Heisen Pharmaceutical 2025 Annual Report Analysis: Revenue increased by 12.88% to 532 million yuan, financial expenses surged by 72.31% year-on-year

Revenue Analysis

During the reporting period, Haisen Pharmaceutical achieved operating revenue of 532,259,379.46 yuan, up 12.88% from 471,510,162.35 yuan in the same period last year. Revenue continued to expand, reaching a record high.

From the perspective of revenue structure, various business segments showed differentiated performance:

• The raw material drug business generated revenue of 471,804,791.39 yuan, accounting for 88.64% of total revenue. It increased 14.87% year over year, and is the core driver of revenue growth. This was mainly due to an increase in international market share, with overseas customer demand growing significantly;
• The intermediates business generated revenue of 46,454,234.61 yuan, accounting for 8.73%. It decreased slightly by 0.80% year over year, and remained overall steady;
• The finished dosage business generated revenue of 11,359,863.55 yuan, accounting for 2.13%. It decreased 2.53% year over year, mainly because the company proactively reduced production to digest inventory, avoiding backlog.

By region, domestic revenue was 242,028,010.96 yuan, up 3.21% year over year; overseas revenue was 290,231,368.50 yuan, up significantly by 22.46% year over year. International business expansion achieved notable results. In particular, performance in emerging markets such as India, Indonesia, and Bangladesh improved markedly, and cooperation with clients in Europe and America has also become increasingly close.

Net Profit Analysis

In 2025, the company’s net profit attributable to shareholders of listed companies was 135,879,665.78 yuan, up 10.87% from 122,557,731.65 yuan last year. Profit scale increased in parallel.

After deducting the impact of share-based payments, net profit was 156,582,544.22 yuan, up 22.14%, indicating strong profitability of the company’s main businesses. The net profit growth rate was slightly lower than the revenue growth rate, mainly due to increased cost and expense items such as equity incentive expenses and R&D investment.

Non-recurring Profit and Loss Analysis

Net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was 128,101,268.76 yuan, up 9.79% from 116,677,414.94 yuan last year. Non-recurring gains and losses mainly include government subsidies, investment and financial management gains, etc. Total non-recurring gains and losses for this period amounted to 7,778,397.02 yuan, which had relatively limited impact on net profit. The growth in non-recurring profit reflects a steady improvement in the profitability level of the company’s core business.

Basic Earnings Per Share Analysis

Basic earnings per share (EPS) was 0.91 yuan per share, up 10.98% from 0.82 yuan per share last year. The increase in EPS was mainly driven by net profit growth. At the same time, the company’s share capital increased due to capital reserve conversion and the grant of restricted shares, which to some extent diluted EPS. However, net profit growth still drove a double-digit increase in EPS.

Non-recurring EPS Analysis

Non-recurring EPS was 0.85 yuan per share, up 10.39% from 0.77 yuan per share last year. It is consistent with the growth trend of non-recurring net profit, reflecting that after excluding non-recurring gains and losses, the core business enhanced earnings attributable per share.

Overall Expense Analysis

In 2025, the company’s total period expenses were 87,073,026.81 yuan, a significant increase of 65.24% compared with 52,694,457.48 yuan in the prior year. Expense growth was mainly influenced by factors such as equity incentives, R&D investment, and export commissions.

Selling Expenses Analysis

Selling expenses were 16,199,675.79 yuan, up 31.17% year over year. The increase mainly came from two aspects: first, the increase in equity incentive expenses. The equity incentive expenses in the selling segment for this period were 2,695,534.92 yuan, versus 743,258.75 yuan in the same period last year; second, export commission increased. The export commission for this period was 2,632,181.91 yuan, versus 1,073,583.30 yuan in the same period last year. As overseas market expansion continued, the growth in export business drove an increase in commission expenses. In addition, market promotion expenses, exhibition fees, and other costs also increased to varying degrees, supporting the company’s market expansion.

Management Expenses Analysis

Management expenses were 37,032,877.28 yuan, up 20.60% year over year. The main reasons for the growth were increased equity incentive expenses and payroll costs. The equity incentive expenses in the management segment for this period were 6,249,489.58 yuan, versus 1,698,276.12 yuan in the same period last year; payroll expenses were 16,670,201.13 yuan, versus 13,900,094.33 yuan in the same period last year. As the company introduced mid- to senior-level talent, employee compensation increased. Meanwhile, intermediary consulting fees and other expenses also increased, which are used to improve corporate governance and management standards.

