state-owned "holding" and integration of traditional Chinese medicine enterprises, following last year's acquisition of Tianshili Holdings by China Resources Sanjiu, ST Jiuzhi Holdings by Heilongjiang Provincial State owned Assets, and Tianjin Tongrentang by Beijing Tongrentang.
As of today, 70% of the top 20 Chinese medicine listed companies in terms of revenue have state-owned assets. The top six companies with the highest revenue have all been controlled by state-owned assets.
It is not uncommon for the "destination" of traditional Chinese medicine to be state-owned assets, but from 2024 to 2025, the underlying context of the traditional Chinese medicine industry has undergone unprecedented changes. From the time traditional Chinese patent medicines and simple preparations OTC was included in the scope of centralized purchase to the third batch of traditional Chinese patent medicines and simple preparations national purchase, the overall decline was far more than the first batch and the second batch, with the highest decline of 96% among single products, directly approaching the ten batches of centralized purchase of chemical drugs. More and more challenges are looming over traditional Chinese medicine enterprises.
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Behind the 'buying and selling' of another billion level traditional Chinese medicine industry

The sale of 45% equity of He Huang Pharmaceutical by He Huang Pharmaceutical, with Shangyao becoming the actual controller of the latter, resulted in a win-win situation among the three parties.
From the perspective of He Huang Pharmaceutical, from selling the equity of Baiyunshan and Huang Traditional Chinese Medicine in 2021 to now selling the equity of He Huang Pharmaceutical, in recent years, He Huang Pharmaceutical has been "de medicating" and has made up its mind to divest traditional Chinese medicine related assets and focus on innovative drugs.
The sale of non core joint ventures this time is a move by Hehuang Pharmaceutical to better focus on its core business of innovative therapies for tumors and immune diseases such as ADC.
In this transaction, Hehuang Pharmaceutical sold its 45% equity stake in Shanghai Hehuang Pharmaceutical for $608 million (RMB 4.438 billion) in cash to Shanghai Jinpu Jianfu Equity Investment Management Co., Ltd. and Shanghai Pharmaceutical Shanghai Pharmaceutical.
After the transaction is completed, He Huang Pharmaceutical plans to use the proceeds to further develop its internal product pipeline and drive the development of its core business strategy, including its next-generation ADC platform. Based on this platform, by combining antibodies with targeted drugs (rather than cell toxins), antibody targeted conjugate drugs (ATTC) act on therapeutic targets through a dual mechanism. The first ATTC candidate drug of Hehuang Pharmaceutical Plan will enter clinical trials in the second half of 2025.
From the perspective of the "buyer" - Shanghai Pharmaceuticals, this acquisition is a further integration and effort to strengthen its traditional Chinese medicine division.
In 2025, during the adjustment and transformation of the industry, Shanghai Pharmaceuticals stated that it will solidly promote the deep integration of technological innovation and industrial innovation, becoming a driving force for promoting the integrated development of the biopharmaceutical industry with a focus on 1+1>2.
Under this' top-level design ', its traditional Chinese medicine sector will continue to adhere to the' big variety, big brand 'strategy and expand its' big health' business.
Under this strategy, Shanghai Pharmaceutical has formed a relatively complete layout of the Chinese medicine industry chain: upstream Chinese medicine planting, Chinese medicine decoction pieces (Shangyao medicinal materials), midstream traditional Chinese patent medicines and simple preparations enterprises, including Shangyao Leiyunshang, Shangyao Guofeng Hehuang Pharmaceutical, and downstream distribution and retail layout.
Among them, Hehuang Pharmaceutical, which owns the exclusive myocardial infarction treatment drug - Musk Heart Protecting Pill, is one of its more precious traditional Chinese medicine assets. The "Shangyao Brand" Shexiang Baoxin Pill originated from the "Suhexiang Pill" recorded in the first traditional Chinese patent medicines and simple preparations monograph "Taiping Huimin Heji Jufang" organized by the government more than 900 years ago. Based on this, the formula has been continuously improved, as well as repeated animal experiments and a large number of clinical studies. In 1981, a new generation of micro particle pills Shexiang Baoxin Pill was born. It is publicly shown that the total sales of this product in the three major terminals and six major markets in China exceeded 2.9 billion yuan, with a year-on-year growth of 8.97%, ranking the fourth among the traditional Chinese patent medicines and simple preparations products for cardiovascular and cerebrovascular diseases.
