Shanxi Zendong Pharmaceutical Co., Ltd. (Zendong Pharmaceutical) reported a net loss of 1.329 billion yuan (RMB, same below) in 2024, a year-on-year decrease of over 29 times.
According to the “2024 Annual Financial Report” released by Zendong Pharmaceutical on April 20, the company achieved operating revenue of 2.971 billion yuan in 2024, a decrease of 18.06% year-on-year, with a net loss of 1.329 billion yuan. The financial magazine “Caijing” reported on April 22 that Zendong Pharmaceutical’s net profit attributable to the parent company decreased over 29 times year-on-year. Looking at the quarterly performance, Zendong Pharmaceutical had a profitable net profit attributable to the parent company in the first three quarters, but in the fourth quarter, the net profit attributable to the parent company suffered a loss of 1.369 billion yuan.
The company attributed the decline in revenue to various external factors: first, the volume-based centralized procurement of provincial alliance medicines led to price reductions exceeding expectations for some varieties and restricted market access in some regions; second, the implementation of outpatient coordination policies temporarily suppressed retail end-customer traffic; third, the overall decline in the Chinese herbal medicine industry reduced market trading activity, significantly increased industry inventory pressure, and resulted in continued weak performance in the terminal market, with a year-on-year decrease of 9.6% in the comprehensive price index.
The report stated that Zendong Pharmaceutical’s net profit attributable to the parent company incurred a significant increase in losses due to non-operational factors such as major arbitration matters, overdue redemption of trust products, and inventory impairment.
In September 2024, Zendong Pharmaceutical announced that Lundy Pharmaceutical, which it had sold, filed for arbitration, claiming 1.467 billion yuan from Zendong Pharmaceutical. In January 2025, based on the arbitration result, Zendong Pharmaceutical paid 500 million yuan to Lundy Pharmaceutical.
Meanwhile, a subsidiary of Zendong Pharmaceutical defaulted on a trust investment. On January 17 this year, Zendong Pharmaceutical announced that its subsidiary, Jinggangshan Zendong Shengming Investment Co., Ltd., purchased trust products totaling 250 million yuan, with an overdue amount of 139 million yuan that couldn’t be redeemed. According to the annual report, an impairment of 143 million yuan was recorded in 2024.
Overall, Zendong Pharmaceutical’s performance has been continuously declining and in a state of loss over the past three years. From 2022 to 2024, the company’s revenue decreased by 26.80%, 2.75%, and 18.06% year-on-year, while the net profit attributable to the parent company incurred losses of 51.29 million yuan, 4398.41 million yuan, and 1.329 billion yuan, respectively.
Additionally, Zendong Pharmaceutical has high selling expenses. The selling expenses from 2022 to 2024 were 1.518 billion yuan, 1.476 billion yuan, and 1.139 billion yuan, accounting for 40.70%, 40.70%, and 38.35% of the operating income, respectively. In the first quarter of 2025, the company’s selling expenses were 255 million yuan, accounting for 33.84% of revenue.
In the “2025 First Quarter Report” released on the same day, Zendong Pharmaceutical reported net profit attributable to the parent company of 1.1572 million yuan, but the downward trend in performance continued, with operating revenue and net profit attributable to the parent company decreasing by 3.53% and 94.99% year-on-year, respectively. At the same time, the financial expenses in the first quarter increased by 169.37% compared to the previous year.