【Epoch Times News, August 20, 2025】 Huarun 39 Pharmaceuticals Co., Ltd. achieved a revenue of 14.81 billion yuan (RMB, the same below) in the first half of this year, a year-on-year increase of 4.99%, but its net profit was 1.815 billion yuan, a year-on-year decrease of 24.31%. The company finds itself in a dilemma of increasing revenue while profits are declining.
Huarun 39 stated in its “2025 Interim Report” released on the 16th that the company saw a 4.99% year-on-year growth in the first half of the year, with a net profit decreasing by 24.31% year-on-year.
In the second quarter of this year, Huarun 39 achieved a revenue of 7.957 billion yuan, a 16.8% increase year-on-year, but its net profit dropped by 47.3% to 545 million yuan. The decline in net profit for the quarter was the highest in recent years.
The company explained the significant drop in net profit was mainly due to the impact of the “high base” in 2024. Additionally, high sales expenses also severely squeezed profit margins. In the first half of 2025, Huarun 39’s sales expenses amounted to 3.939 billion yuan, up from 3.311 billion yuan in the same period last year, indicating a 6.28 billion yuan increase in sales expenses, an 18.94% year-on-year growth. In the second quarter alone, sales expenses reached 2.441 billion yuan.
An analysis by mainland economic media figure “Financial insights” on August 19 pointed out that Huarun 39 faces multiple challenges, especially the substantial goodwill brought by numerous acquisitions in recent years. As of the first half of this year, the goodwill of Huarun 39 amounted to 7.045 billion yuan, accounting for 23.4% of its non-current assets. Carrying such high goodwill, if the performance of the acquired targets does not meet expectations, the company’s performance is likely to fluctuate significantly. Therefore, although the company saw increased revenue but not profits in the first half of this year, it might not have reached its worst-case scenario yet.
Securities Times website on August 17 noted that M&A has been one of the essential development strategies for Huarun 39 since its establishment. According to statistics, since 2012, the company has successfully completed over ten M&A transactions, including Anuo Pharmaceutical, Kunyu Group, Tian Shili, involving areas such as children’s vitamins, chronic disease management, and innovative traditional Chinese medicine.
Economic Information Daily revealed on August 19 that in May 2022, Huarun 39 proposed a major asset restructuring plan to acquire a 28% stake in Kunyu Group. In January 2023, the acquisition of Kunyu Group was completed, with Huarun 39 becoming the controlling shareholder. As of June 30, 2025, Huarun 39 held a 28.05% stake in Kunyu Group. In 2025, the company obtained approval for the acquisition of a 28% stake in Tian Shili, making it a subsidiary of the company.
However, both companies showed a decrease in revenue and net profit. On August 16, Kunyu Group released its 2025 interim report, reporting a 11.68% year-on-year decrease in main operating income to 3.351 billion yuan, and a 26.88% year-on-year drop in net profit to 198 million yuan, with a non-GAAP net profit of 151 million yuan, down by 5.57% year-on-year.
On the same day, Tian Shili also released its 2025 interim report, revealing a 1.91% year-on-year decrease in operating income, and 6.40 billion yuan in non-GAAP net profit, down by 12.87% year-on-year.
Goodwill typically refers to the value a company can obtain under the same conditions, exceeding the normal return on investment rate. Compared to peers, it can generate excess profits. It represents the potential economic value that can bring additional profits to the company’s operations in the future, or the capitalized value of a company’s expected profitability exceeding the normal profitability of identifiable assets (such as the average social return rate). Goodwill is a part of the overall value of a company. In mergers and acquisitions, it is the difference between the investment cost of the acquiring company and the fair value of the net assets of the acquired company.
Huarun 39 Pharmaceuticals Co., Ltd. is a large state-owned pharmaceutical listed company that was listed on the Shenzhen Stock Exchange on March 9, 2000. In late November 2007, it officially entered the Huarun Group. In February 2010, the company’s name was officially changed from “Sanjiu Pharmaceuticals Co., Ltd.” to “Huarun 39 Pharmaceuticals Co., Ltd.”