Jianmin Group 2025 Annual Report Analysis: R&D Expenses Up 24.13%, Net Cash Flow from Financing Activities Down 68.80%

Operating Revenue: Business contraction drags overall, industrial growth offsets the impact

In 2025, Jianmin Group recorded operating revenue of RMB 3.370 billion, down 3.85% year over year. By segment, revenue from the pharmaceutical distribution (commercial) segment was RMB 1.331 billion, down sharply by 23.37% year over year. This was mainly because the company proactively reduced low-margin, low-efficiency distribution business and optimized its business structure; revenue from the pharmaceutical manufacturing (industrial) segment was RMB 2.025 billion, up 15.92% year over year, becoming the core support for performance. Within this, the OTC product line grew by 9.37%, while the prescription drug product line grew by 21.06%. Sales of leading products such as Longmu Zhuanggu Granules and Bian Tong Capsules remained stable, while new products including Xiao’er Zibei Xuanfei Syrup and Qirui Weishu Capsules performed well in the market.

Net Profit and Profit After Non-recurring Items: Earnings remain basically stable; profit after non-recurring items is nearly unchanged

During the reporting period, net profit attributable to shareholders of the listed company was RMB 360 million, down slightly by 0.65% year over year. Profit after non-recurring items was RMB 303 million, down only 0.05% year over year, basically in line with the previous year. The slight decline in net profit was mainly driven by factors such as lower investment income. However, growth in the pharmaceutical industrial segment effectively absorbed this pressure, keeping overall earnings performance steady.

Earnings Per Share: Slight decline, moving in step with earnings changes

Basic earnings per share were RMB 2.37 per share, down 0.42% year over year; profit after non-recurring items per share was RMB 1.99 per share, unchanged from the previous year. Changes in earnings per share track the trends in net profit and profit after non-recurring items, reflecting the matching relationship between the company’s profitability scale and its share capital.

Expenses: R&D spending increased; management expenses optimized

In 2025, total period expenses of the company were RMB 1.707 billion, up 13.52% year over year, mainly driven by a significant increase in R&D expenses.

Selling expenses: Rise alongside industrial growth

Selling expenses were RMB 1.452 billion, up 18.22% year over year. This was mainly due to an increase in selling and promotional expenses, channel-building expenses, and other costs brought about by growth in pharmaceutical industrial revenue, as well as adjustments to expense deployment resulting from changes in product mix. Among them, marketing and advertising expenses reached RMB 1.296 billion, accounting for 89.23% of selling expenses, making it the main component.

Administrative expenses: Cost reduction and efficiency gains show results

Administrative expenses were RMB 153 million, down 20.67% year over year. This was mainly because the company achieved cost reduction and efficiency gains by optimizing management processes, cutting non-essential expenditures, and other measures. Among them, payroll expenses fell from RMB 113 million to RMB 79 million, a clear decrease.

Finance expenses: Interest expense increases

Finance expenses were RMB 14 million, up 20.00% year over year, mainly due to higher interest expense. During the reporting period, interest expense was RMB 13.1947 million, up 2.05% year over year.

R&D expenses: Stronger commitment to innovation investment

R&D expenses were RMB 99 million, up 24.13% year over year. The company has continued to increase R&D investment in areas such as TCM innovative drugs and chemical drug formulations. During the reporting period, Xiao’er Niuhuang Tuiretie Gao (a Class 1 TCM new drug), Furosemide Oral Solution (a Class 3 chemical drug formulation), and Ambroxol Oral Solution obtained drug registration certificates. In addition, five new drugs such as Tongjiang Granules and Zhishu Tongbian Granules were in clinical trial stages, and the R&D pipeline continued to expand.

