---
title: "Under the game of centralized procurement and innovation, the transformation difficulties of established traditional Chinese medicine companies have intensified"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/283680662.md"
description: "In the game between centralized procurement and innovation, established traditional Chinese medicine companies are facing transformation difficulties. According to Tonghuashun data, as of April 20, 2026, among the 25 listed traditional Chinese medicine companies, TAIJI GROUP, TY PHAR., and WHYY saw their net profits increase by over 160% year-on-year, while Kunming Pharmaceutical Group and TONGRENTANGCM experienced a decline in net profits. The significant increase in TAIJI GROUP's net profit is mainly attributed to non-recurring gains and a substantial reduction in sales expenses. TY PHAR. and WHYY also demonstrated strong profit recovery capabilities, with changes in sales models and the expansion of e-commerce channels being key factors"
datetime: "2026-04-22T13:44:36.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/283680662.md)
  - [en](https://longbridge.com/en/news/283680662.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/283680662.md)
---

# Under the game of centralized procurement and innovation, the transformation difficulties of established traditional Chinese medicine companies have intensified

**According to Tonghuashun data, as of April 20, 2026, 25 listed traditional Chinese medicine companies have announced their 2025 annual reports. Among them, TAIJI GROUP, TY PHAR., and WHYY have seen net profit growth rates exceeding 160%, while Kunming Pharmaceutical Group and TONGRENTANGCM have experienced significant declines in net profit margins.**

From the announced performance data, the reduction in sales expenses is the main reason for the profit growth of traditional Chinese medicine companies, while online sales models such as e-commerce channels are key to sales growth.

**Concerns Behind the Surge in Net Profit**

Among the latest performances of the 25 traditional Chinese medicine companies, TAIJI GROUP has the highest net profit growth rate at 352.38%; followed by TY PHAR. (298.5%) and WHYY (162.93%).

Data shows that TAIJI GROUP's operating income for 2025 was 10.5 billion yuan, a year-on-year decrease of 15.23%; the net profit attributable to the parent company was 121 million yuan, a year-on-year increase of 352.38%; the net profit attributable to the parent company after deducting non-recurring gains and losses was 43.67 million yuan, a year-on-year increase of 13.32%. The company's high growth in net profit is mainly due to its low base in 2024 (only 2.7 million yuan) and non-recurring income. Overall, the company is in a state of profit growth without revenue growth, with non-recurring gains and losses contributing 76.9 million yuan, accounting for over 63%, mainly including government subsidies of 96.25 million yuan and asset disposal gains of 28.21 million yuan.

The improvement in TAIJI GROUP's profitability is directly related to its cost reduction and efficiency enhancement measures. According to the annual report, TAIJI GROUP's sales expenses decreased from 3.287 billion yuan to 1.648 billion yuan, a year-on-year decline of 49.88%, mainly due to changes in the sales settlement model and a decline in sales volume, with the expense ratio dropping from 26.5% to 15.7%, becoming a key support for profit growth.

TY PHAR. achieved revenue of 925 million yuan in 2025, a year-on-year increase of 34.42%; the net profit attributable to the parent company was 81.67 million yuan, a year-on-year increase of 298.50%, demonstrating strong profit recovery capability. The main driving factors for revenue and net profit growth are the rebound in sales of core products, with "TY" brand cough relief tablets achieving sales of 636 million tablets in 2025, recovering to 63.10% of the same period in 2023.

WHYY achieved its highest profit level in nearly a decade, with revenue of 817 million yuan in 2025, a year-on-year increase of 6.96%; the net profit attributable to the parent company was 95.71 million yuan, a year-on-year increase of 162.93%. Although the price of the core product, Xinkeshu tablets, dropped by about 39% in the 2023 centralized procurement, it achieved volume growth in 2025 through "price for volume." Revenue from cardiovascular system drugs reached 569 million yuan, a year-on-year increase of 12.31%, accounting for 69.62% of total revenue, becoming the absolute main force for growth.

