Jinhua State-Owned Assets "Take Another Step": 890 Million Invested in Baihua Pharmaceutical

Ask AI · How will this acquisition help fill the CRO shortcoming in Jinhua’s pharmaceutical industry chain?

On April 7, Baihua Pharmaceutical (600721.SH) disclosed an announcement regarding the transfer of controlling rights. The company’s controlling shareholder and actual controllers, Mi Zaiqi, Mi Enhua, and Yang Xiaoling, have signed a “Share Transfer Agreement” with Jinhua City Juxin Enterprise Management Partnership (Limited Partnership) (abbreviated as “Jinhua Juxin”). The parties plan to transfer a total of 20.68% of the listed company’s equity held by the three parties at a price of RMB 890 million.

Equity structure of Jinhua Juxin; source: Qichacha

After a look-through analysis, it can be seen that Jinhua Juxin is in fact an enterprise management platform under Jinhua Municipal State-owned Assets Supervision and Administration Commission, with a total subscribed capital of RMB 800.2 million. Among them, Jinhua Financial Holding Investment Co., Ltd. (abbreviated as “Jinhua Jinkong”), jointly established by Jinhua Municipal State-owned Assets Supervision and Administration Commission and Zhejiang Financial Development Group, is the largest contributor, with an actual shareholding percentage of over 70.38%. Xiaoka Capital’s chairman Zhang Yanyang also participates through Zhejiang Shanchuan River Valley Technology Co., Ltd. According to the company’s official website, the company has extensive experience in equity investments and mergers and acquisitions, cumulatively managing funds with a scale of over RMB 3 billion, covering many fields such as cultural consumption, new energy, and pharmaceuticals.

It is worth noting that just over half a month ago, Jinhua Jinkong had only just entered the controlling-rights restructuring of Beiyinmei (002570.SZ)’s controlling shareholder, “Zhejiang Xiaobei Damei Holdings Co., Ltd.” (For details, see “Jinhua State Assets ‘makes an appearance’ in Beiyinmei’s controlling-rights restructuring: attracting a second listed company with RMB 856 million?”). At the time, Caixin News made an assessment: to make up for the gap in the number of listed companies between Jinhua and places such as Taizhou and Jiaxing, Jinhua State Assets was accelerating the acquisition of listed companies outside the region.

Two changes of control in less than four months

According to available information, Baihua Pharmaceutical’s predecessor was “Baihuacun,” established in 1996. Initially, the company’s main business involved small-scale commercial operations such as department store retail, catering, and trading. Later, it underwent multiple transformations including IT and coal chemical industries. In 2016, Baihua Pharmaceutical entered the pharmaceutical R&D CRO track by acquiring Huawei Medical. However, because this cross-industry transformation did not meet expectations, it was subsequently hit by performance backlash, which then led to further changes in control.

In April 2019, Hualing Industry and Trade (Group) Co., Ltd. (abbreviated as “Hualing Group”) transferred 19.86% of Baihua Pharmaceutical’s shares, becoming its controlling shareholder. It is reported that the founder “Mi Enhua” and his wife “Yang Xiaoling” had previously been selected multiple times on the Hurun Rich List, and in 2025, with wealth of RMB 29 billion, they ranked 918th on the global billionaire list.

April 2019 change-of-control transfer announcement; source: corporate announcement

In March 2024, Mi Zaiqi, the son of Mi Enhua and Yang Xiaoling, took over Hualing Group and became one of Baihua Pharmaceutical’s newly appointed actual controllers. Under the leadership of the new executive, on December 26, 2025, Baihua Pharmaceutical first disclosed matters related to a change of controlling rights. The company’s stock began trading suspension from December 29. Then, less than half a month later, on January 6, 2026, the company announced that it would terminate the transaction. The reason was that the controlling shareholder and actual controller and the transaction counterparty “did not reach a consensus on major matters related to the change in controlling rights.” As a result, after Baihua Pharmaceutical resumed trading, its stock price hit the daily limit-down for two consecutive trading days.

Only a little more than two months later, the company’s actual controller again initiated a transfer of controlling rights. Based on the period of shareholding, the three actual controllers collectively steered Baihua Pharmaceutical for only a little over one year.

