Strong growth in nuclear medicine business drives stock price limit-up; Dongcheng Pharmaceutical's goodwill nearing 2.5 billion yuan becomes a hindrance

Source: Taishan Finance

Taishan Finance reporter Jing Ming

On March 25, DONGCHENG PHARMACEUTICALS (002675) released its 2025 annual report. The company’s full-year revenue was RMB 2.741 billion, down 4.46% year over year; net profit attributable to shareholders was RMB 196 million, up 6.42% year over year, and non-recurring profit and loss (after excluding non-recurring items) was RMB 180 million, up sharply by 126.51% year over year.

After the earnings release, on March 30 the company’s share price hit the daily limit in a strong rally, up 10.03%, closing at 14.48 yuan. Its total market value reached RMB 11.940 billion. Its radiopharmaceuticals business became the core engine driving growth. For the full year, it generated revenue of RMB 1.136 billion, up 12.21% year over year. However, the company’s accumulated goodwill was still as high as RMB 2.491 billion, accounting for 57.26% of net assets, becoming a financial risk that cannot be ignored.

DONGCHENG PHARMACEUTICALS’ 2025 performance showed clear divergence across segments. Its radiopharmaceuticals business, as the core growth driver, rose against the tide amid industry-wide pressure, with its revenue contribution increasing to 41.4%, becoming a key force in restoring the company’s profitability. Among them, PET-CT’s key diagnostic drug 18F-FDG delivered revenue of RMB 498 million, up 18.35% year over year; revenue from technetium-labeled related drugs was RMB 121 million, up 21.42% year over year.

By contrast, the company’s traditional heparin API business was affected by continued declines in market prices, with revenue down 19.19% year over year, dragging overall revenue performance. Still, the company’s heparin formulations business recorded growth of 10.37%, offsetting, to a certain extent, the weakness in the API segment. Meanwhile, by optimizing cost and expense controls, the company’s net cash flow from operating activities reached RMB 580 million, up 101.93% year over year, with a significant improvement in earnings quality.

The high growth of DONGCHENG PHARMACEUTICALS’ radiopharmaceuticals business stems from its comprehensive layout across products, R&D, capacity, and channels. On the product side, in May 2025, subsidiary ANDIKKO’s sodium fluoride [¹⁸F] injection was approved for launch, used for diagnosis of bone metastases in tumors; in December, technetium [⁹⁹ᵐTc] tilbrotride injection was included in the National Reimbursed Drug List, further opening up market space in cardiac nuclear medicine.

In addition, the上市 application for the blockbuster product fluorine [¹⁸F] Thyratide injection was accepted by the NMPA, providing momentum for future growth. On the R&D side, the company’s R&D spending in 2025 was RMB 289 million, accounting for 10.54% of revenue; it focused on building an integrated radiopharmaceutical pipeline for diagnosis and treatment. In terms of capacity and channels, the company accelerated the “one heap and two devices” strategy. The Jiujiang Tianhong medical isotope dedicated reactor project completed its first pour of concrete; construction of the main plant building for the 40MeV electron accelerator “leaf” accelerator was completed; and the 30MeV cyclotron project completed lifting and installation. By the end of 2025, the company had 31 radiopharmaceutical production centers covering 93.5% of the population nationwide, and its channel barriers continued to be strengthened.

Even though the radiopharmaceuticals business has performed impressively, the company’s massive goodwill risk still deserves attention. As of the end of 2025, DONGCHENG PHARMACEUTICALS’ goodwill balance was RMB 2.491 billion, only slightly down 0.39% compared with the end of the previous year, accounting for 57.26% of the company’s net assets of RMB 4.35 billion. This portion of goodwill mainly came from acquisitions of radiopharmaceutical assets in earlier years, including targets such as Yantai Dayang, Zhongtai Biology, and Yunkek Pharmaceutical Industry, among others.

Historical data shows that the company had previously made goodwill impairment provisions for multiple acquisition projects due to performance falling short of expectations, forming a cycle of “acquisitions create more goodwill—performance fails to meet standards—impairment erodes profits.” Financial commentator Sun Chunhao said: “If in the future DONGCHENG PHARMACEUTICALS’ radiopharmaceuticals business growth loses momentum and cannot support the value of such high goodwill, the RMB 2.491 billion of goodwill may become a ‘time bomb’ that could hit the company’s performance, posing a potential threat to the stability of earnings.”

On March 30, DONGCHENG PHARMACEUTICALS’ share price hit the limit, a result of multiple factors converging, including high growth in the radiopharmaceuticals business, R&D breakthroughs, and improved cash flow. The market believes that as one of China’s two major radiopharmaceutical players, the company has notable advantages from its full-industry-chain layout. As major products are approved one after another, reimbursement coverage expands, and upstream isotope supply bottlenecks ease, the company’s radiopharmaceuticals business is expected to maintain high growth. At the same time, the company launched a share repurchase plan of RMB 100 million to RMB 200 million for employee incentives, demonstrating management’s confidence in future development.

However, the market also needs to be alert to risks such as the continued sluggishness of the heparin business, goodwill impairment, and radiopharmaceutical R&D progress falling short of expectations. In the future, whether DONGCHENG PHARMACEUTICALS can achieve comprehensive recovery in performance by leveraging sustained growth in its radiopharmaceuticals business, absorbing the high level of goodwill, and realizing a full rebound, still needs further observation.

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