Two takeover plans within four months, Baohua Pharmaceutical's control rights face new turbulence

Ask AI · Why did the Mi family plan twice in the short term to transfer control of Baihua Pharmaceutical?

Within less than four months, Baihua Pharmaceutical is again at the crossroads of a change in control. On March 30, Baihua Pharmaceutical issued an announcement stating that its controlling shareholder and actual controller, Mi Zaiqi, Mi Enhua, and Yang Xiaoling, are in the process of arranging a share agreement transfer. This may lead to a change in control. And just three months earlier, Baihua Pharmaceutical had also announced that it was planning to transfer control; however, the plan was terminated due to a failure to reach an agreement, and after the trading resumed, the stock price hit the daily limit down for two consecutive trading days.

Baihua Pharmaceutical’s path to capital has been quite rocky. Starting from commercial trading, it went through the information technology industry and the energy sector, and in 2016 it transformed into a pharmaceutical company. Yet it fell into a slump because, following the acquisition of Huawei Pharmaceutical, performance failed to meet expectations; after two years, cumulative goodwill impairment exceeded RMB 1.5 billion.

After the Mi family “Hualing faction” took over in Xinjiang in 2019, Baihua Pharmaceutical’s performance improved to some extent. But as a mid- to small-sized CRO company, facing competitive pressure from leading players such as Simcere, uncertainties still remained, including heavy pressure on collections and accounts receivable staying high.

Control transfer begins again

The announcement shows that on March 30, Baihua Pharmaceutical received a notice from controlling shareholder and actual controller Mi Zaiqi, Mi Enhua, and Yang Xiaoling. The three are planning a share agreement transfer of the company’s shares, which may result in a change in the company’s controlling rights. Baihua Pharmaceutical’s stock was suspended from trading starting March 31, and the expected suspension period would not exceed two trading days. The announcement also stated that the share agreement transfer is currently being negotiated and there remains uncertainty.

Just three months ago, Baihua Pharmaceutical had just been planning a control transfer. By the end of December 2025, Baihua Pharmaceutical issued an announcement saying that its controlling shareholder and actual controller Mi Zaiqi, Mi Enhua, and Yang Xiaoling were planning a share agreement transfer, which may lead to a change in the company’s control. The company’s stock was suspended from trading starting December 29, 2025. In the end, however, because the controlling shareholder and actual controller and the counterparty did not reach an agreement on major matters related to the control change, they decided to terminate the planned control transfer. Baihua Pharmaceutical’s stock resumed trading on January 7, 2026. After trading resumed, the stock price of Baihua Pharmaceutical hit the daily limit down for two consecutive trading days.

According to information available, in April 2019, Hualing Industrial and Trading (Group) Co., Ltd. (hereinafter referred to as “Hualing Group”) acquired 19.86% of Baihua Pharmaceutical’s shares, becoming its controlling shareholder. One of the actual controllers whose control is being transferred this time, Mi Enhua, is the founder of the “Hualing faction” enterprise group in Xinjiang, while Mi Zaiqi is the son of Mi Enhua and his wife, Yang Xiaoling.

In March 2024, Baihua Pharmaceutical announced that the registered capital of its controlling shareholder, Hualing Group, would increase from RMB 500 million to RMB 1.1 billion. Mi Zaiqi, the only controlling shareholder of Hualing Holding, became one of Baihua Pharmaceutical’s actual controllers through its controlling interest in Hualing Group. At that time, the market interpreted this change as the formal debut of the second generation of the Xinjiang “Hualing faction.”

And after Mi Zaiqi, as the second generation of the family, had just entered the core of decision-making for two years, the family twice planned a change in control in the short term, rushing to seek an overall exit. Pharmaceutical industry analyst Zhu Mingjun pointed out that the previous transfer failed because “it wasn’t negotiated successfully.” After trading resumed, the consecutive limit-down moves actually compressed the stock price bubble. This time, with less than four months before the restart, it means that both sides had found a balance in the new plan. Looking deeper, the company’s revenue only increased slightly by 0.66%, while operating cash flow plummeted by 62%, revealing significant pressure on fundamentals. When the controlling shareholder chooses to seek another exit at this time, it can be understood as a “stop-loss” move before the value of assets shrinks further.

Regarding the matters related to this share transfer, Wang Yinhao and Song Yuying from Beijing Business Daily sent an interview request to Baihua Pharmaceutical. As of the time of writing, no reply had been received.

From trading to information technology and energy, and then to pharmaceuticals

In the years before the Mi Enhua family took over Baihua Pharmaceutical, the company’s main business and equity structure underwent multiple changes.

Baihua Pharmaceutical’s original name was “Baihua Village.” In the early period after listing, its main businesses included small-scale commercial trades such as department store retail, catering, and trading. In 2002, Baihua Pharmaceutical acquired 51% of the shares of Guangzhou Xintuo Technology Development Co., Ltd. By controlling that company, it directly entered the information technology industry and established a development direction centered on the information technology industry, with traditional sectors such as catering as supplementary. Its performance also briefly rebounded.

But the good times didn’t last. In 2004, Baihua Pharmaceutical fell back into losses again, and around 2007 it began transforming into the energy industry. In its 2007 annual report, Baihua Pharmaceutical mentioned that, given the unfavorable situation in which the company’s main business was not prominent, its sustained profitability was weak, and operating pressure remained relatively high, it established the direction for its main business transformation through asset restructuring—injecting coal assets with promising market development prospects. According to Baihua Pharmaceutical’s 2010 annual report disclosures, “with the completion of the second round of restructuring, the company has formed a complete industrial chain from coking coal mining and washing and selection to coking, urea, and other coal chemical products production.”

