A new leadership reshuffle among the leading Chinese medicine companies—what signals are released by Kangyuan Pharmaceutical as the company’s second-generation successor takes over?

Ask AI · How does Kangyuan Pharmaceutical’s “Old-Lead-New” model ensure a smooth intergenerational transition?

Produced by | Zhongfang.com

Reviewed by | Li Xiaoyan

On March 30, Kangyuan Pharmaceutical announced the appointment of 31-year-old Xiao Lihao as Vice General Manager of the company, marking his second promotion within three months after joining the board in December 2025, officially entering the core management decision-making layer. As the son of founder Xiao Wei, Xiao Lihao’s rapid advancement not only signifies that Kangyuan’s family succession has entered a substantive implementation stage but also reflects how this leading innovative Chinese medicine company, amid industry transformation cycles, is leveraging governance structure optimization, youth empowerment, and R&D innovation to address phased pressures and pursue high-quality development. At this critical node of industry pressure and new-old momentum conversion, Kangyuan’s move stabilizes the current fundamentals while planning for long-term new growth, providing an important reference for inheritance and transformation of traditional Chinese medicine enterprises.

Unlike some companies’ “parachuted” second-generation executives, Xiao Lihao’s promotion path shows a clear step-by-step cultivation process, demonstrating Kangyuan’s cautious and long-term approach to succession planning. Since joining Kangyuan Group in 2020, he started as a Youth League Committee Secretary and Assistant to the Chairman, gradually taking charge of subsidiaries, and from 2024 served as Chairman of the core subsidiary Kangyuan Sunshine Pharmaceutical, deeply involved in the production of specialty drugs and innovative drug R&D, accumulating comprehensive experience from grassroots management to full operational oversight of subsidiaries. His promotion to Vice General Manager marks a key leap from the supervisory level of the board to the operational execution layer, signaling that the succession has moved from the “training and observation period” into the “practical participation period.”

Another deeper meaning of this personnel adjustment lies in Kangyuan’s governance wisdom of “Old-Lead-New, Stable Transition.” In June 2025, Xiao Wei, who had led the company for over two decades, voluntarily stepped down as Chairman and legal representative but continued to hold positions such as Director and Strategic Committee Member, forming a transition pattern of “retreating behind the scenes, controlling strategy, and full delegation.” Xiao Lihao and Xiao Wei are acting in concert, ensuring strategic continuity and avoiding decision-making gaps during succession, while also providing space for young managers to develop. This “father steering strategy, son executing operations” model not only reduces the shock risks of intergenerational handover but also offers Xiao Lihao a platform to familiarize himself with corporate governance and overall business coordination, aligning with the steady path of family business inheritance under modern corporate systems.

Kangyuan’s current core challenge is that traditional key products are under phased pressure due to policy and market environment impacts. In 2024, the company’s revenue and net profit attributable to parent dropped by 19.93% and 26.99%, respectively, with the decline accelerating in the first three quarters of 2025. The main reasons are the sharp drop in sales of flagship products such as Re Du Ning injection and Ginkgo Biloba Terpene Glycosides injection, affected by stricter regulation of Chinese medicine injections and medical insurance cost controls, coupled with high inventory levels, creating short-term operational pressure. However, it is noteworthy that such performance fluctuations are common in the phased cycle of the Chinese medicine industry; in 2024, over 60% of listed Chinese medicine companies experienced profit declines, and Kangyuan’s adjustments are essentially the unavoidable pains of industry transformation.

In response to these challenges, Kangyuan has established a dual-core management structure of “Young Commander Leading, Veteran Sitting In,” providing a solid guarantee for performance stabilization. General Manager Yang Yongchun, an industry veteran who joined Kangyuan in 1997, has over twenty years of experience in marketing, auditing, and sales management, familiar with the full process of the company’s operations; in February, the company appointed Zhang Xiaoliang as Vice General Manager. Zhang, who joined in 2007, has risen from an academic specialist to Director of the South China Business Unit, with rich frontline sales and regional management experience, and is a strong player on the marketing front. The two veterans complement Xiao Lihao: the former leverages deep industry experience and resources to coordinate daily operations, stabilize sales, and clear inventory; the latter brings youthful perspectives and innovative thinking to optimize management mechanisms, develop emerging businesses, and promote digital transformation, forming a collaborative effect of “stabilizing the present, planning for the future.”

Despite short-term performance pressures, Kangyuan has not shrunk its innovation efforts but continues to increase R&D investment, building core momentum for long-term growth. As a benchmark in Chinese medicine innovation, the company’s R&D spending has ranked among the top in the industry for years, reaching 654 million yuan in 2024, accounting for 16.79% of revenue, far exceeding industry averages. Currently, the company holds 214 drug approvals and 50 exclusive varieties, covering fields such as respiratory, cardiovascular, and orthopedics, forming a product matrix, while also establishing an “Chinese medicine as the foundation, chemical and biological drugs as wings” innovation pattern.

Ongoing breakthroughs in R&D pipelines are key to Kangyuan’s ability to navigate cycles. In Chinese medicine, Re Du Ning granules completed Phase III clinical trials, Qing Shen Tong Luo granules received clinical acceptance, and new drugs like Chan Pu granules and Yin Qiao Qing Re tablets have been approved, with several entering Phase II/III clinical trials; in chemical and biological drugs, GLP-1 class weight-loss and glucose-lowering drugs, as well as innovative drugs in oncology and autoimmunity, are steadily advancing, with three biological drugs obtaining clinical approval in China and the US, with results gradually coming to fruition. Meanwhile, the company accelerates product structure optimization, promoting growth in gel and tablet forms, and expanding into chronic disease management and health sectors, reducing reliance on traditional injections, and building a more robust growth echelon.

Xiao Lihao’s formal involvement is not only a milestone in Kangyuan’s family succession but also a crucial turning point for corporate governance modernization and strategic renewal. Unlike Xiao Wei’s decisive style, Xiao Lihao is known for his rational, rigorous, and academic approach, excelling in fine management, digital operations, and compliance, which is expected to promote comprehensive upgrades in management mechanisms, marketing models, and business layout while maintaining innovation. From an industry trend perspective, Chinese medicine companies are experiencing a peak in intergenerational transition, with younger managers bringing cutting-edge perspectives and flexible thinking, becoming an important force in industry modernization.

In the short term, Kangyuan still faces challenges such as adjusting core products, digesting inventories, and performance recovery, but with a stable management structure, sustained R&D investment, and a clearer product pipeline, a stable rebound is well-founded. In the long run, as innovative drugs are gradually launched, product structures continue to optimize, and young management teams are empowered, the company is expected to shed traditional dependencies and build a diversified growth pattern of “Innovative Chinese Medicine + Biological Drugs + Big Health,” consolidating its leading position in the industry.

Kangyuan’s intergenerational transition is essentially a strategic practice of “inheritance and innovation”: ensuring strategic continuity through steady inheritance, activating development vitality through youthful governance, and strengthening core competitiveness through R&D innovation. Amid the wave of revitalizing traditional Chinese medicine, this veteran innovative enterprise is opening a new chapter of high-quality development through dual optimization of governance structure and business layout, with Xiao Lihao leading a new management team to write a new industry chapter in overcoming challenges and seizing opportunities.