Guizhou Sanli Pharmaceutical Co.,Ltd. recently responded to an inquiry letter from the Shanghai Stock Exchange regarding its 2025 annual report, fully disclosing operational and financial risks behind a significant earnings slump. In 2025, the company reported revenue of 1.703 billion yuan, down 21% year-on-year, with net profit attributable to shareholders plummeting 83% to 46 million yuan, and non-GAAP net profit dropping by 90%. The first half of 2026 also saw a pre-announced profit decline of around 50%, signaling a convergence of multiple risks that have severely pressured the company's growth logic.

Why the Price Hike Strategy Failed and Heavy Reliance on One Product Led to a Sharp Sales Drop

The company's core revenue relies on respiratory system drugs, represented by Kaihoujian spray, and tonic products, which together contribute over 90% of its main income. From 2023 to 2025, the company continuously raised unit prices, with respiratory drugs increasing from 21.80 yuan to 23.47 yuan, and tonic products rising by over 16% to 37.47 yuan, citing a shift to larger product specifications. However, these price hikes directly triggered a massive sales decline: in 2025, respiratory product sales fell 28.84% year-on-year, while tonic product sales dropped 37.56%. Revenue from these two categories decreased by 25.13% and 27.43%, respectively. The company acknowledged that the annual main business revenue fell by about 400 million yuan, with gross profit shrinking by 273 million yuan, almost entirely due to declining sales. The revenue-boosting effect of price increases could not offset the loss of demand. Only the gynecological drug segment saw a 19% revenue increase, but its total annual revenue was just 135 million yuan, and this growth was a rebound from a poor 2024 performance, insufficient to counteract the core category's weakness. The pediatric market, a key focus, faced contraction due to declining birth rates, DRG/DIP cost controls, and channel destocking, while the company's strategy of protecting profits through price hikes further weakened product competitiveness, exposing its vulnerability to single-product reliance and weak cyclical resilience.

The Aftermath of Aggressive Acquisitions: Massive Goodwill Poses a Persistent Impairment Risk

After its 2020 IPO, the company pursued continuous acquisition-driven expansion, buying Haosite, Hanyang Pharmaceutical, and Dechangxiang, along with a herbal medicine business, aiming to diversify product risk. However, these acquisitions failed to generate synergies and instead became a drag on performance. In 2025, the acquired target Hanyang Pharmaceutical saw its revenue drop 31.3% year-on-year and net profit decline 51.31%. The company consequently recorded a 122 million yuan goodwill impairment, an amount 2.5 times its net profit for the year, directly eroding annual earnings. Even after this significant impairment, remaining goodwill on the books at the end of 2025 stood at 433 million yuan, accounting for 28.61% of net assets. Industry challenges such as medical insurance cost controls, tighter hospital prescriptions, and intensified OTC competition continue to weigh on the subsidiaries' operations. If the acquired companies' performance remains weak, the company may face further large goodwill impairments, posing a persistent risk to profits. The expansion strategy has not built a second growth curve but has instead increased operational and asset impairment pressures, highlighting the company's poor integration and subsidiary management capabilities.

Short-Term Debt Pressure Emerges, and a 700 Million Yuan Private Placement Cannot Solve Long-Term Challenges

The acquisition spree has also worsened the company's financial structure. As of the end of the first quarter of 2026, the company's combined cash and financial investments totaled only 376 million yuan, while interest-bearing debt reached 797 million yuan, with short-term interest-bearing debt at nearly 558 million yuan, creating a significant short-term repayment gap. Although the asset-liability ratio of 44.47% is within a reasonable range, cash flow cannot cover maturing debt, raising liquidity risk. To ease the funding pressure, the company has launched a 700 million yuan private placement plan, fully subscribed by entities controlled by the actual controller. All proceeds will be used for working capital and loan repayment, and after the issuance, the controller and its concert parties will hold 60.56% of shares. This placement can only temporarily alleviate debt pressure, not address the fundamental issues of declining product sales and weak subsidiary performance. Although the company has adjusted its marketing structure and shifted to more refined promotion for Hanyang Pharmaceutical, the downward trend in performance, as seen from the 2025 annual report to the first-half 2026 pre-announcement, has not reversed. Against the backdrop of normalized medical insurance cost controls, shrinking pediatric drug demand, and intensifying industry competition, the company faces the simultaneous challenges of reviving its core product sales, digesting the goodwill burden from acquisitions, and repaying existing debt. The combination of these pressures makes medium-to-long-term profit recovery a difficult task.