However, WHYY also faces multiple risk factors in 2026, such as the upcoming new round of centralized procurement for the core product Xinkeshu tablets this year. If it fails to win bids or if prices further decline, it will directly impact its profit model. In addition, uncertainties in the transformation of the outpatient market, continuous losses from subsidiaries dragging down performance, and long-term governance challenges under a "no actual controller" structure also exist The company's controlling shareholder, Zhongzheng Wanrong, holds 50.27% of the shares, but the equity is evenly divided among the founders, with no single natural person in control. There remains a potential risk of decreased decision-making efficiency or directional disagreements in long-term major decisions (such as mergers and acquisitions, capital operations).

**Old Pharmaceutical Companies in a Transformation "Growing Pains"**

From the annual report, it can be seen that established pharmaceutical companies such as Kunming Pharmaceutical Group, Baiyunshan, and Tongrentang, despite their deep brand heritage, are experiencing painful transitions from scale expansion to quality and efficiency amid multiple impacts such as centralized procurement price reductions, innovation stagnation, and product structure imbalance.

Kunming Pharmaceutical Group is showing a dilemma of ineffective sales-driven models, interrupted innovation, and a "triple decline" in revenue, net profit, and cash flow. Data shows that in 2025, Kunming Pharmaceutical Group achieved revenue of 6.575 billion yuan, a year-on-year decrease of 21.74%; the net profit attributable to shareholders of the listed company was 350 million yuan, a significant year-on-year decline of 46%; the net profit after deducting non-recurring gains and losses was only 107 million yuan, a year-on-year plummet of 74.45%.

From the perspective of internal transformation progress, Kunming Pharmaceutical Group is undergoing a painful period of deep integration following the entry of China Resources. In December 2022, China Resources Sanjiu became its largest shareholder, and Kunming Pharmaceutical Group was officially incorporated into the China Resources system, proposing a three-year "four reshaping" integration project to promote the company's sales model from traditional controlled sales to the "Kunming Pharmaceutical Business Way" intensive system. However, the transformation process has not been smooth.

There is a phased time lag in the connection between the old and new sales models, directly affecting terminal coverage efficiency and leading to short-term pressure on the sales side. Influenced by prescription control in pharmacies and chronic disease management policies, the sales volume of the core product, the cardiovascular "miracle drug" Xuesaitong series, saw a significant decline in 2025. However, Kunming Pharmaceutical Group's sales expenses reached 1.708 billion yuan, accounting for 26% of revenue, with over 70% of market promotion expenses, while R&D expenses were only 103 million yuan, accounting for 2.27% of revenue, far below the industry average. Innovative drugs like KYAZ01 are still in the early clinical stages and are unlikely to contribute to performance in the short term.

It is worth noting that the frequent changes in Kunming Pharmaceutical Group's senior management are directly related to the company's performance pressure. Since 2002, Kunming Pharmaceutical Group has experienced seven chairpersons, with the longest tenure being only nine years and the shortest just four months. The high frequency of leadership changes reflects the anxiety over the company's weak transformation.

Leading traditional Chinese medicine company Baiyunshan achieved revenue of 77.656 billion yuan in 2025, a year-on-year increase of 3.55%; the net profit attributable to the parent company was 2.983 billion yuan, a year-on-year increase of 5.21%. Compared to a 30% decline in revenue in 2024, Baiyunshan's performance in 2025 has stopped the decline and rebounded.

However, among the company's five major business segments, only the pharmaceutical commercial sector saw revenue growth, while the other four sectors, including chemical pharmaceuticals and natural beverages, showed a downward trend, which includes star products such as the "domestic Viagra" Jinge (Sildenafil Citrate Tablets) and Wanglaoji herbal tea.

The financial report shows that in 2025, a total of 79.8718 million Jinge tablets were sold, approximately 7.98 million fewer than in 2024, with revenue declining by 26.18% year-on-year. This marks the second consecutive year of decline for Jinge following its first drop in both sales and revenue in 2024 In addition, the drug also faces more than 20 similar competitors, including Yangtze River Pharmaceutical, Qilu Pharmaceutical, Xiu Zheng Pharmaceutical, and Changshan Pharmaceutical.

