Overview of the Traditional Chinese Medicine Industry Operating Data: Significant segmentation of the landscape, leading companies excel in their own strengths, while small and medium-sized pharmaceutical companies face pressure but continue to move forward.

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Recently, various listed companies have successively disclosed their annual financial reports for 2025. As of now, 11 listed traditional Chinese medicine companies have disclosed their annual report data. This article conducts an in-depth analysis of the 2024-2025 comprehensive operational data of companies such as Dong’e Ejiao, China Resources Sanjiu, and Jianmin Group, breaking it down across five core dimensions: enterprise scale, R&D investment, profitability, operational efficiency, and talent incentives. This provides a comprehensive overview of the industry’s development pattern, positioning each company’s metrics within the top and bottom tiers, offering data support for industrial development and investment assessment.

**　Enterprise scale: Significant disparities between tiers, marked differences in size among small and medium-sized pharmaceutical companies**

Total employee count, as a measure of a company’s production capacity, market layout, and industry chain coverage, shows a clear differentiation among the 11 traditional Chinese medicine companies. The industry scale tiers for 2024-2025 remain largely stable, with only minor personnel adjustments at some companies.

By the end of 2025, leading company China Resources Sanjiu, with a total employee count of 30,304, firmly holds the top position in the industry, achieving a substantial growth of 51.28% compared to 20,031 employees in 2024, becoming the only company in the industry with over 30,000 employees. The national layout and full product line expansion under its state-owned enterprise background are core supports for its scale expansion; Baiyun Mountain follows with 27,057 employees. Although this is a slight reduction from the 28,138 employees in 2024, it still maintains a scale of 27,000, highlighting the advantages of a complete industry chain and nationwide channel coverage as a regional leader. Both companies have employee counts exceeding 25,000, together accounting for nearly 60% of the total employee count of the 11 companies, creating a scale advantage that forms industry barriers.

The bottom-tier companies are Wohua Pharmaceutical (rights protection) and Te Yi Pharmaceutical, with total employee counts of 1,018 and 1,434 by the end of 2025, both under 2,000. Wohua Pharmaceutical continues to reduce from 1,089 employees in 2024, while Te Yi Pharmaceutical shows a slight increase from 1,341, yet its size is only 3.36% of China Resources Sanjiu and 3.76% of Baiyun Mountain, with a gap of over 20 times compared to the first tier. Additionally, companies like Jianmin Group, Dong’e Ejiao, and Jiu Zhi Tang (rights protection) all have employee counts between 2,000 and 5,000, placing them in the medium-sized segment of the industry. Tianshili and Taiji Group are positioned in the second tier with employee counts around 10,000, with operational capabilities and market coverage falling between the top and small and medium-sized pharmaceutical companies.

From the trend of personnel changes, among the 11 companies from 2024-2025, seven achieved growth in employee numbers, while four experienced reductions. The significant expansion of China Resources Sanjiu contrasts with the slight reductions at Baiyun Mountain, Jianmin Group, and Kunming Pharmaceutical Group, reflecting an industry trend of active expansion among leading companies and personnel structure optimization at some companies.

**　R&D investment: Tianshili’s R&D intensity is unmatched, while Baiyun Mountain and Kunming Pharmaceutical Group are severely under-invested**

The proportion of R&D expenses to revenue is a key indicator for measuring a company’s innovation capability, product upgrade potential, and core competitiveness, directly determining the company’s development momentum in the modernization of traditional Chinese medicine, new variety R&D, and process upgrades. In 2024-2025, the 11 companies show a pattern where leading companies maintain high investments, most companies invest at lower levels, and some companies exhibit a decline in R&D intensity, indicating uneven industry innovation capabilities.

In 2025, leading R&D company Tianshili maintains the top position in the industry with 8.32% of R&D expenses as a percentage of revenue. Although this is a slight decline from 9.77% in 2024, it remains the only company in the industry with an R&D intensity exceeding 8%; Jiu Zhi Tang follows closely at 6.46%, achieving a slight increase from 6.17% in 2024, representing a continuous improvement in R&D investment. Additionally, Te Yi Pharmaceutical (4.80%), Wohua Pharmaceutical (4.45%), Dong’e Ejiao (4.07%), and China Resources Sanjiu (4.01%) all have R&D intensities in the 4%-5% range, placing them in the upper-middle tier of industry R&D investment.

The bottom-tier companies in R&D are Baiyun Mountain and Kunming Pharmaceutical Group, with their R&D expenses as a percentage of revenue at only 0.85% and 1.56% in 2025, respectively. Baiyun Mountain further declines from 1.02% in 2024, becoming the only company in the industry with an R&D intensity below 1%; Kunming Pharmaceutical Group, although it shows a slight increase from 1.27% in 2024, still falls short of 2%. Notably, as a dual giant in scale, Baiyun Mountain’s R&D investment does not match its scale, which may reflect the company’s over-reliance on existing product lines and channel advantages, resulting in insufficient emphasis on innovation and product upgrades in traditional Chinese medicine, potentially limiting long-term development potential. In contrast, China Resources Sanjiu has achieved simultaneous growth in scale and R&D investment, becoming a representative of innovation and scale among leading companies.

