Analysis Report on the Plunge in 2025 Net Profit and Inventory Impairment Risks of Zhifei Biological (300122.SZ)

According to the latest disclosed financial data[0][1], Zhifei Biological is experiencing the most severe operational crisis since its listing:

Key Indicators	Value	Year-on-Year Change
2025 Expected Net Profit	-RMB 10.698 billion to -RMB 13.726 billion	Down 630%-780% YoY
2024 Net Profit	RMB 2.018 billion	Down 74.99% YoY
2025 Q3 Inventory Balance	RMB 20.246 billion	Up over 125% from the beginning of 2024
2025 Q3 Accounts Receivable	RMB 12.8 billion	—
2025 Q3 Single-Quarter Revenue	RMB 2.705 billion	Up 6.29% QoQ

The company’s stock price has fallen by more than 79% from its 2021 peak, with a current market capitalization of approximately RMB 483.3 billion, a price-to-book ratio of 1.65x, and a negative price-to-earnings ratio due to losses[0].

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Zhifei Biological, once an industry star with over RMB 10 billion in net profit in 2021, has slid to a huge loss of over RMB 10 billion in 2025. Its performance evolution is as follows[1][2]:

2021: Net profit of RMB 10.209 billion (peak)
2022: Net profit of RMB 7.539 billion (-26.1%)
2023: Net profit of RMB 4.768 billion (-36.7%)
2024: Net profit of RMB 2.018 billion (-74.99%)
2025: Expected loss of RMB 10.6-13.7 billion (down 630%-780% YoY)

As of Q3 2025, the company has recorded

, and the loss trend continues to expand[1].

Zhifei Biological’s agency products contributed over 90% of its revenue during 2020-2024[1]. However:

• In H1 2025, revenue from agency products was only RMB 4.37 billion, down
  75.16% YoY
• The batch release volume of quadrivalent HPV vaccines plummeted by over 95% from 2024, dropping to zero in H1 2025
• The batch release volume of 9-valent HPV vaccines plummeted
  76.8% YoY
• Recombinant zoster vaccines also declined by over 64%

In June 2025, Watson Biotech’s independently developed domestic 9-valent HPV vaccine “Xinkening 9” was approved for marketing, priced at only

, which is less than 40% of Merck’s 9-valent HPV vaccine (about RMB 1,300-1,500 per dose)[2][3]. This marks:

• The birth of China’s first domestic 9-valent HPV vaccine, breaking Merck’s 7-year market monopoly
• Studies in The Lancet Infectious Diseases confirm that its efficacy and safety are equivalent to imported products
• A fundamental shift in consumer selection logic

Professor Deng Yong from Beijing University of Chinese Medicine pointed out[1] that the current HPV vaccine market is facing multiple pressures:

• Core demand is becoming saturated
• Surge in domestic vaccine supply coupled with price cuts from centralized procurement
• Consumer willingness is affected by consumption downgrade and free vaccination policies
• The industry is shifting from imported 9-valent monopoly to domestic 2-valent dominance and domestic 9-valent breakthrough

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As of the end of Q3 2025, Zhifei Biological’s inventory balance reached as high as

, an increase of over 125% compared to RMB 8.986 billion at the beginning of 2024[1][2]. This scale is equivalent to:

• 77.7%
  of 2024 full-year revenue
• More than 2 times the expected 2025 revenue

Scenario	Monthly Sales Rate	Digestion Period	Within Shelf Life (36 months)?
Based on 2025 Q3 Revenue	RMB 902 million	22.5 months	✅ Yes
Based on H1 2025 Agency Revenue	RMB 728 million	27.8 months	✅ Yes
Based on 2024 Average Monthly Sales	RMB 2.172 billion	9.3 months	✅ Yes

, at the current sales rate, inventory can be digested within the 36-month shelf life.

, the following factors make the actual risk much higher than the surface figures:

In 2023, Zhifei Biological renewed its cooperation agreement with Merck, committing to

[2][3]:

Year	Base Procurement Amount	Actual Revenue	Net Inventory Increase
2024	RMB 32.626 billion	RMB 26.07 billion	+RMB 6.556 billion
2025	RMB 26.033 billion	<RMB 11 billion	+over RMB 15 billion
2026	RMB 17.892 billion	Continued decline	Continued increase

: Even if existing inventory can be digested, newly procured vaccines will continue to be warehoused under the procurement agreement, leading to the inability to effectively reduce inventory levels[2][3].