Cumulative net loss of RMB 165 million over 7 years

Behind the Mi Enhua family’s exit from controlling rights, Baihua Pharmaceutical’s performance has also been under pressure overall.

According to Tonghuashun iFind, from 2019 to 2025, its net profit attributable to the parent company was RMB 34.3847 million, -RMB 320 million, RMB 59.8271 million, -RMB 34.755 million, RMB 12.9723 million, RMB 41.479 million, and RMB 40.6879 million. The average compound annual growth rate was only 2.84%, with cumulative net losses of approximately RMB 165 million.

Baihua Pharmaceutical’s net profit attributable to the parent over the years; source: Tonghuashun iFind

Although profit fluctuations have eased somewhat in the past three years, in terms of business scale, such a small-to-medium-sized CRO company as Baihua Pharmaceutical still finds it difficult to compete with giants such as WuXi AppTec (603259.SH) and Kanglong Chemical (300759.SZ), as well as second-tier providers such as Tigermed (300347.SZ) and Kelun Pharma (002821.SZ).

Not only that, Baihua Pharmaceutical also faces significant pressure in collections. According to its 2025 annual report, during the reporting period, the net cash flow from operating activities was RMB 30.4186 million, down 62.11% from 2024. The profit cash coverage ratio was 0.75, down 1.19 from 1.94 in the same period of 2024. This was mainly due to an increase in accounts receivable caused by delayed payments from counterparties for pharmaceutical R&D collaboration.

And by the end of 2025, Baihua Pharmaceutical’s accounts receivable had grown by 54.06% from the end of 2024 to RMB 125 million, accounting for 11.36% of total assets.

The third municipally-owned state-owned enterprise: completing the pharmaceutical puzzle

Returning to the perspective of Jinhua.

According to available information, in 2025, Jinhua has listed the life and health industry chain as the city’s only “two-new” deep-integration demonstration chain for technological innovation and industrial innovation, and it is also one of the city’s ten key industrial chains. In 2024, the industrial output value above designated size for this industry chain reached RMB 35.43 billion, with output value growth of 5.8%. In the first half of 2025, it reached RMB 22.29 billion, accounting for 62.91% of 2024.

A review of actual controllers of 42 listed companies in Jinhua; charting: Caixin

In terms of industry chain layout, Jinhua has already established industrial foundations in segmented fields such as biologics, chemical drugs, traditional Chinese medicine, and medical devices. In addition, production facilities and laboratories of companies including Zhejiang Jianfeng Pharmaceutical, Zhejiang Huanling Medical Technology, and Zhejiang Jinhua Kang Enbei Biopharmaceutical have also been set up there. Only for CXO tracks related to pharmaceutical R&D such as CRO/CDMO, relevant government platforms are rarely mentioned.

In contrast, Huawei Medical under Baihua Pharmaceutical—having been selected for many consecutive years as one of China’s top 20 pharmaceutical CRO enterprises—already has end-to-end service capabilities across the entire pharmaceutical R&D industry chain, including pharmaceutical research, clinical services, and bioanalysis and testing. In 2025, its revenue was nearly RMB 251 million, with net profit of RMB 18.7135 million. As of the end of 2025, its total assets were RMB 574 million, and its asset-liability ratio was approximately 38.45%.

Also, the “Ten Opinions on Vigorously Supporting the High-Quality Development of the Biopharmaceutical Industry in Jinhua” issued in 2024 shows that, when supporting the R&D and production of drugs, a single innovative drug R&D and production item can receive rewards of up to RMB 48 million for the full process. In addition, the local area also has 9 GCP institutions (drug clinical trial institutions) relying on local hospitals and resources from leading pharmaceutical enterprises, which can also provide potential support for Baihua Pharmaceutical’s industrial development. At the same time, Jinhua Jinkong also manages multiple pharmaceutical industry funds; after state-owned capital takes over, Baihua Pharmaceutical will be able to connect more easily with these funding channels.

As for the future, whether Jinhua State Assets can drive Baihua Pharmaceutical to grow into a regional CXO core platform and achieve precise actions to extend and supplement the industrial chain—Caixin News will continue to keep an eye on it.