In-depth Analysis of the Price Halving of Yuekang Pharmaceutical's Ginkgo Leaf Injection

Yuekang Pharmaceutical (Stock Code: 688317.SS), a pharmaceutical company listed on the STAR Market, saw its core product ‘Ginkgo Leaf Extract Injection’ (trade name: Yuekangtong) suffer a price halving at the end of 2024 due to the ‘one drug two prices’ controversy, severely impacting the company’s performance [1].

• Original Price System:
  National online listing price was 24.1 yuan per vial, and the winning price in some provinces’ centralized procurement was 18.14 yuan per vial
• Adjusted Price:
  Uniformly reduced to 11.2 yuan per vial
• Reduction Rate:
  About 53% lower than the 24.1 yuan per vial price, and about 38% lower than the 18.14 yuan per vial price
• Impact on Annual Revenue:
  This alone is expected to reduce annual revenue by more than 1 billion yuan [1]

According to the latest financial data, Yuekang Pharmaceutical’s performance shows a significant downward trend [0][1][2]:

1. Continuous Revenue Decline:
   Operating revenue dropped from 4.966 billion yuan in 2021 to 3.781 billion yuan in 2024, a cumulative decrease of 23.9%
2. Plummeting Net Profit:
   From 545 million yuan to a loss of 148 million yuan, the sustainability of profitability is seriously questioned
3. Sharp Drop in Gross Margin:
   From 64.65% in 2022 to 49.57% in the first half of 2025, a decrease of about 15 percentage points
4. Net Margin Turns Negative:
   The net margin in the first half of 2025 was -8.75%, turning from positive to negative marks a fundamental shift in the company’s profitability

Ginkgo Leaf Extract Injection, as Yuekang Pharmaceutical’s top product, faces dual pressure on sales volume and price [1][2]:

1. Sales Volume Decline:
   2024 sales volume was 147 million vials, a year-on-year decrease of 8.47%
2. Price Halving:
   Reconstruction of the price system due to compliance issues led to a sharp drop in sales revenue
3. Market Share Squeezed:
   Although the product once had a market share of nearly 80%, price wars and compliance rectifications are eroding its market position

Yuekang Pharmaceutical’s traditional Chinese medicine injection industry is facing multiple challenges [1][2]:

1. Stricter Regulation:
   The ‘one drug two prices’ incident reflects the regulatory authorities’ severe crackdown on non-compliant behaviors in the drug circulation link
2. Fading Industry Dividends:
   The growth rate of the traditional Chinese medicine injection market has slowed down, and the pressure of medical insurance cost control continues to increase
3. Rising Compliance Costs:
   The problem of excessively high sales expense ratio (maintained above 40% since 2018) is facing rectification pressure

In addition to Ginkgo Leaf Injection, the company’s other cardiovascular and cerebrovascular drug Huoxin Pill also faces the impact of centralized procurement price cuts, and the gross margin of anti-infective drugs has shrunk sharply to 6.9%, severely squeezing the profit margins of the two main business segments [1].

Facing the困境 of traditional businesses, Yuekang Pharmaceutical is actively seeking transformation, taking small nucleic acid innovative drugs as its strategic fulcrum [3]:

• Acquired Hangzhou Tianlong Pharmaceutical in 2021, obtaining GalNAc delivery technology with independent intellectual property rights
• Established a full-chain R&D system for nucleic acid drugs from sequence design, chemical modification to delivery systems
• Reserved more than 10 small nucleic acid drug pipelines

• Anti-liver cancer antisense nucleic acid drug CT102 for injection: Phase II clinical trial
• Ultra-long-acting lipid-lowering drug YKYY015 Injection (PCSK9 siRNA): Phase II clinical trial
• Ultra-long-acting antihypertensive drug YKYY029 Injection (AGT siRNA): Phase I clinical trial
• Small nucleic acid drug YKYY013 Injection for functional cure of hepatitis B: Phase I clinical trial

To cope with performance pressure and R&D investment needs, the company announced in December 2024 that it plans to issue H-shares and list on the main board of the Hong Kong Stock Exchange, trying to open a new financing channel [1][2]. Previously, the company raised 2.192 billion yuan in its IPO when it listed on the STAR Market in December 2020.

1. Continuous Performance Pressure:
   The negative impact of the price halving of Ginkgo Leaf Injection will continue to be felt throughout 2025
2. Cash Flow Pressure:
   The net cash flow from operating activities in the first three quarters of 2025 was 168 million yuan, a year-on-year decrease of 60.90%
3. Sales System Reconstruction:
   After price compliance adjustments, the original sales system faces the risk of collapse

1. Innovative Drug Commercialization Cycle:
   Most of the pipelines under research are in the early clinical stage, and there is still a long time before commercialization
2. Industry Policy Uncertainty:
   Against the background of normalized drug centralized procurement, the payment environment for innovative drugs still needs to be improved
3. Uncertainty of H-share Listing:
   There are uncertainties about the timeline and financing scale of the H-share listing

1. Market Potential of Small Nucleic Acid Drugs:
   The global siRNA drug market is growing rapidly, and Novartis’ Inclisiran achieved sales of 754 million US dollars in 2024
2. Value of Technology Platform:
   The GalNAc delivery technology owned by the company is a key technology for nucleic acid drug development
3. Policy Support for Innovative Drugs:
   The National Medical Insurance Administration’s ‘Several Measures to Support the High-Quality Development of Innovative Drugs’ provides policy support for the development of innovative drugs

Yuekang Pharmaceutical is experiencing the most severe operational challenges since its listing. The price halving of Ginkgo Leaf Injection directly led to a sharp drop in the company’s core revenue source, and its first post-IPO loss in 2025 is a high probability event. The company’s strategic direction of transforming to small nucleic acid innovative drugs is forward-looking, but it is difficult to make up for the gap caused by the decline of traditional businesses in the short term.

• Short-term:
  Avoid or reduce positions, and re-evaluate after performance stabilizes
• Medium-term:
  Closely monitor the progress of H-share listing and the advancement of innovative drug pipelines
• Long-term:
  If there is a substantial breakthrough in innovative drug pipelines, consider buying on dips

The current stock price has fallen from a high of 35 yuan in August 2025 to around 16 yuan, and the market’s expectations for the company’s transformation are undergoing a rational return. Investors need to closely monitor the 2025 annual report data and the business recovery situation in the first quarter of 2026.

[1] Sina Finance - “From STAR Market New Star to H-share IPO Fundraising: Yuekang Pharmaceutical is Having a Hard Time” (https://finance.sina.com.cn/roll/2025-12-28/doc-inhekhih8541517.shtml)

[2] Sohu - “Price Reduction to Survive After ‘One Drug Two Prices’ Scandal, Yuekang Pharmaceutical’s H-share IPO Cannot Hide Performance Cliff” (https://m.sohu.com/a/963654046_250147)

[3] Jiemian News - “Traditional Chinese Medicine Injection Dividends Fade, Yuekang Pharmaceutical Transforms into Small Nucleic Acid Innovative Drug Company Planning H-share Listing” (https://m.jiemian.com/article/13818445.html)

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