From the overall R&D level in the industry, the average proportion of R&D expenses to revenue for the 11 companies in 2025 is approximately 3.85%, with only four companies exceeding 4% and seven companies below 4%. This reflects that the overall R&D investment in the traditional Chinese medicine industry is low, and innovation capability remains a core shortcoming in industry development.

**　Profitability: Wohua Pharmaceutical and Dong’e Ejiao lead in gross margin, while Baiyun Mountain and Taiji Group face profit pressure**

The gross profit margin is a core indicator for measuring a company’s product competitiveness, pricing ability, and profit space, directly reflecting the market value of the company’s core products. The net cash flow from operating activities/revenue reflects profit quality and measures a company’s ability to convert reported profits into cash. Combining these two indicators provides a comprehensive assessment of a company’s profitability. In 2024-2025, the profitability of the 11 companies shows a significant advantage in gross margin among leading companies, while the profit quality of some companies is concerning, indicating a disproportion between scale and profitability.

From the perspective of gross margin, in 2025, the leading companies are Wohua Pharmaceutical and Dong’e Ejiao, with gross profit margins of 75.38% and 73.47%, respectively, both exceeding 70%, making them the two companies with the strongest profitability in the industry. Wohua Pharmaceutical’s gross margin has increased by 2.81 percentage points from 72.5683% in 2024, while Dong’e Ejiao’s gross margin has increased by 1.05 percentage points from 72.4185% in 2024.

Additionally, Tianshili (66.85%) and China Resources Jiangzhong (65.37%) both exceed 60%, while Jianmin Group (58.39%) and Jiu Zhi Tang (59.93%) exceed 50%, representing the upper-middle tier of industry profitability. Notably, Jianmin Group has significantly increased by 10.66 percentage points from 47.7319% in 2024, becoming the company with the fastest improvement in profitability.

The companies with the lowest gross margin are Baiyun Mountain and Taiji Group, with gross profit margins of only 16.24% and 29.59% in 2025. Baiyun Mountain’s gross margin has slightly declined from 16.695% in 2024, making it the only company in the industry with a gross margin below 20%. Taiji Group has seen a significant decline of 9.73 percentage points from 39.3203% in 2024, with significantly deteriorated profitability.

As a dual giant in scale, Baiyun Mountain’s gross margin is severely disconnected from its scale, primarily due to the high proportion of low-gross-margin common medicines in its product structure and fierce market competition leading to weak pricing power. Taiji Group, on the other hand, faces significant compression in profit space due to adjustments in product structure and rising costs of market channel expansion, becoming the company with the most apparent decline in profitability in the industry. Furthermore, Kunming Pharmaceutical Group (38.52%), China Resources Sanjiu (54.03%), and Te Yi Pharmaceutical (54.62%) have gross margins ranging from 38% to 55%, placing them in the medium profitability tier.

In terms of profit quality, in 2025, the leading companies for the proportion of operating cash flow income are Dong’e Ejiao and Te Yi Pharmaceutical, at 34.16% and 26.40%, respectively, both exceeding 25%. Dong’e Ejiao, although slightly down from 36.66% in 2024, still maintains a high cash conversion capability, while Te Yi Pharmaceutical has turned from a loss of -3.28% in 2024 to profitability, achieving significant improvement in profit quality.

Additionally, China Resources Jiangzhong (23.01%), Jiu Zhi Tang (19.12%), China Resources Sanjiu (17.45%), and Tianshili (17.30%) have cash flow income proportions exceeding 15%, with profit quality in the upper-middle range of the industry. Notably, Jiu Zhi Tang has significantly improved by 10.73 percentage points from 8.39% in 2024, significantly enhancing its cash conversion capability.

The companies with the lowest operating cash flow income ratio are Baiyun Mountain and Kunming Pharmaceutical Group, at -0.30% and 4.40% in 2025, respectively. Baiyun Mountain becomes the only company in the industry with a negative cash flow income ratio, turning from 4.59% in 2024 to negative, reflecting that the net cash flow from operating activities is negative, with reported profits lacking cash support, and issues such as difficulty in accounts receivable recovery and excessive inventory financing are prominent. Although Kunming Pharmaceutical Group has a positive ratio, it has decreased by 5.22 percentage points from 9.62% in 2024, with significantly weakened cash conversion capability and concerning profit quality.

Additionally, it is noteworthy that Taiji Group has turned around from -5.1% in 2024 to 5.56%, Jianmin Group has improved from 6.68% to 8.15%, and Wohua Pharmaceutical has risen from 11.98% to 15.73%, all achieving improvements in profit quality.

Operational efficiency: Baiyun Mountain and China Resources Jiangzhong have the fastest turnover, while Jiu Zhi Tang and Kunming Pharmaceutical Group operate inefficiently

The operating cycle, as a core indicator of measuring a company’s operational efficiency, reflects the entire process from obtaining inventory to selling it and recovering cash. A shorter operating cycle indicates higher inventory turnover, better receivables recovery efficiency, greater capital utilization efficiency, and superior operational capability. Conversely, a longer cycle indicates excessive capital occupation and low operational efficiency. In 2024-2025, the operational efficiency of the 11 companies shows that leading scale companies have efficient turnover, while some companies experience significantly extended operating cycles, reflecting a polarization of operational capabilities.

