1 billion in R&D investment, why is XinNuoWei "losing money" but still moving forward?

Produced by | China Visitor Network

Reviewed by | Li Xiaoyan

On March 17, XinNuoWei (300765.SZ) disclosed its 2025 annual report. Data shows the company achieved an operating revenue of 2.158 billion yuan for the year, an 8.93% increase year-over-year. While revenue steadily expanded, net profit attributable to the parent company suffered a loss of 241 million yuan, down 548.80% year-over-year. After deducting non-recurring gains and losses, the net profit was a loss of 294 million yuan, a decline of 795.33%. This performance drew widespread market attention. However, a deeper analysis reveals that this “report card” is not simply a sign of operational failure, but a reflection of the company’s strategic transformation during a critical period—actively investing, restructuring, and laying out long-term value in the biopharmaceutical industry. Short-term performance pressure underscores the company’s firm commitment and clear path toward becoming an innovative biopharmaceutical enterprise, and its long-term development potential warrants renewed market evaluation.

Innovation is the core competitiveness of the biopharmaceutical industry and the engine driving XinNuoWei’s transformation. By 2025, the company increased R&D investment significantly, with annual R&D expenses reaching 1.036 billion yuan, up 23.01% year-over-year. R&D spending accounted for 48.01% of operating revenue. This substantial investment is not blind spending but targeted at cutting-edge technologies such as antibody drugs, ADC (antibody-drug conjugates), and mRNA vaccines, providing critical support for building differentiated competitive barriers.

In terms of R&D pipeline layout, XinNuoWei has formed an integrated “R&D—Manufacturing—Commercialization” industry chain. By the end of 2025, the company had more than ten major investigational drugs in clinical or late-stage development, with fruitful results. Notably, the injection of Enlansupab (Enshuxing®) and Omalizumab (Enyitan®) received approval for market launch in 2024, and in 2025, they rapidly entered commercialization, becoming core growth drivers in biopharmaceuticals, generating 257 million yuan in revenue for the year.

Developing innovative drugs involves long cycles, high risks, and extended return periods. Short-term heavy R&D investment is unlikely to quickly translate into profits but lays the foundation for future explosive growth. In 2025, the company received clinical trial approvals for nine products in China, four in the U.S. FDA, and two ADC products entered Phase III clinical trials. Several breakthroughs were achieved, such as SYS6010 (EGFR ADC), which received FDA fast-track designation for treating resistant non-small cell lung cancer. Clinical data showed an efficacy rate of 63.2% in resistant patients, far exceeding traditional chemotherapy’s 20%. Uscinumab and Patuzumab injections have been submitted for market approval, expected to be approved within two years, becoming new profit growth points. These advances demonstrate the company’s R&D strength and indicate significant future growth potential.

While vigorously advancing the innovative drug transformation, XinNuoWei’s traditional business remains a “ballast stone,” providing stable cash flow and resource support. The functional raw materials and health food business achieved sales of 1.857 billion yuan in 2025, accounting for 86.08% of total revenue, remaining the main revenue source.

As the world’s largest producer of synthetic caffeine, XinNuoWei leverages its qualified production facilities, large-scale capacity, and cost advantages to maintain its industry leadership. By 2025, caffeine capacity reached 18,000 tons per year, with sales of 18,192 tons, making it a key supplier for Coca-Cola, Pepsi, and Red Bull, holding the top global market share. Despite a 4.85 percentage point decline in gross profit margin to 34.88% due to industry oversupply, intensified homogenized competition, rising costs, and weak downstream demand, the company stabilized its business through increased sales, process optimization, and expanded application scenarios.

Additionally, the “GuoWeikang” series of health foods, recognized as a “China Well-Known Trademark,” covers nearly 200 chain pharmacies nationwide, possessing strong brand influence in terminal consumer markets. Raw material businesses such as acarbose and anhydrous glucose also developed steadily, supplementing the functional raw materials segment. The steady operation of traditional businesses not only provides continuous cash flow, easing R&D funding pressure, but also accumulates valuable resources and experience for the company’s transition to innovative pharmaceuticals—an important foundation for managing uncertainties during transformation.

In 2025, a key move in XinNuoWei’s industrial layout was acquiring a 29% minority stake in Jushen Biotech, increasing its shareholding from 51% to 80%. Jushen Biotech focuses on frontier fields like antibody drugs, ADC, and mRNA vaccines, with a comprehensive technology platform and rich R&D pipeline, highly aligned with XinNuoWei’s strategic direction.

Although Jushen Biotech reported a net loss of 904 million yuan in 2025, significantly impacting the company’s consolidated net profit attributable to the parent, this acquisition strategically enhances the company’s presence in biopharmaceuticals and strengthens core competitiveness. Notably, in January 2026, Jushen Biotech signed a strategic cooperation agreement with AstraZeneca to collaborate on innovative peptide drug discovery and long-acting delivery technology platforms. Jushen Biotech will receive an upfront payment of $420 million and has the potential to earn up to $13.8 billion in sales milestones and royalties. This partnership not only recognizes Jushen Biotech’s innovative achievements at an international level but also provides continuous cash flow, optimizes cash structure, accelerates R&D investment recovery, and supports subsequent pipeline development.

This cooperation marks a milestone in XinNuoWei’s international expansion, indicating that its innovative drug business is beginning to integrate into the global industry chain. Future international collaborations are expected to enhance brand influence and market share, enabling leapfrog development.

The 2025 losses reflect the inevitable “growing pains” during XinNuoWei’s innovation-driven transformation—an embodiment of short-term investments and long-term value, structural adjustments, and strategic upgrades. Industry norms show that early-stage R&D and commercialization phases of innovative drug companies often face performance pressure; this is a common industry trait, not a management failure.

Financially, the company’s revenue grew by 8.93%, demonstrating resilience and market demand support. Despite short-term profit declines, the company’s R&D pipeline is advancing, commercialization results are emerging, and international cooperation has made breakthroughs—long-term value factors not fully reflected in current performance. While asset utilization efficiency has room for improvement, the gradual listing of innovative products, stabilization of traditional gross margins, and realization of international cooperation benefits suggest that performance will gradually improve.

For investors, it is important not to judge XinNuoWei’s transformation solely based on short-term performance data but to focus on its core competitiveness, pipeline progress, and industry layout effectiveness as long-term drivers. As a company with both traditional advantages and innovative potential, XinNuoWei is in a critical transition from a functional raw materials supplier to a leading innovative pharmaceutical enterprise. Short-term pains are a necessary step toward long-term value.

The performance pressure in 2025 is a true reflection of XinNuoWei’s critical phase of transformation and its strategic focus on innovation and biopharmaceutical future. The company is steadily advancing its shift from “raw material supplier” to “innovative drug company” through R&D investment, traditional business support, and M&A collaborations.

As its innovative pipeline matures, international cooperation benefits materialize, and traditional business stabilizes, XinNuoWei is expected to see a performance turnaround in the coming years, unlocking long-term growth potential. The market should adopt a rational view of the performance fluctuations during this transition, paying attention to the company’s core competitiveness and value creation in the biopharmaceutical sector. Ultimately, in this golden industry, companies that commit to sustained investment and strategic layout will eventually realize their value bloom.