R&D personnel: Stable team, optimized structure

As of the end of 2025, the company had 167 R&D personnel, accounting for 7.4% of its total headcount. In terms of educational background, there were 4 PhD candidates, 45 Master’s students, 81 undergraduates, and 37 junior college and below. The proportion of high-education talent exceeded 77%, providing strong talent support for R&D innovation. In terms of age distribution, there were 65 people under 30, 48 people between 30 and 40, and 40 people between 40 and 50; the team’s younger composition and the mix of experienced talent are reasonably aligned.

Cash flow: Operating cash flow improves; financing cash flow under pressure

Net cash flow from operating activities: Higher collections + lower payments; net amount increases

The net cash flow generated from operating activities was RMB 275 million, up 17.19% year over year. On the one hand, collections from the pharmaceutical industrial segment increased, and downstream customer repayments were in good condition. On the other hand, with TCM raw material prices moving downward, procurement costs decreased and payment pressure eased, enabling the net operating cash flow to grow year over year.

Net cash flow from investing activities: Net inflows from wealth management subscriptions/redemptions affect results; outflows narrow

The net cash flow generated from investing activities was -RMB 148 million, up 40.20% year over year. This was mainly because the net inflow from subscriptions and redemptions of wealth management products was higher than last year. In the current period, the cash received from redeeming wealth management products increased, while spending on the purchase and construction of fixed assets, intangible assets, and other items was controlled to a certain extent, narrowing the scale of investing cash outflows.

Net cash flow from financing activities: Borrowings decrease + deposits increase; net amount drops sharply

The net cash flow generated from financing activities was -RMB 170 million, down 68.80% year over year. The main reasons were that borrowings decreased; short-term borrowings fell from RMB 141 million to RMB 55 million during the reporting period. Long-term borrowings increased, but on a limited scale. At the same time, an increase in note deposit payments caused financing cash outflows to exceed inflows, leading to a sharp decline in the net amount.

Potential risks the company may face

Industry policy risk

Ongoing policy implementation, including dynamic adjustments to the National Reimbursement Drug List, normalization of centralized drug procurement (drug VBP), and special governance of drug pricing, may affect product pricing and market access. The company needs to closely monitor policy changes, optimize its product structure, and enhance its cost control capabilities.

Market competition risk

Competition in the pharmaceutical industry is intensifying, and new products and new business models continue to emerge. The company needs to continuously strengthen brand building, improve competitive advantages through product differentiation, and expand market channels.

Risk of fluctuations in raw material prices

TCM raw material prices may fluctuate due to factors such as natural conditions and supply-demand relationships, which could affect production costs. The company will strengthen monitoring of raw material prices, implement strategic reserves, and optimize procurement strategies.

Risk that new product introductions do not meet expectations

There is uncertainty in cultivating new product markets. The company will strengthen market research, implement differentiated promotion strategies, and reduce the risk of new product introductions.

Management risk

As the company’s scale expands, higher requirements are placed on management capabilities. The company needs to continuously improve its management system and enhance team management.

Risk of talent loss

Loss of core talent may affect business stability. The company will improve incentive mechanisms and strengthen talent development and retention.

Compensation for executives (board supervisors, directors, and senior management): Compensation for core management remains stable

• The Chairman, Yuan Pingdong, reported total pre-tax remuneration received from the company during the reporting period of RMB 0.8299 million.
• The President, Wang Jun, reported total pre-tax remuneration received from the company during the reporting period of RMB 1.3202 million.
• The Vice Presidents, Huang Zhijun and Pei Xuejun, reported total pre-tax remuneration received from the company during the reporting period of RMB 1.0118 million each.
• The Financial Controller, Cheng Chaoyang, reported total pre-tax remuneration received from the company during the reporting period of RMB 0.6776 million.

Overall, in 2025, Jianmin Group maintained solid growth momentum in its pharmaceutical industrial segment while proactively optimizing the structure of its commercial business. R&D investment continued to be stepped up, and operating cash flow improved; however, financing cash flow faces pressure. In the future, the company needs to continuously respond to changes in industry policies, strengthen competitiveness of core products, steadily advance the market introduction of new products, and enhance its overall ability to withstand risks.

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