Financial Expenses Analysis

Financial expenses were -5,020,411.11 yuan, up 72.31% (the negative expense narrowed). The main reason was that interest rates declined, leading to a reduction in interest income. Interest income for this period was 5,682,222.20 yuan, versus 15,413,428.75 yuan in the same period last year. The sharp decrease in interest income caused the negative financial expenses to narrow significantly. In addition, foreign exchange gains and losses for this period were 51,862.96 yuan, compared with -3,324,441.27 yuan in the same period last year. The increase in foreign exchange gains also had some impact on financial expenses.

R&D Expenses Analysis

R&D expenses were 38,860,884.85 yuan, up 39.89%. They accounted for 7.30% of operating revenue, up from 5.89% in the prior year by 1.41 percentage points. The growth in R&D investment mainly resulted from increased equity incentive expenses and payroll costs: the equity incentive expenses in the R&D segment for this period were 8,969,170.06 yuan, versus 2,595,796.13 yuan in the prior year; payroll expenses for R&D personnel were 17,680,440.16 yuan, versus 15,133,341.18 yuan in the prior year. In addition, material costs, depreciation, and amortization also increased. The company has continued to intensify R&D investment in areas such as antiviral, antidepressant, and lipid-lowering fields. There were 20 R&D projects in progress in total, with 4 newly added R&D projects. This lays a foundation for future product planning.

R&D Personnel Overview

In 2025, the company’s number of R&D personnel reached 125, up 31.58% from 95 in the prior year. The proportion of R&D personnel increased from 14.33% to 17.73%. In terms of educational background, 90 R&D personnel were bachelor’s degree holders or above, up 50% year over year; 20 were master’s degree holders, up 5.26% year over year; 2 were PhD degree holders, up 100% year over year. The number of R&D personnel with vocational education or below decreased, and the educational structure of the R&D team continued to improve.

In terms of age distribution, there were 61 R&D personnel under the age of 30, up 41.86% year over year; 38 were between 30 and 40 years old, up 26.67% year over year. The R&D team is clearly trending younger, injecting fresh blood into the company’s R&D innovation. The increase in both the number and quality of R&D personnel was mainly due to the company’s R&D building for its fund-raising projects coming into operation and the Haisen Research Institute under its subsidiaries beginning to run smoothly. At the same time, the company has deeply implemented the “14th Five-Year Plan” R&D-driven strategy, increasing efforts in talent recruitment and training.

Overall Cash Flow Analysis

In 2025, the company’s net decrease in cash and cash equivalents was -134,472,817.61 yuan, compared with a net increase of 97,693,633.66 yuan in the same period last year. Cash flow shifted from net inflow to net outflow, mainly due to a substantial increase in cash outflows from investing activities.

Net Cash Flow from Operating Activities Analysis

Net cash flow from operating activities was 177,453,591.02 yuan, up 6.16% year over year. Cash flow from operating activities continued to generate net inflows and maintained stable growth, reflecting the company’s strong cash-generating ability from its main business.

Operating cash inflows were 422,864,128.55 yuan, up 9.38% year over year. This was mainly because cash received from sales of goods and provision of services increased. At the same time, the company received tax refunds of 12,593,342.98 yuan, which did not occur in the same period last year. Operating cash outflows were 245,410,537.53 yuan, up 11.83% year over year. This was mainly due to increases in cash paid for purchasing goods and receiving services, and increases in cash paid to employees and for employees, driven by the expansion of business scale and higher employee compensation.

Net Cash Flow from Investing Activities Analysis

Net cash flow from investing activities was -297,245,354.31 yuan. It decreased significantly by 381.39% year over year, with a substantial expansion in net outflow. The main reason was that the company increased its investment in financial products. Cash paid for investments in this period was 2,088,000,000.00 yuan, versus 370,000,000.00 yuan in the same period last year. Meanwhile, cash paid for the construction of fixed assets, intangible assets, and other long-term assets was 152,263,155.87 yuan, versus 64,748,175.31 yuan in the same period last year. Capital expenditures such as the construction of a new plant area and technological renovation projects increased.

