Huashen Technology: Facing Pressure in 2025, Strategic Focus on Building Momentum for High-Quality Development

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In 2025, the pharmaceutical industry in China entered a stage of deep structural adjustment under dual drivers: the continued intensification of medical insurance cost controls and volume-based procurement, as well as the policies to revitalize traditional Chinese medicine. On March 30, Huashen Technology (000790.SZ) released its 2025 annual report, with full-year revenue of RMB 545 million. In the face of industry changes and internal transformation pressure, Huashen Technology proactively anchored itself on three core directions—optimizing capital, focusing on its main business, and strengthening barriers—and has accumulated momentum for long-term development through a series of practical measures.

Private placement to empower the company and strengthen its foundation—optimize capital structure and boost market confidence

Due to the normalization of volume-based procurement, to ease the company’s cash flow, optimize its capital structure, reduce financial expenses and the asset-liability ratio, and enhance its ability to withstand risks and sustain operations, Huashen Technology initiated a matter of issuing shares to specific targets. This became an important move to stabilize the company’s fundamental financial position and bolster market confidence. The targets of this private placement are the entities controlled by the company’s actual controller, Huang Mingliang, and Ouyang Ping and her husband. This reflects the controlling shareholder’s high recognition of the company’s strategic direction and long-term value, and also sends strong positive signals to the market and minority shareholders. The funds raised in this private placement will be mainly used to replenish working capital and repay bank borrowings. This can directly relieve day-to-day operational funding pressure, reduce the asset-liability ratio, improve the overall capital structure, enhance risk-resilience and financial soundness. At the same time, it can provide sustained funding support for the in-depth discovery and secondary development of major TCM (traditional Chinese medicine) products, as well as for optimizing and upgrading in-development products, thereby supporting a steady increase in R&D investment.

Meanwhile, after the private placement is completed, the shareholding proportion of the actual controller will further increase, which is beneficial for strengthening the stability of the company’s control right and providing more reliable governance support for strategic implementation and business expansion. At present, this matter has been approved by the company’s shareholders’ meeting. The company will proceed with the subsequent implementation and information disclosure work in a steady manner according to the plan.

Turn back to the core and slim down—focus on the main business and divest low-efficiency assets to improve operational quality and efficiency

In response to issues such as business dispersion and insufficient efficiency in resource allocation, in 2025 Huashen Technology firmly carried out a “core-focused” strategy, concentrating all resources and effort fully on the core main business of TCM and healthy living. The company proactively conducted sorting, divestment and optimization of low-efficiency assets and non-core assets. During the reporting period, the company completed the disposal of its equity interest in Tibet Kangyu, a subsidiary. Although the disposal incurred some disposal losses in the short term and had a phased impact on current performance, from a long-term development perspective, this move effectively activated existing assets, improved asset operation efficiency, reduced the occupation of management resources and capital by non-core businesses, and directed more elements toward core TCM areas with high potential and high returns.

In 2026, the company will continue to advance the divestment of assets in the non-medical business segments in a prudent and orderly manner, reasonably recoup funds and prioritize investment in R&D for core products, capacity upgrades, and market expansion. At the same time, the company plans to bring in resource-based strategic cooperation partners for Huashen Beverages and Shandong Lingkai to enhance project operation capability and market competitiveness, and to introduce high-quality new products through co-investment with technology partners—thereby improving utilization rates of existing facilities, reducing losses, and improving returns. A series of asset optimization “combo punches” demonstrates the company’s firm strategic resolve to focus on the main business and enhance quality and efficiency.

Product and technology build barriers—dive deep into the TCM track and strengthen the development base

Relying on a well-established product matrix, continuous technological innovation, and a mature channel network, Huashen Technology continues to build the core competitiveness of its TCM business and lays a solid foundation for long-term stable development. In terms of product layout, the company currently has 26 registered and manufactured drug varieties. Among them, 5 products were selected into the National Basic Medicinal Products List, 15 products entered the National Medical Insurance and Work Injury Insurance directory, and 16 products were included in the 2025 edition of the Chinese Pharmacopoeia. The products’ compliance and market access advantages are prominent. Core products such as Biyuan Shu Oral Liquid, Ergan Tui Re Ning Oral Liquid, and Huoli Su Oral Liquid have successfully been selected as “National Family Essential Medicine Featured Brands” for the year, and terminal recognition and brand influence continue to rise.

On the technology innovation front, the company carries out systematic secondary development around major TCM products. Taking core products such as Qiqi Tongshu Capsules and Biyuan Shu Oral Liquid as key focuses, it continues to enhance quality standards and optimize technologies, and has cumulatively obtained more than 170 authorized patents. The Qiqi Tongshu Capsules production line was the first to adopt advanced quality-control technologies using fingerprint maps to control the material groups associated with therapeutic efficacy. Its raw material, Qiqi Sanol Saponin, as the first TCM extraction, was included in the 2018 edition of the German Drug Codex, and its capabilities in international standards are leading. The company applies near-infrared online testing and intelligent monitoring technologies, and has built a modern TCM technology platform centered on large-pore adsorption resin separation and purification technology, enabling precise control of processes and breakthroughs in product quality, breaking foreign technology monopolies and enhancing the industry’s indigenous innovation capability. At the same time, it has established fingerprint maps for Qiqi Sanol Saponin, and continues to conduct post-market treatment mechanism, clinical efficacy, and safety studies, providing evidence and assurance for the clinical value of its products. In April 2025, this product successfully obtained approval as a nationally protected second-class TCM product variety. In terms of channels, the company has built a three-level integrated marketing system—“clinical validation in core Grade III hospitals—deep penetration into primary healthcare retail terminals—OTC channel brand radiation.” This covers medical markets and retail terminals at all levels across the country. The channels have strong resilience and high penetration efficiency.

Looking ahead to 2026, Huashen Technology will continue to stick to the main lane of the TCM and healthy living industry, leveraging its existing industrial foundation and resource advantages. With strategic focus and management optimization and asset activation as the main lines, it will continue to push forward business structure adjustment and upgrades to core competitiveness, striving with full effort to achieve a turnaround from loss to profit. The company will steadily advance the implementation of the private placement, continuously optimize its asset-liability structure, and accelerate the pace of disposing of non-core assets. Meanwhile, it will continuously improve the level of intelligence and digitization in production processes, so as to better meet the needs of product iteration and business innovation. At a critical stage of deep changes and structural upgrades in the pharmaceutical industry, Huashen Technology, with a clearer strategy, more resilient operations, and more solid barriers, will adjust while bearing pressure and build strength while transforming, and steadily move toward a new stage of high-quality development.

(This article does not constitute any investment advice. The information disclosure content shall be subject to the company’s announcements. Investors who act on this do so at their own risk.)

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