And Hehuang Pharmaceutical is a joint venture established by Hehuang Pharmaceutical and Shanghai Pharmaceutical in a 50:50 ratio in 2001. In 2023, Hehuang Pharmaceutical's revenue was 2.7 billion yuan and net profit reached 660 million yuan. From January to October 2024, its revenue was 2.469 billion yuan and net profit reached 625 million yuan. It is a relatively stable enterprise in the development of traditional Chinese medicine waist enterprises.
Through this acquisition, Shanghai Pharmaceutical stated that due to the strong regional usage habits of traditional Chinese medicine products, there are certain challenges in promoting them nationwide. However, Hehuang Pharmaceutical has strong sales and promotion capabilities in lower tier markets, especially in counties. In the future, it is expected to empower the company's sales of traditional Chinese medicine inventory varieties in lower tier markets, further strengthening the overall strength of Shanghai Pharmaceutical's self operated promotion.
In addition, Shanghai Pharmaceutical also stated that the registration, certification, and export of Shanghai and Huang Pharmaceutical's Danning tablets in Canada in 2016, 2019, and 2022 respectively are important milestones for their internationalization of traditional Chinese medicine. The experience of Hehuang Pharmaceutical in internationalizing Danning tablets is also expected to contribute to the overseas layout of other varieties in Shanghai's pharmaceutical and traditional Chinese medicine sector.
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Behind the accelerated integration of the traditional Chinese medicine industry

In fact, incidents similar to Shanghai Pharmaceuticals increasing its stake in Hehuang Pharmaceutical are not uncommon in the industry, and the integration of the traditional Chinese medicine industry has also entered a deeper stage.
The consolidation events in the traditional Chinese medicine industry in recent years can be summarized into three main logics: firstly, accelerating the integration of state-owned assets to consolidate its leading position; Secondly, private traditional Chinese medicine enterprises are facing operational difficulties and have introduced state-owned assets to "rescue the market"; The third is the entry of industrial capital to promote the coordinated development of upstream and downstream.
Five months ago, China Resources Sanjiu planned to acquire listed company Tianshi Li for over 6.2 billion yuan, becoming the most anticipated transaction for state-owned integrated traditional Chinese medicine enterprises in 2024. Behind this transaction, the main reason for the transaction between the two parties cannot be separated from the "value bonus".
For Tianshi Li, in the future, relying on the leading state-owned enterprise China Resources Sanjiu can not only obtain richer resource support, but also generate a "1+1>2" effect in sales expansion.
On the other hand, for China Resources Sanjiu, the products and channel layout of Tasly are extremely attractive. On the one hand, Tianshi Li not only holds a pivotal position in the cardiovascular market share as its core product, Compound Danshen Dripping Pills, but also has a leading innovative pipeline for traditional Chinese medicine in China, with great potential for future explosive growth; On the other hand, Tian Shili's dominance in the in-house market through its large variety of products can also serve as a reinforcement for China Resources Sanjiu, which focuses on the OTC market.
Therefore, the acquisition of Tianshili by China Resources Sanjiu can be said to be the most typical merger and acquisition transaction of state-owned assets with the purpose of resource integration in recent years.
Similar transactions occurred in 2024.
At the end of December 2024, Kunming Pharmaceutical Group, which was merged into China Resources Sanjiu, officially became the controlling shareholder of another subsidiary of China Resources Sanjiu, China Resources Torch. This means that the two major cardiovascular companies under China Resources are not only expected to solve the industry competition problem of Xuesaitong soft capsules between the two companies, but also strengthen the layout of Kunyao Group's Sanqi industry chain.
In addition, the recent transaction between Beijing Tongrentang and Tianjin Tongrentang is also similar, and the merger between the two parties will be beneficial for expanding the market influence of future products.
