Summary of Key Points
Zhongsheng Pharmaceutical’s subsidiary, Zhongsheng Ruichuang, failed to go public by the end of 2024, triggering a performance-based agreement. Recently, Zhongsheng Pharmaceutical completed the final round of share repurchases, acquiring 12.06% of the equity from three foreign original shareholders. As a result, nearly 90% of Zhongsheng Ruichuang’s shares are now held by its parent company, with only the core team and individual investors remaining as shareholders, making it a completely “in-house” company. The key reason for the investors’ withdrawal was that Zhongsheng Ruichuang’s flu-specific drug, Angladiveir, was launched late and did not sell well, and since there is no longer a market for COVID-19 drugs, the investors saw no short-term profit potential. After enduring seven years, they chose to exit with their investment remaining unchanged.
Detailed Analysis
1. The Failure of the Performance-Based Agreement: From “Gambling on Going Public” to “Complete Repurchase”
During Zhongsheng Ruichuang’s Series C financing in 2022, a performance-based agreement was signed with the investors, which essentially stated: “You (Zhongsheng Ruichuang) must go public by the end of 2024; otherwise, I (Zhongsheng Pharmaceutical) will have to buy back your shares.” Zhongsheng Ruichuang failed to meet this deadline, and since then, Zhongsheng Pharmaceutical has repurchased shares in five rounds from institutions such as Huzhou Jingxin and Yifeng Capital, until all shares from the three foreign shareholders (Southern Orchard, Snow Owl, and BioTrack) were acquired. Now, there are virtually no external investors left on Zhongsheng Ruichuang’s board of directors, meaning the parent company has taken full control of the company.
2. Why Did the Investors Decide to Withdraw Resolutely? After Seven Years, They Left with Their Investment Unchanged
These three foreign institutions were not short-term players: Southern Orchard and Snow Owl were original shareholders from the Series A financing in 2018, while BioTrack joined in 2019 with an initial investment of $32.34 million. They received $28.26 million upon exiting, meaning they neither made a profit nor a loss. Why didn’t they wait for the flu drug to become more popular?
- Late Launch: Angladiveir was expected to be launched around 2024 but was not until May 2025, missing the deadline set by the agreement.
- Poor Sales: Despite being launched during the flu season, Angladiveir did not perform well in the market; its revenue in 2025 amounted to only 64.7 million yuan, which is less than a fraction of the sales of the imported drug Zofluzimab.
- Lack of Profit Potential: With the COVID-19 market fading and intense competition in the flu drug sector, the investors saw no chance of making a profit in the short term, so they chose to withdraw.
3. The Flu Drug’s Poor Performance: Why Didn’t Doctors and Patients Buy It?
Angladiveir was developed under the leadership of Academician Zhong Nanshan and targeted a novel mechanism. However, its poor sales were due to several practical issues:
- Complex Dosage: While other domestic flu drugs (such as Qingfeng’s Masulavir) and imported Zofluzimab require only one dose, Angladiveir needs to be taken for five days, which patients found inconvenient.
- Low Awareness: Doctors were accustomed to prescribing the older drug Oseltamivir or the imported Zofluzimab, and Angladiveir did not receive sufficient academic promotion in hospitals, leading to low recognition among doctors.
- Weak Distribution Channels: In October 2025, less than 10% of Angladiveir’s sales came from offline channels (hospitals and pharmacies), meaning many patients could not obtain the drug. On e-commerce platforms, Zofluzimab had over 20,000 purchases, compared to just over 5,000 for Angladiveir, indicating a significant gap in market presence.
4. Are There Still Opportunities in the Future? The Flu Season Is Approaching, but Challenges Remain
With the flu season approaching in 2026, does Zhongsheng Ruichuang still have a chance to turn things around?
- Opportunities: Angladiveir has been included in the medical insurance coverage, offering a price advantage over Zofluzimab ($265) and Masulavir ($186), with the Yunnan medical insurance price at $144.9.
- Challenges: The company needs to address distribution and awareness issues—promoting the drug among doctors in hospitals and increasing consumer awareness. Otherwise, even during the flu season, it may still struggle to compete with established drugs and imported products.
In summary, although Zhongsheng Ruichuang has returned under the control of its parent company, it still needs time to build distribution channels, boost market recognition, and regain investors’ confidence to make its flu drug successful.
5. The “Side Story” of the COVID-19 Drug: A Missed Opportunity
During the pandemic, Zhongsheng Ruichuang developed a COVID-19 oral drug called Ruitrewe, which received significant attention and led to a Series C financing of 370 million yuan. However, by the time Ruitrewe was approved in 2023, the COVID-19 market had cooled down, resulting in limited revenue and failing to help Zhongsheng Ruichuang meet its performance-based agreement goals. This highlights the risks associated with betting on future trends: by the time your product is ready, the market focus may have shifted.
This news article reflects the common challenges faced by innovative pharmaceutical companies: long development cycles and high market uncertainty. Even if a product is approved, it may not sell well. The investors’ withdrawal was not due to the quality of the drug but rather the lack of short-term profitability. Zhongsheng Pharmaceutical’s responsible decision to complete the share repurchases without conflict is commendable, but the real challenge lies in how to successfully market the flu drug.