Although the performance is not impressive, what surprised the market was the massive cash dividend of 1.382 billion yuan from Baiyunshan, with a dividend rate of 46.32%, distributing nearly half of the profits to shareholders, setting a historical high since the restructuring in 2013.

Tongrentang also delivered its worst annual report in recent years. Its revenue for 2025 was 17.256 billion yuan, a year-on-year decrease of 7.21%, marking the first negative growth since 2020 and the lowest growth rate in nearly five years. More concerning is the non-net profit of 1.147 billion yuan, a year-on-year decrease of 22.57%, which has seen double-digit declines for the second consecutive year. The non-net profit for 2024 decreased by 10.55%, and the decline in 2025 not only did not narrow but further expanded to 22.57%, indicating that the problem is accelerating.

Tongrentang's "cash cow," An Gong Niu Huang Wan, is no longer selling well. Data shows that the revenue from An Gong Niu Huang Wan in 2025 was 4.093 billion yuan, a significant drop of 20.46% year-on-year; inventory increased from about 3.73 million boxes in 2024 to 5.87 million boxes, a surge of 57.38%, directly leading to a year-on-year revenue decline of 7.21%.

At the same time, all subsidiaries of Tongrentang have lost ground. Tongrentang Commercial (responsible for retail pharmacies) saw revenue decline by 8.37% and net profit plummet by 52.32%, affected by a drop in customer traffic and the costs of new stores; Tongrentang Technology (mainly engaged in cold and heat relief products) experienced a year-on-year revenue decline of 10.69% and a net profit decrease of 25.52%. Tongrentang Guoyao (overseas business) reported a year-on-year revenue decline of 5.80% and a net profit decrease of 16.39%. All three companies fell simultaneously, indicating a systemic weakening of the entire system under soft demand, high costs, and intensified competition.

In 2025, Tongrentang accrued a total of 291 million yuan in asset impairment losses (mainly for inventory depreciation), with the raw material depreciation provision being about 140 million yuan. However, considering that raw material inventory reached as high as 4.862 billion yuan and the price of Niu Huang has dropped by about 30%, the theoretical impairment scale that needs to be recognized may be far greater than this. Based on market price revaluation, the potential impairment for just natural Niu Huang could reach hundreds of millions.

**A New Round of Reshuffling Arrives**

The centralized procurement of traditional Chinese medicine has a significant impact on the industry. After experiencing growing pains, many companies have rapidly penetrated the market and achieved significant growth in performance, leveraging the opportunities presented by centralized procurement following the completion of the third batch of national centralized procurement of traditional Chinese medicine and the first batch of follow-up work.

On April 14, the National Joint Procurement Office for Traditional Chinese Medicine released the fourth batch of procurement documents, marking a critical deepening phase for centralized procurement of traditional Chinese medicine. This procurement scale has been upgraded again, including 89 varieties, and for the first time, over-the-counter (OTC) drugs and imported traditional Chinese medicine have been included in large-scale procurement, covering multiple dosage forms such as injections, oral, and external use. The procurement period lasts from the execution date of the results until December 31, 2028, with agreements renewable annually, further strengthening the long-term impact of centralized procurement The Chinese traditional Chinese medicine market is currently in a dual critical period of scale expansion and structural adjustment. Data shows that by 2026, the domestic traditional Chinese medicine market is expected to grow by 10% year-on-year, surpassing 1.5 trillion yuan. However, behind the market prosperity, structural issues such as intensified homogenization competition, inflated prices of certain products, and insufficient innovation capabilities are becoming increasingly prominent.

Industry insiders analyze that the implementation of the fourth batch of centralized procurement will accelerate the industry's clearing process. In the next 3-5 years, a number of small and medium-sized enterprises lacking cost control capabilities and differentiated advantages may gradually exit the hospital market, turning to OTC, e-commerce channels, or specialized segments for survival. Leading enterprises are expected to further consolidate their market position through "price for volume" strategies, leveraging advantages in large-scale production, supply chain integration, and brand strength, leading to a continuous increase in industry concentration.

Reporter: Wang Liying

Text Editor: Zhang Jun Cai

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