However, after two consecutive years of large losses in 2014 and 2015, along with unclear development prospects, from late 2015 to early 2016, Baihua Pharmaceutical—after moving across multiple industries—once again began a new plan for asset restructuring.

In 2016, Baihua Pharmaceutical acquired Nanjing Huawei Pharmaceutical Technology Group Co., Ltd., transforming into a pharmaceutical enterprise, and also appointed Zhang Xiaoqing, the head of Huawei Pharmaceutical, as general manager. At that time, Baihua Pharmaceutical and Zhang Xiaoqing signed a profit forecast compensation agreement. As the party obligated to provide compensation for Huawei Pharmaceutical, Zhang Xiaoqing committed that the net profits attributable to the owners of the parent company after deducting non-recurring gains and losses achieved by Huawei Pharmaceutical in 2016, 2017, and 2018 would be no less than RMB 100 million, RMB 123 million, and RMB 147 million respectively. The cumulative net profits attributable to the owners of the parent company after deducting non-recurring gains and losses achieved over the three years from 2016 to 2018 would be no less than RMB 370 million.

The annual report shows that Huawei Pharmaceutical did not fulfill the relevant commitments. As a result, during 2017–2018, Baihua Pharmaceutical recorded goodwill impairment for two consecutive years, with cumulative impairment exceeding RMB 1.5 billion. That year, Baihua Pharmaceutical’s net losses were RMB 564 million and RMB 808 million, respectively.

After Huawei Pharmaceutical’s performance blowout, the former controlling shareholder of Baihua Pharmaceutical, Xinjiang Production and Construction Corps Sixth Division State-owned Assets Operation Co., Ltd., transferred the company’s controlling rights. The Mi Enhua family then took over Baihua Pharmaceutical.

Zhu Kui, a person engaged in pharmaceutical investments, told Beijing Business Daily that Baihua Pharmaceutical’s path from trading to the information technology industry, to the energy sector, and then to pharmaceuticals is, in essence, a case study of a “shell company” chasing hot topics without strategic resolve. This convoluted history makes it easy for the market to leave an impression of “unstable main business and possible shell selling at any time,” which leads to the company’s valuation trading at a discount to industry leaders for a long time.

Operating cash flow plunged by more than 60% in 2025

Over several years under the control of the Mi Enhua family, Baihua Pharmaceutical’s performance has seen sharp ups and downs. From 2019 to 2024, Baihua Pharmaceutical achieved net profits of RMB 34.3847 million, -RMB 320 million, RMB 59.8271 million, -RMB 34.76M, RMB 12.9723 million, and RMB 41.48M, respectively.

On March 27, Baihua Pharmaceutical released its 2025 annual report. In 2025, the company achieved operating revenue of RMB 388 million, up 0.66% year over year; its net profit attributable to shareholders of listed company was RMB 40.6879 million, down 1.91% year over year; and its net profit attributable to shareholders of listed company after deducting non-recurring gains and losses was RMB 32.7858 million, up 10.57% year over year.

Judging from the financial data, over the past three years, Baihua Pharmaceutical’s performance appears relatively stable. However, in terms of business scale, as a mid- to small-sized CRO company, it is difficult to compete with leading enterprises such as WuXi AppTec and Simcere—whose revenue exceeds RMB 10 billion— and compared with Tigermed and Qilu Pharmaceuticals (KeLaiYing), there is still a sizable gap.

Not only that, Baihua Pharmaceutical is also facing considerable pressure on collections. The annual report shows that in 2025, Baihua Pharmaceutical’s net cash flow from operating activities was RMB 30.4186 million, down 62.11% from 2024. The profit cash coverage ratio for the current period was 0.75, down from 1.94 in the same period of 2024 by 1.19, mainly due to delays in payments from cooperation partners in pharmaceutical R&D business leading to an increase in accounts receivable.

According to the annual report, as of the end of 2025, Baihua Pharmaceutical’s accounts receivable increased by 54.06% from the end of 2024 to RMB 125 million, accounting for 11.36% of total assets.

Zhu Mingjun pointed out that Baihua Pharmaceutical cannot directly compete with giants such as WuXi AppTec. Its survival logic lies in focusing on the niche market of “high-end generics” with misalignment. Leveraging approximately 25 years of experience accumulated by Huawei Pharmaceutical, the company has some technological moat in areas such as chiral synthesis, sustained-release and controlled-release preparations, and intranasal formulations. These high-difficulty generic drug R&D projects are the “dirty and tough work” that giants are unwilling to dig into deeply, yet market demand remains strong. At the same time, the company has a one-stop capability of “pharmaceutical research + clinical services + bioanalysis.” Compared with giants, it can offer more flexible and more cost-effective services. However, Baihua Pharmaceutical also faces severe challenges: the 62% plunge in operating cash flow reflects heavy collection pressure and is clearly reflected in the downstream pharmaceutical companies’ funding tightness. Meanwhile, leading companies are squeezing the tail-end market through price cuts. If it cannot improve cash flow and continue to strengthen technical barriers in its niche areas, Baihua Pharmaceutical may still be unable to escape being marginalized or being acquired.

Beijing Business Daily reporters Wang Yinhao and Song Yuying