In 2025, the companies with the shortest operating cycles are Baiyun Mountain and China Resources Jiangzhong, at 147.32 days and 148.78 days, respectively, both under 150 days, making them the two companies with the highest operational efficiency in the industry. Baiyun Mountain’s cycle has slightly extended from 144.0881 days in 2024, while China Resources Jiangzhong has improved from 124.5664 days in 2024, maintaining a short operating cycle and a capital utilization efficiency above the industry average.

Additionally, Dong’e Ejiao (184.07 days) and Taiji Group (192.51 days) have operating cycles within 200 days, placing them in the upper-middle tier of industry operational efficiency. Notably, Dong’e Ejiao has significantly shortened its cycle by 33.94 days from 218.0106 days in 2024, becoming the company with the fastest improvement in operational efficiency.

The companies with the longest operating cycles are Jiu Zhi Tang and Kunming Pharmaceutical Group, reaching 464.23 days and 299.36 days in 2025, respectively. Jiu Zhi Tang’s cycle has further extended by 25.13 days from 439.0994 days in 2024, making it the company with the lowest operational efficiency in the industry, with an operating cycle nearing 1.3 years, slow capital turnover, and funds being tied up in inventory and accounts receivable, which may impact the company’s profitability and capital utilization efficiency. Kunming Pharmaceutical Group’s cycle has also significantly extended by 62.03 days from 237.3286 days in 2024, indicating a marked deterioration in operational efficiency, making it the company with the most apparent decline in operational capability.

From the overall operational level in the industry, the average operating cycle for the 11 companies in 2025 is approximately 230.19 days, with only four companies below 200 days and seven companies exceeding 200 days. The gap between Jiu Zhi Tang and Kunming Pharmaceutical Group and leading companies reaches 2-3 times, reflecting that the overall operational efficiency of the traditional Chinese medicine industry needs improvement, with inventory and accounts receivable management becoming core pain points in industry operations.

**　Talent incentives: Clear differentiation in talent competitiveness, Dong’e Ejiao and China Resources Sanjiu lead in compensation**

Average salary is a core indicator for measuring a company’s talent attractiveness, employee incentive level, and soft power, directly affecting a company’s ability to attract and retain excellent R&D, production, and sales talent. Talent is the core support for a company’s innovation development and market expansion. In 2024-2025, the average salary among the 11 companies shows that leading profitable companies have higher salaries, while small and medium-sized pharmaceutical companies have lower salaries, with most companies achieving salary growth.

In 2025, the leading companies in average salary are Dong’e Ejiao and China Resources Sanjiu, at 228,800 yuan and 218,200 yuan, respectively, both exceeding 200,000 yuan, making them the two companies with the highest talent incentive levels in the industry. Dong’e Ejiao has increased by 16,900 yuan from 211,871 yuan in 2024, while China Resources Sanjiu has increased by 23,100 yuan from 195,052 yuan in 2024. Both companies, backed by strong profitability and scale advantages, are able to offer industry-leading compensation packages to attract and retain excellent talent in R&D, brand operations, and sales, providing talent assurance for long-term development.

Additionally, Baiyun Mountain (216,700 yuan) and Tianshili (194,200 yuan) both have average salaries exceeding 190,000 yuan, placing them in the upper-middle tier of industry talent incentives. Baiyun Mountain has achieved a slight increase from 204,961 yuan in 2024, and Tianshili has increased from 193,138 yuan in 2024.

The bottom-tier companies in average salary are Te Yi Pharmaceutical and Jiu Zhi Tang, with average salaries of only 84,100 yuan and 129,700 yuan in 2025, respectively. Te Yi Pharmaceutical, although it has increased by 9,500 yuan from 74,604 yuan in 2024, is still the only company in the industry with an average salary below 100,000 yuan. Jiu Zhi Tang has seen a slight increase of 2,700 yuan from 126,944 yuan in 2024, with compensation levels significantly below the industry average. The excessively low salary levels have placed the two companies at a disadvantage in talent competition, making it difficult to attract excellent R&D and sales talent, which in turn impacts the companies’ innovation capabilities and market expansion abilities.

Additionally, Jianmin Group (144,600 yuan), Wohua Pharmaceutical (155,300 yuan), Taiji Group (156,800 yuan), Kunming Pharmaceutical Group (158,700 yuan), and China Resources Jiangzhong (161,700 yuan) have average salaries in the range of 140,000 to 170,000 yuan, placing them in the medium tier of industry talent incentives.

From the overall salary level in the industry, the average salary for the 11 companies in 2025 is approximately 168,100 yuan, showing a slight increase from 162,800 yuan in 2024, with 10 companies achieving salary increases. Only China Resources Jiangzhong has slightly declined from 170,617 yuan to 161,700 yuan, reflecting a gradual increase in the industry’s overall emphasis on talent. However, significant individual differences remain, with talent incentives in small and medium-sized pharmaceutical companies still being a shortcoming in industry development.