Net Cash Flow from Financing Activities Analysis

Net cash flow from financing activities was -15,594,048.20 yuan, down 50.07% year over year, with the net outflow scale expanding. Cash received from absorbing investments this period was 3,580,726.80 yuan, mainly due to funds received from the reserved grant of restricted shares. Cash paid for dividends, profit distributions, or interest payments was 17,451,010.00 yuan, versus 34,000,000.00 yuan in the same period last year. The company’s profit distribution payments were in addition. In addition, cash paid for other matters related to financing activities totaled 1,723,765.00 yuan, mainly due to payments for repayment of lease liabilities.

Potential Risks Analysis

(1) Product concentration risk

The company’s major products are aluminum sulfate, Annoquin, atorvastatin calcium, and PHBA, and the product concentration is relatively high. If the competitive landscape and market demand for these major products undergo unfavorable changes—such as competitors launching substitute products or market demand shrinking—this could adversely affect the company’s operations.

(2) Risk of raw material supply and price fluctuations

The company’s raw material procurement concentration is relatively high. Although there are substitute suppliers, if changes occur in the cooperation relationship with core suppliers, it may affect the stable supply of raw materials and the company’s cost competitiveness. Meanwhile, international conditions are complex and changeable, and raw material prices may fluctuate significantly. If the company is unable to pass cost pressure to downstream customers, its profitability may be affected.

(3) Risk that fund-raising projects do not meet expectations

The feasibility of the company’s fund-raising projects is determined based on factors such as the industry policy, the industry’s technical level, and the market environment at the time. During project implementation, the company may face uncertainties arising from changes in industrial policies, adjustments in industry development direction, and changes in the market environment. As a result, there may be differences between actual benefits and the projected benefits or the projects may not be implemented as expected.

(4) Safety production and environmental protection risk

In the company’s production process, flammable, explosive, and toxic substances are used, and the production processes are complex, with strict requirements for safety and environmental protection management and control. Although no major safety production accidents or environmental accidents occurred during the reporting period, if such accidents occur in the future, they may lead to production shutdowns, face penalties, and affect the company’s operations.

(5) Risk of exchange rate fluctuations

The company’s export business revenue is mainly settled in USD. Exchange rate fluctuations will generate foreign exchange gains or losses and affect the company’s earnings. If the RMB appreciates significantly, it will compress the profit margins of the company’s exported products.

(6) Annoquin product policy risk

In 2020, the National Medical Products Administration took measures regarding Annoquin injection and other products, such as stopping production, sales, and use. Some overseas countries also impose restrictions on the use of Annoquin-related products. If policies to restrict the use of Annoquin are further upgraded domestically and internationally, the company’s Annoquin API business may be adversely affected.

(7) Risk that product R&D does not meet expectations

The pharmaceutical industry’s product R&D cycle is long, involves complex processes, and has high costs. It is vulnerable to numerous uncertainties such as technology, market demand, and policy and regulatory requirements. There is a risk that R&D innovation may not meet expectations, which may result in new products failing to be launched on schedule and affect future performance growth.

Chairman’s pre-tax compensation during the reporting period analysis

During the reporting period, Chairman Wang Shiyue’s total pre-tax compensation received from the company was 79.94 million yuan. The compensation mainly consists of basic salary and performance-based pay, reflecting his leadership contributions to the company’s business development.

General Manager’s pre-tax compensation during the reporting period analysis

During the reporting period, General Manager Ai Lin’s total pre-tax compensation received from the company was 87.75 million yuan, higher than the chairman’s compensation. This was mainly because the general manager is responsible for the company’s day-to-day operational management and bears more operational responsibilities. At the same time, his R&D background also provides support for the company’s technological R&D and product innovation. His compensation level matches his job responsibilities and contributions.

Deputy General Managers’ pre-tax compensation during the reporting period analysis

Deputy General Manager Lou Yanjun received 64.18 million yuan in pre-tax compensation; Zhang Shengquan received 74.94 million yuan; and Wu Yangkuan received 19.07 million yuan in pre-tax compensation. Because Wu Yangkuan’s tenure during the reporting period was less than one year (appointed as deputy general manager in August 2025), his compensation is calculated based on his actual period of service. As senior deputy general managers, Lou Yanjun and Zhang Shengquan oversee core business segments such as production and sales, and their compensation reflects their role value and contributions to the company.

Financial Director’s pre-tax compensation during the reporting period analysis

During the reporting period, Financial Director Pan Aijuan’s total pre-tax compensation received from the company was 57.02 million yuan. She is responsible for important work such as the company’s financial management and capital operations. Her compensation level aligns with her job responsibilities and professional contributions, ensuring the stable operation of the company’s financial system.

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