Summary of Key Points
The pharmaceutical sector in Hubei has shown a clear divergence in performance due to factors such as the expansion of centralized procurement and fluctuations in the global supply and demand for raw materials: leading companies in distribution have maintained stability through their scale advantages; companies specializing in high-barrier drugs, unique raw materials, and innovative biopharmaceuticals have seen counter-cyclical growth; traditional Chinese medicine (TCM) brands are trying to transform under pressure; while some traditional chemical and raw material companies are still working to reduce losses and recover. At the same time, companies are seeking breakthroughs through diversified strategies and innovative research and development, and Hubei itself is planning to develop a globally influential healthcare industry.
I. Divergence in Market Segments: Some Growing Stably, Others Still Struggling
The performance of pharmaceutical companies in Hubei is like a rollercoaster, with significant differences across different segments:
- Leading Distributors: Centralized Procurement is a Boost
As a national pharmaceutical distributor, Jiuzhoutong benefits from the large volume of medicines it needs to deliver under centralized procurement, allowing it to handle more business. Its revenue in the first half of 2026 was 87.2 billion yuan, an increase of 7.6%, with a growth rate of 8.7% in the second quarter, making it one of the few companies in the industry to show stable growth.
- High-Barrier Specialty Drugs: Not Affected by Centralized Procurement
Renfu Pharmaceutical's anesthetic and psychiatric drugs fall under strict national regulation and are not included in the price-cutting scope of centralized procurement. These drugs accounted for over 30% of its revenue in the first half of the year, with Yichang Renfu holding more than 60% of the domestic market share for anesthetics, serving as a stabilizing factor for its performance.
- Unique Raw Materials: Veterinary Drug Demand Provides a Rescue
Huisheng Biology's tilmicosin raw materials dominate more than half of the global market. With the recovery in veterinary drug demand and rising prices this year, its net profit increased by 75.59%, and its gross margin rose by 15 percentage points, making it one of the fastest-growing companies in the sector.
- Traditional Chemical/Raw Materials: Still on the Path to Loss Reduction
Guangji Pharmaceutical faces overcapacity in vitamin raw materials, resulting in a net loss of 58 million yuan in the first half of the year, although this is 23% less than last year. The main reasons are rising raw material costs and decreased gross margins, which has slowed down its profitability recovery.
II. Centralized Procurement as a Safe Haven: Which Companies Can Avoid Price Cuts?
Not all pharmaceutical companies are affected negatively by centralized procurement. The following types of companies can avoid price cuts:
- Strictly Regulated Drugs: Such as Renfu's anesthetics, which are not included in centralized procurement and thus remain stable in price.
- Innovative Biopharmaceuticals: Heyuan Biology's recombinant human albumin injection is a Class 1 innovative drug approved by the state and is not subject to centralized procurement. Its revenue in the first half of the year was 18.27 million yuan, up 43.7%, and although it still incurred a loss of 62.75 million yuan, the loss was less than in previous years.
- Raw Materials for Non-Pharmaceutical Uses: Huisheng Biology's veterinary drug raw materials are primarily for human use and are not affected by centralized procurement, thus benefiting from the industry's recovery.
III. How Can Struggling Companies Break Through the Challenges? Diversification and Innovation Are Key
Companies are finding ways to overcome difficulties:
- Jiuzhoutong: Beyond Medicine, into Elderly Care and Aesthetics
In addition to traditional distribution, its self-produced and contract-manufactured drugs saw a 24% increase in revenue, and its medical devices and TCM businesses grew by 15%-26%, with the aesthetics segment growing by 64%. It has also collaborated with national elderly care programs to develop a "medicine + elderly care + services" model for the silver economy, extending its business to elderly health management.
- Renfu Pharmaceutical: Investing in Innovative Drug Research
Multiple Class 1 innovative drugs were approved for clinical trials in the first half of the year, with some entering phase two trials. The company has established a pipeline from early research to market approval in areas such as anesthesia, central nervous system, and autoimmune diseases, laying the foundation for future growth.
- Mayinglong: TCM Brands Moving Beyond Single Revenue Sources
In addition to its hemorrhoid medication, Longzhu Ointment's sales increased by 20%, and its Babao Eye Ointment was included in the national essential medicine list. The company is also focusing on the healthcare, children's medicine, and ophthalmic drug markets, diversifying its revenue sources beyond TCM products.
IV. Hubei's Healthcare Development Plan: Where to Go from Here?
During the "14th Five-Year Plan" period, Hubei aims to build a globally influential healthcare industry, with a focus on three key areas:
1. Innovative Drugs: Supporting companies in developing new drugs, with more support for innovative enterprises like Heyuan and Renfu.
2. Precision Medicine: Integrating technology to make healthcare more personalized.
3. Integration of Health and Wellness Services: Combining medical care with elderly care and health management, as demonstrated by Jiuzhoutong's silver economy model.
This indicates that Hubei's pharmaceutical companies will lean towards innovation and services in the future. Traditional companies that do not transform may face elimination.
Conclusion
The divergence in the Hubei pharmaceutical sector reflects a reshaping of the industry. Companies that can leverage innovation, uniqueness, and diversified strategies will survive and even grow, while those that rely on traditional generic drugs and ordinary raw materials will face greater pressure. For consumers, buying medicines may become cheaper due to centralized procurement, but when investing in pharmaceutical companies, it is important to consider whether they have businesses that can avoid price cuts or possess innovative capabilities. After all, only companies that can withstand the impact of centralized procurement and have core competitive advantages will be more stable in the long run.