High R&D investment and declining gross profit margin, New Novartis, which is transforming into innovative drugs, reports its first loss after going public.

(Source: Beijing Business Today)

Under intense R&D investment, New Novei (300765), which is transitioning into innovative drugs, is also facing certain performance pressures. On March 17, New Novei reported its first annual loss since listing. Innovation drugs are a key factor in the company’s performance changes. In 2025, the company further acquired a minority stake in its subsidiary, CSPC Jushi Biopharmaceutical Co., Ltd. (hereinafter referred to as “Jushi Biotech”), increasing its ownership to 80%. Over the year, the company’s R&D expenses increased significantly year-on-year, and sales expenses surged by over 80%, all related to the innovation drug business. Aside from the innovation drug segment, in 2025, New Novei’s gross profit margin and profitability of its caffeine products declined compared to the previous year, and the overall gross profit margin of its main business also decreased. As the only A-share listed platform under CSPC Group, New Novei is experiencing a “growing pain” period in its transformation into an innovative biopharmaceutical company.

Net profit loss of 241 million yuan

According to New Novei’s 2025 annual report, during the reporting period, the company achieved operating revenue of 2.158 billion yuan, an increase of 8.93%, while net attributable profit was -241 million yuan, a decline of 548.8%.

Regarding the reasons for the performance loss, New Novei provided three explanations, two of which are closely related to the innovation drug business.

It is understood that in 2024, New Novei expanded into the biopharmaceutical industry by increasing its capital and controlling Jushi Biotech. This move is seen as a key step in the company’s transition to innovative drugs. Jushi Biotech focuses on frontier biopharmaceutical areas such as antibody drugs, ADCs, and mRNA vaccines.

In 2025, New Novei increased its stake in Jushi Biotech from 51% to 80%. At that time, the company stated that it was optimistic about Jushi Biotech’s development prospects, and acquiring a minority stake would help improve its business layout, implement development strategies, and promote sustainable growth, aligning with its long-term strategic plan.

From a revenue perspective, the acquisition of Jushi Biotech brought certain benefits. In 2025, the biopharmaceutical revenue was 257 million yuan. After the approval and listing of Enlongsulbaparatide (Enshuxing) and Omalizumab for injection (Enyitan) in 2024, market development proceeded smoothly, quickly entering the commercialization stage, becoming a new growth point for the company’s biopharmaceutical revenue in 2025.

However, Jushi Biotech is not yet profitable. As its R&D pipeline advances rapidly with various products and clinical indications, it will require continued substantial R&D investment in the future, which undoubtedly adds financial pressure to New Novei.

The company stated that during the reporting period, the acquisition of part of Jushi Biotech’s minority stake increased the impact of Jushi Biotech’s gains and losses on the company’s consolidated financial statements, becoming one of the main reasons for the performance loss.

Notably, in January this year, Jushi Biotech and its related parties, CSPC Group and Qiqi Pharmaceutical, jointly signed a “Strategic Cooperation and Authorization Agreement” with AstraZeneca, to collaborate on innovative peptide drug discovery and long-acting delivery platform. Jushi Biotech will receive an upfront payment of $420 million and may collect milestone payments, sales milestones, and royalties based on the actual pipeline development.

New Novei stated that this transaction will optimize the company’s cash flow structure, accelerate the recovery of early R&D investments, and provide stable funding for the continued R&D of its pipeline.

R&D and sales expenses both increase

It is noteworthy that during the reporting period, New Novei’s R&D and sales expenses both saw significant increases.

The 2025 annual report shows that the company’s total R&D expenditure was 1.036 billion yuan, up 23.01% year-on-year. Sales expenses reached 281 million yuan, an increase of 82.34%.

The company attributes the primary reason for its net loss to increased R&D investment. It stated that during the period, it continued to ramp up R&D efforts, accelerating the pipeline of innovative drugs, with several key progress milestones. Among these, nine products received clinical trial approval in China for the first time; four products obtained FDA approval for clinical trials in the U.S.; the new indication for Omalizumab for injection (Enyitan) was approved for listing; the application for Patorizumab injection was accepted; and two ADC products entered Phase III clinical trials. By the end of 2025, the company had more than ten major pipeline drugs in clinical or late-stage development.

Regarding sales expenses, the increase was mainly due to the first full year of market promotion for Enlongsulbaparatide and Omalizumab in 2025.

Deng Yong, director of the Health Law and Innovation Transformation Center at Beijing University of Chinese Medicine, pointed out that innovative drug R&D requires substantial funding and time investment. Therefore, New Novei maintained high R&D expenses in 2025, which impacted its performance. Additionally, its biopharmaceutical business is still in development, requiring significant resources for market promotion. The rise in sales expenses increases short-term costs, and market share and revenue growth take time to materialize, affecting overall performance.

Zhang Yue, chairman of AOYAO International, suggested that New Novei could control the growth rate of sales and R&D expenses reasonably while ensuring R&D and marketing effectiveness, thereby improving capital efficiency.

The Beijing Business Today reporter sent interview requests to New Novei regarding these issues but had not received a response by the time of publication.

Gross profit margin decline

The decline in gross profit margin is another factor behind New Novei’s 2025 net loss.

Data shows that New Novei focuses on R&D, production, and commercialization of biopharmaceuticals, functional raw materials, and health foods. Its functional raw materials and health foods mainly include caffeine, acarbose, anhydrous glucose raw materials, and products like Guoweikang vitamin C tablets and B-vitamin tablets. In 2025, these segments generated sales revenue of 1.857 billion yuan, still the main source of revenue, accounting for 86.08%.

New Novei stated that market factors led to a decline in gross profit margin and profitability of caffeine products in 2025.

Specifically, in 2025, the gross profit margin of its core business in functional raw materials and health foods was 34.88%, down 4.85% year-on-year; the gross profit margin of its biopharmaceutical main business was 64.63%, down 30.53% year-on-year; overall, the gross profit margin of its main business was 38.5%, down 3.76%.

In its 2025 annual report, New Novei mentioned that the functional raw materials and health foods industry relies on the steady development of the health industry. While demand upgrades, it also faces challenges such as homogenization and stricter regulations, placing it at a critical stage of industry upgrading. Looking ahead, the company plans to focus on existing business segments in the short term, emphasizing core areas, and in the long term, to develop frontier fields, continuously iterate core technologies, and expand applications of innovative therapies. It will also strengthen its position in functional raw materials and health foods, extend high-end categories, diversify product offerings, optimize processes, and build long-term competitive advantages to seize opportunities in the health industry.

Additionally, New Novei is planning to list in Hong Kong and has already submitted an application to the Hong Kong Stock Exchange. The Beijing Business Today will continue to monitor its listing progress.