In addition, rescuing private traditional Chinese medicine enterprises that have fallen into operational difficulties is also one of the important reasons for multiple state-owned asset acquisition transactions in recent years. Especially in 2024, traditional Chinese medicine listed "time-honored" enterprises represented by Jiuzhitang are facing operational crises, and "changing ownership" of state-owned assets has become a typical example.
In 2024, after experiencing multiple crises such as changes in management rights, capital occupation by major shareholders, declining performance, being labeled as ST, and being questioned about annual reports, Jiuzhitang's business difficulties finally turned around - the actual controller Li Zhenguo plans to transfer 53.5 million shares of the company's shares to the second largest shareholder, Chenneng Venture Capital. After the transfer is completed, Chenneng Venture Capital will become the controlling shareholder of Jiuzhitang with a shareholding ratio of 24.04%, and the State owned Assets Supervision and Administration Commission of Heilongjiang Province will become the new actual controller. The industry also expects state-owned assets to not only save Jiuzhitang from crisis, but also to achieve new growth with the empowerment of state-owned resources.
In addition to the integration of state-owned assets as the main body, the integration of the upstream and downstream of the traditional Chinese medicine industry chain is also a typical event in 2024. For example, in July 2024, the chain pharmacy enterprise Yangtian and completed the acquisition of the "Hakka Traditional Chinese Medicine" enterprise Jiaying Pharmaceutical and took over, which was interpreted by the industry as a transaction layout for extending the upstream and downstream industrial chain of a chain pharmacy; In 2024, Beilu Pharmaceutical announced the acquisition of Tianyuan Pharmaceutical, which integrates the production and sales of traditional Chinese medicine, in order to improve its layout in the field of traditional Chinese medicine.
In addition, industrial capital is also one of the forces for upstream and downstream integration. In 2024, Xinchen Capital, a private equity business under CITIC Capital Holdings Limited, announced the completion of the acquisition of Guilong Pharmaceutical. This is not only a deepening of the investment institution's layout in the field of non prescription drugs in the pharmaceutical and health industry, but also a combination of its previous layout in the health industry. The merger of Guilong Pharmaceutical into the company is expected to be empowered by its layout.
Whether it is dominated by state-owned capital or the entry of upstream and downstream enterprises and industrial capital into the industry chain, it cannot be separated from the encouragement of policies for the integration of the traditional Chinese medicine industry, but it is also closely related to its own development laws.
On the one hand, the traditional Chinese medicine industry itself is highly connected to the upstream of the industry chain. Upstream traditional Chinese medicine belongs to agricultural products, and its quality and yield are greatly affected by weather, ecological environment, and planting cycle. The fluctuation of traditional Chinese medicine prices is also one of the main reasons for downstream changes in traditional Chinese medicine prices.
On the other hand, it is not difficult to find that the high growth of the traditional Chinese medicine industry in the past is stagnating, and a general decline may become the norm in the short term in the future. This can be clearly seen from the figures in the third quarter reports of traditional Chinese medicine companies. According to the statistics of E drug managers, the net profit of traditional Chinese medicine companies in the third quarter showed a sharp year-on-year decline of over 50%. Leading enterprises such as Yunnan Baiyao, Taiji Group, Step Pharmaceutical, and Yiling Pharmaceutical have not escaped.
The price increase of traditional Chinese medicine is certainly one of the influencing factors, but it also reflects that the logic of relying on high sales of a single large variety to boost performance in the past may no longer be feasible. The traditional Chinese medicine industry urgently needs to find new growth logic in the integration of upstream and downstream.
It is worth mentioning that behind the accelerated integration of the traditional Chinese medicine industry, some policies are also playing a subtle role. For example, for the centralized purchase of OTC products of traditional Chinese patent medicines and simple preparations proposed in 2024, and for the third batch of traditional Chinese patent medicines and simple preparations national purchase results announced by the government not long ago, the maximum decline of 96% for a single variety is far ahead of two batches, and it is directly driven by the centralized purchase of ten batches of chemical drugs. Under such a high decline, higher requirements are also put forward for the upstream and downstream layout of the winning enterprises, which is self-evident that the intention of forcing industrial integration.