The Zhangzhou Pai Zai Huang Pharmaceutical Co., Ltd. (Pai Zai Huang) saw a decline in both revenue and profit in the third quarter of this year, marking the first time the company has experienced a simultaneous drop in revenue and net profit since 2006, making it the worst quarterly report in its history. Over the past four years, the company’s market value has evaporated by approximately 180 billion yuan, shrinking by 60%.
In the “Third Quarter Report for 2025” released on October 18th, Pai Zai Huang reported a revenue of 2.064 billion yuan for the third quarter, a year-on-year decrease of 26.28%, and a net profit of 687 million yuan, down 28.82% compared to the same period.
For the first three quarters of this year, Pai Zai Huang’s revenue totaled 7.442 billion yuan, a decrease of 11.93% year-on-year, with a net profit of 2.129 billion yuan, down 20.74% year-on-year, and a non-GAAP net profit of 1.891 billion yuan, a 30.38% decrease year-on-year.
Looking at each quarter, the year-on-year changes in revenue for the first, second, and third quarters of this year were -0.92%, -9.79%, and -26.28% respectively, showing a continuous decline over three consecutive quarters, with the rate of decline widening each quarter. Correspondingly, the year-on-year changes in the company’s net profit attributable to shareholders for the same quarters were 2.59%, -40.76%, and -28.82%, indicating a weaker profitability trend.
According to Interface News on October 22nd, this is the first time in nearly a decade that Pai Zai Huang has experienced negative growth in revenue and net profit for the first three quarters of the year, apart from the impact of the COVID-19 pandemic. Furthermore, the company’s revenue and net profit have both seen negative growth in the third quarter for the first time in nearly a decade.
Pai Zai Huang attributed the decline in net profit to reduced sales in the pharmaceutical manufacturing industry and a decrease in gross profit margin. The decrease in net cash flow from operating activities was attributed to a reduction in cash received from sales of products and services.
Public data reveals that following the release of Pai Zai Huang’s “Third Quarter Report for 2025” on the A-share market on October 20th, the company’s stock price opened 5.78% lower, closing at 187.09 yuan per share. On October 22nd, the share price continued to fluctuate downward, reaching a low of 180.00 yuan per share intraday, closing at 181.40 yuan per share, a 2.15% decrease. The stock price hit a new low in nearly a year, with a daily trading volume of 898 million yuan, and the total market value shrinking to 109.43 billion yuan. According to 21st Century Economic News on October 22nd, the company’s market value has evaporated by approximately 180 billion yuan over the past four years, a decrease of 60% from its peak of 491.88 yuan per share in July 2021.
At the same time, the cash flow situation has worsened. The company’s operating net cash flow for the first three quarters of this year was only 487 million yuan, a 62.53% decrease year-on-year, and accounts receivable increased to 967 million yuan, a 23.05% increase from the beginning of the year.
Phoenix Net Finance, quoting the Company Research Institute on October 22nd, revealed that Pai Zai Huang’s inventory has continued to rise, exceeding 6.16 billion yuan by the end of the third quarter, a significant increase from 4.97 billion yuan at the end of last year, highlighting the difficult situation of weak sales.
The fundamental reasons for Pai Zai Huang’s declining profits lie in rising costs and weak demand. Public data shows that Zhangzhou Pai Zai Huang Pharmaceutical Co., Ltd. is a state-owned pharmaceutical company listed on the Shanghai Stock Exchange since June 16, 2003. Its leading product, Pai Zai Huang Brand Capsules, is known for its heat-clearing properties and effectiveness in detoxification, cooling blood, resolving stasis, reducing swelling, and alleviating pain.
Around 2021, the saying “Before drinking Maotai, take Pai Zai Huang to protect your liver” became widely circulated in business circles. This led to the rapid adoption of “Maotai + Pai Zai Huang” as a symbolic “standard” combination in high-end banquet settings, with many renowned hotels directly offering this bundled pairing. This clever bundling concept transformed Pai Zai Huang from a medicinal treatment for liver disease into a gift shrine with health implications and high-end social currency attributes, leading to an explosive expansion in demand.
Around the same period in 2021, speculators previously focused on Maotai shifted their attention to the Pai Zai Huang market. They manipulated the market through hoarding, creating an atmosphere of scarcity. At that time, Pai Zai Huang tablets originally priced at 590 yuan each were wildly speculated to reach 1,600 yuan per tablet, with prices surpassing even gold, making them difficult to find both online and offline.
However, the costly ingredients such as musk, bezoar, snake bile, and notoginseng in Pai Zai Huang’s formula account for over 90% of the total cost, and any fluctuation in raw material prices directly impacts its profits.
According to the Company Research Institute report, natural bezoar, known as the “golden treasure of medicine,” saw its price surge from around 350,000 yuan per kilogram in 2019 to approximately 1.7 million yuan per kilogram in the first half of 2025 due to a huge supply-demand gap. Another core ingredient, natural musk, with an annual output of only about 500 kilograms, has seen prices rise by over 200% in recent years due to strict quotas. The rising prices of raw materials have gradually raised Pai Zai Huang’s costs. Analyzes indicate that for a Pai Zai Huang tablet containing 0.1 grams of natural bezoar, the cost of bezoar alone has increased by nearly 100 yuan since 2023, severely compressing profit margins.
Facing soaring costs, Pai Zai Huang’s strategy over the past two decades has been raising prices. Since its listing in 2003, the company has hiked prices for its product series over 20 times. The ex-factory price of Pai Zai Huang tablets increased from 125 yuan per tablet in 2004 to 600 yuan per tablet in 2023, reaching a retail price of 760 yuan per tablet, more than four times the original price. However, after 2024, Pai Zai Huang’s sales began showing signs of fatigue and completely “stalled” in 2025. As the middle class began cutting down on non-essential spending, demand for Pai Zai Huang plummeted.
Although Pai Zai Huang officially maintains a retail price of 760 yuan per tablet, the actual selling price in the terminal market has experienced significant “inversion.” In the secondary market, scalpers quietly reduced the price to below 500 yuan per tablet, with some expiring products dropping to around 350 yuan. Some people who were originally buyers have now become sellers, urgently selling off their hoarded goods.
Industry insiders indicated to Investment Express on October 22nd that the root cause of Pai Zai Huang’s declining profits lies in its core business itself: high upstream raw material prices and slowing channel sales have significantly reduced the gross profit margin of its core liver disease drugs, leading to a more than 20% increase in inventory and a sharp decline in operating cash flow.
Liver disease drugs have long been the key support for Pai Zai Huang’s high growth, accounting for over 95% of the revenue in the pharmaceutical manufacturing sector and 52.14% of total revenue. The decline in performance of this core category directly undermines the foundation of the company’s growth.
Zheshang Securities analysis believes that in the first three quarters of this year, Pai Zai Huang’s gross profit margin for liver disease drugs declined significantly, mainly due to the large price increase of natural bezoar in previous periods. However, with the natural bezoar market undergoing two consecutive price reductions, it is expected that the company’s gross profit margin pressure may improve in the fourth quarter, and the growth of liver disease drugs is expected to slowly turn positive starting from the fourth quarter.