Based on the RMB 20.246 billion inventory balance, the estimated impairment losses under different expiration ratios are as follows:

Assumed Expiration Ratio	Impairment Amount	Percentage of 2025 Expected Loss
10%	RMB 2.02 billion	15%-19%
20%	RMB 4.05 billion	30%-38%
30%	RMB 6.07 billion	45%-57%
40%	RMB 8.10 billion	60%-76%
50%	RMB 10.12 billion	75%-95%

According to a report by Securities Times[1], Zhifei Biological has clearly stated that it will “recognize impairment for near-expired and expired inventory whose net realizable value is lower than its book value”, which is one of the main sources of the huge loss in 2025.

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To ease liquidity pressure, Zhifei Biological has applied for a

[2][3]. As guarantee conditions:

• The controlling shareholder Jiang Rensheng’s family provides
  full joint liability guarantee
• Equity of core subsidiaries is
  fully pledged
• Huge accounts receivable are
  pledged for credit enhancement

This means the company has put almost all its mortgageable assets on the line.

To accelerate inventory clearance, Zhifei Biological launched a

benefit campaign in Chongqing, Fuzhou, Xi’an and other regions[2]. This is the first disguised price reduction of Merck’s 9-valent HPV vaccine since its entry into the Chinese market, highlighting the company’s urgency to clear inventory.

Notably, some positive signals have emerged on the company’s operating side[1]:

• 2025 Q3 revenue of RMB 2.705 billion,
  positive quarter-on-quarter growth for two consecutive quarters
• Net cash flow from operating activities
  remained positive for three consecutive reporting periods
• As of the end of Q3 2025, accounts receivable and inventory decreased by
  5.21% and 9.85% YoY respectively

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• Sustained inventory impairment pressure may further erode profits
• Intensified competition from domestic HPV vaccines, escalation of price wars
• Rigid constraints from the Merck procurement agreement make it difficult to reduce inventory

• Merck’s 9-valent HPV vaccine was approved for
  male indications
  , expanding market coverage
• Recombinant zoster vaccine expanded to immunocompromised populations
• The company has launched the “buy two doses, get one free” promotion to clear inventory

• Advancement of Self-Developed Pipeline
  : Among 34 independent R&D projects, 21 are in the application or clinical trial stage
• New Business Expansion
  : Entered the GLP-1 field through the acquisition of Chen’an Biotech, laying out in the diabetes and weight loss markets
• International Layout
  : Phase III clinical trials of the Shigella flexneri and Shigella soni bivalent conjugate vaccine are underway in Bangladesh

• Chen’an Biotech’s products have not yet been commercialized, requiring a 3-5 year cultivation period
• The company lacks operational experience in therapeutic biologics
• Fierce market competition, with many players already in the GLP-1 field

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Risk Dimension	Risk Level	Core Focus
Inventory Impairment Risk	★★★★★	RMB 20.2 billion inventory faces expiration risk with huge impairment losses
Procurement Agreement Risk	★★★★★	RMB 98 billion rigid procurement commitment restricts operational flexibility
Market Competition Risk	★★★★★	Disadvantageous position in price wars amid domestic substitution wave
Cash Flow Risk	★★★★☆	Needs to borrow RMB 10.2 billion with severe asset pledges
Liquidity Risk	★★★★☆	Controlling shareholder has pledged all core assets
Long-Term Transformation Risk	★★★☆☆	New businesses require a 3-5 year cultivation period

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Zhifei Biological’s 2025 net profit plummeted by 90%, with the core reason being excessive reliance on its Merck HPV vaccine agency business coupled with the impact of domestic substitution.

: Assuming 20%-30% of the RMB 20.246 billion inventory expires, the impairment loss will reach RMB 4-6 billion.

The more fundamental problem is: The RMB 98 billion procurement agreement signed with Merck prevents the company from adjusting procurement volumes according to market demand, leading to continuous inventory accumulation. Even if existing inventory can barely be digested within the shelf life, new procurement will still keep inventory at a high level.

In the short term, the company is experiencing a

of risks accumulated under its historical aggressive growth model; in the medium-to-long term, its fate depends on whether it can successfully navigate the industry cycle and truly establish an R&D and commercialization system that does not rely on a single product and has continuous innovation capabilities.

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[0] Jinling AI Securities API Data - Financial Analysis and Company Profile of Zhifei Biological (300122.SZ)

[1] Securities Times - “Recognizing Impairment to Lighten Burden: Zhifei Biological Adjusts in Multiple Dimensions to Gather Momentum for 2026” (https://www.stcn.com/article/detail/3589406.html)

[2] Sina Finance - “Zhifei Biological Burdened by Inventory” (https://finance.sina.com.cn/jjxw/2026-01-14/doc-inhheupi8901043.shtml)

[3] Guancha.cn - “Behind the RMB 10.2 Billion Loan: Zhifei Biological Fulfills the ‘Indentured Agreement’ of RMB 98 Billion with Merck” (https://www.guancha.cn/economy/2026_01_12_803573.shtml)