China National Pharmaceutical Group's net profit increases by nearly 80% behind the scenes: store closures, reduced impairments, and frequent management changes

Source: Beijing Business Today

After the impairment charge was reduced, Sinopharm Concorde saw a sharp jump in net profit. On April 1, Sinopharm Concorde released its 2025 performance results: attributable net profit was RMB 1.14B, up 76.8% year over year. Behind the impressive net profit performance, the impairment allowances for goodwill and intangible assets decreased by RMB 686 million; whereas in 2024, impairment provisions were as high as RMB 970 million, which caused net profit that year to plunge by nearly 60%. Stripping out this factor, the true quality of Sinopharm Concorde’s profitability still needs to be validated.

From a breakdown by business, the retail segment has been the primary factor dragging overall performance over the past two years. In 2025, revenue from this segment declined by 6.16%, and although net profit increased somewhat, it still recorded a loss of RMB 217 million. To “stop the bleeding,” China Resources Pharmacy closed more than 2,000 stores over the past two years, with the total number of stores shrinking from 10,516 to 8,221. Meanwhile, management is also making intensive adjustments. From large-scale store closures to frequent executive changes, Sinopharm Concorde appears to be going through a deep restructuring.

With the narrowing of impairment, net profit rebounds

Sinopharm Concorde’s 2025 annual report shows that during the reporting period, the company achieved operating revenue of RMB 73.42B, down 1.29% year over year; attributable net profit was RMB 1.14B, up 76.8%; and net profit after non-recurring items was RMB 1.1B, up 88.53%.

In 2025, Sinopharm Concorde’s net profit achieved a significant rebound. On the one hand, this came from the reduction in asset impairment losses. In 2024, Sinopharm Concorde’s retail segment was affected by multiple factors such as changes in industry policies and intensifying market competition, leading to a decline in performance, and creating a large gap between the operating performance of acquired asset groups and expectations. The company recorded impairment provisions of RMB 970 million for goodwill and intangible assets formed from the allocation of the acquisition consideration (brand usage rights and sales networks), which reduced attributable net profit for the year by RMB 561 million and resulted in only RMB 642 million, down 59.83% year over year. In 2025, however, asset impairment allowances for goodwill and intangible assets decreased by RMB 686 million year over year, directly driving the surge in Sinopharm Concorde’s net profit.

From the perspective of revenue structure, Sinopharm Concorde’s main businesses are mainly divided into two segments: pharmaceutical distribution and pharmaceutical retail. Among them, the pharmaceutical distribution business, as the foundation of the overall business, accounted for more than 70% of Sinopharm Concorde’s revenue. In 2025, it achieved operating revenue of RMB 53.32B, up 0.64%; net profit was RMB 949 million, up 2.94%, showing steady performance.

The real problem lies in the retail segment, that is, China Resources Pharmacy. Since 2024, the retail business’s net profit of Sinopharm Concorde has shown a clear slide. Revenue declined 8.41% year over year, and attributable net profit fell as much as 388.83%, reaching a loss of RMB 1.07B, directly dragging down the company’s overall performance.

In 2025, the retail segment saw some recovery, achieving operating revenue of RMB 20.98B, down 6.16% year over year; net profit reduced its loss by 80.36% year over year, but it still recorded a loss of RMB 217 million.

Deng Yong, a professor and doctoral supervisor at Beijing University of Chinese Medicine’s School of Health and Health Law, pointed out that the decline in Sinopharm Concorde’s revenue year over year reflects pressure on growth in its distribution and retail core businesses. The improvement in profitability is more the result of easing historical burdens and cost reductions and expense control, and is a “bleeding-stop type of repair,” rather than strong internal growth. A significant improvement in net profit after non-recurring items indicates that low-efficiency stores have been cleared out and that cost control measures have begun to take effect, but the sustainability of profitability still depends on the subsequent real recovery of single-store efficiency, category structure, and the distribution business’s true rebound.

Regarding issues related to changes in employment performance, a reporter from Beijing Business Today sent an interview inquiry letter to Sinopharm Concorde. As of the time of publication, no reply had been received.

Large-scale store closures and personnel changes

Another layer of reasons behind the improvement in net profit is the decline in rigid cost items such as labor and rent brought about by store adjustments. Sinopharm Concorde’s annual report shows that in 2025, the company added 61 new directly operated stores, closed 1,140 directly operated stores; added 65 franchise stores, and closed 334 franchise stores.

A reporter from Beijing Business Today noted that at the end of 2023, China Resources Pharmacy’s total store count exceeded 10,000, reaching 10,516. In 2024, Sinopharm Concorde began large-scale store closures; by the end of that year, the total number of stores was 9,569. And as of December 31, 2025, China Resources Pharmacy’s total store count had fallen to only 8,221, including 6,691 directly operated stores and 1,530 franchise stores. In just two years, more than 2,000 stores were closed.

Sinopharm Concorde stated in its annual report that it focused on optimizing store placement. In 2025, China Resources Pharmacy accelerated “bleeding-stop” closures of loss-making stores, and initially completed the work of concentrating closures of loss-making stores.

Deng Yong pointed out that the chain pharmacy industry is in a deep adjustment period shifting from expansion of scale to improving the quality of existing inventory. The industry faces pressures such as an oversupply of store offerings, diversion between online and offline channels, and rigid increases in rent and labor costs. The old model of “profit immediately after opening a store” can no longer be sustained; low-efficiency stores suffer widespread losses, and the industry has entered a phase of active inventory clearance.

At the same time, management is also being adjusted intensively. On March 18, Sinopharm Concorde announced that Vice President Wang Chu left the company due to a job transfer. Huang Minchun and Chi Guoguang from Sinopharm Holdings Guangzhou, and Wang Hubiao, stepped in, while Wang Chu had just been appointed in 2025. More importantly, this is already the second vice president to leave early within the past half year. In November 2025, Chen Changbing, who was responsible for strategy and M&A, left early; his term was originally scheduled to end in 2027. Over the past year, Sinopharm Concorde’s senior management team has undergone multiple changes.

Deng Yong emphasized that Sinopharm Concorde takes a practical approach and aligns with industry trends by achieving cost reduction and efficiency improvement through closing loss-making stores and optimizing network layout, with organizational adjustments driving operational integration and management efficiency enhancement. Closing stores and personnel changes in the short term bring pain, but at its core, it is a strategic course correction—deflating the bubble and improving quality. Going forward, the core of competition among chain pharmacies will shift to single-store profitability, supply-chain efficiency, and professional service capability. The leading companies that complete structural optimization will have more competitive strength to “survive through cycles.”

Beijing Business Today reporter Wang Yinhao Song Yuying

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