Not just looking at the single season, but the whole year: Is Tongrentang emerging from its pain?

Ask AI · Tongrentang How It Uses Cash Flow Growth to Demonstrate Operational Resilience?

Based on the data, the company’s operating quality shows strong resilience.

Produced by | China Visit Network

Reviewed by | Li Xiaoyan

In 2025, the Traditional Chinese medicine (TCM) industry entered a period of deep adjustment. Beijing Tongrentang released an annual report marked by relatively significant fluctuations in performance over the past decade. As an industry leader with a 356-year history, Tongrentang faces near-term challenges such as slower sales of core products and high costs. However, supported by a solid operating base, strong cash flow, a full value-chain layout, and proactive transformation initiatives, it is strengthening the long-term foundation for development in industry change with “improving quality and efficiency while adhering to integrity and pursuing innovation” as its core, demonstrating the resilience and potential of an old brand to weather cycles.

In 2025, Tongrentang achieved operating revenue of 8B yuan and net profit attributable to shareholders of 17.26B yuan. Due to factors including weaker industry demand, core raw material prices remaining at a high level, and seasonality, performance experienced a phased adjustment. In particular, in the fourth quarter, profits were under short-term pressure due to one-off impacts such as large-lot inventory write-down provisions and concentrated expense recognition. This is not a sustained deterioration of the underlying business fundamentals.

Based on the data, the company’s operating quality shows strong resilience. Full-year net cash flow from operating activities reached 1.19B yuan, up 253.87% year over year. Procurement optimization and improved collection efficiency were clearly significant, substantially thickening the safety cushion for funds. The company continues to return a high proportion of profits to shareholders. It plans to distribute 5 yuan in cash for every 10 shares, with a dividend payout ratio of 57.66%, delivering confidence in long-term value with real money. The financial structure remains solid: total assets at period-end exceeded 30.6 billion yuan, and the net asset base remains stable, providing ample “ammunition” to respond to industry cycles and advance strategic transformation.

As a benchmark in the TCM industry, Tongrentang’s product matrix is diverse and deeply rooted. Although core products in cardiovascular and cerebrovascular categories saw short-term declines due to market competition and weak consumer demand, potential categories such as tonifying and supplementing as well as gynecology-related products grew against the trend, becoming a “stabilizer” for performance. In 2025, revenue from tonifying and supplementing category products was 2.69B yuan, up 10.94% year over year. The market recognition of classic products such as Wujibai Feng Wan and Liu Wei Di Huang Wan continued to rise, showing strong brand appeal.

The company is accelerating its “major products + premium products” dual-wheel strategy, focusing on cultivating more than 20 potential product varieties and further tapping the value of classic famous prescriptions. At the same time, leveraging its brand moat to expand into new tracks such as medicine-food homology and health and wellness, the product structure is gradually shifting from being driven by a single core product to providing multiple points of support, effectively hedging the risk of fluctuations in individual products. In terms of inventory management, the company deepens coordination between planting and trading/production and distribution, optimizes production-sales alignment, and high-priced raw material inventories are gradually cleared, creating conditions for subsequent restoration of gross margin.

A surge in prices of core raw materials such as natural bezoar is a common industry challenge. Tongrentang actively and proactively breaks the bottleneck. In March 2026, the company completed the nation’s first legal import of natural bezoar, opening up a new channel for stable supply. As lower-cost raw materials are gradually introduced, cost pressure that has long suppressed gross margin is expected to ease step by step.

The company continues to improve the full value-chain layout of “planting – production – sales.” The supply-chain operations platform has been fully rolled out, enabling data coordination across procurement, production, inventory, and other links, significantly improving operational efficiency. The digital-and-intelligent transformation is being pushed deeper. The company has put into operation IoT-enabled workshops and the Green Manufacturing Base in Yizhuang. With intelligent manufacturing empowering quality control and cost reduction and efficiency gains, it further consolidates the quality barrier of “though processing may be complicated, we never dare to cut corners on labor.”

At present, the TCM industry is entering a policy golden period, with a cluster of policies and initiatives such as the “Implementation Plan for High-Quality Development of Traditional Chinese Medicine Industry (2026–2030)” being rolled out in succession. This creates a favorable development environment for leading companies. Tongrentang closely seizes strategic opportunities under the “15th Five-Year Plan” (the next phase), and deepens the “improving quality and efficiency with a return to shareholders” initiative, carrying out comprehensive changes across products, channels, and R&D.

R&D investment continues to increase. In 2025, R&D expenses were 292 million yuan. The focus is on second-stage development of major products and innovation of classic famous prescriptions. Several products have obtained overseas registration and certifications, accelerating internationalization. On the marketing front, the company optimizes channel structure, strengthens the integration of online and offline, expands its network of retail pharmacy stores to 1,279, and achieves an over-72% coverage rate of insurance-designated pharmacies, continuously enhancing terminal penetration.

Short-term performance fluctuations are Tongrentang’s “growth pains” along the way of transformation, and also a microcosm of the industry’s shift from scale expansion to high-quality development. As a inheritor and innovator of TCM culture, Tongrentang possesses an unreplicable brand moat, a well-developed product matrix, and full value-chain control capability.

In the future, with the clearance of high-priced inventory, breakthroughs in raw-material bottlenecks, optimization of product structure, and deeper digital-and-intelligent transformation, the company’s profitability is expected to gradually recover. Under the triple drivers of population aging, rising health awareness, and policy dividends, Tongrentang is writing a new chapter of high-quality development for a TCM old brand by adhering to integrity and pursuing innovation, using quality and therapeutic effects as its ink. Its long-term value is worth looking forward to.

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