Summary of Key Points
The price of capuchin monkeys (used as “human substitutes” in pharmaceutical company experiments) has skyrocketed to 200,000–250,000 yuan per animal, which has driven the stock prices of CRO (Contract Research Organization) companies like Zhaoyan New Drug to soar. In just five days, Zhaoyan’s stock price increased by nearly 40%, and its Hong Kong shares even rose by over 20%. However, Zhaoyan’s profits do not come from its main business (pharmaceutical safety evaluation services) but rather from the “paper value” of these monkeys. As the price of monkeys rises, the assets associated with them on the company’s books also increase in value, contributing over 700 million yuan to the net profit—while the main business is actually losing money. Behind this apparent wealth is an imbalance in the supply and demand for monkeys. The company also exposes weaknesses such as a lack of strength in its core business, profits not being supported by cash flow, and major shareholders selling their shares at high prices. Essentially, Zhaoyan remains a cyclical company that relies on monkey-based services for its revenue.
Why Have Monkey Prices Reached Luxury Car Levels?
The increase in capuchin monkey prices is not accidental; it is the result of a severe imbalance between supply and demand:
- Supply Side: There are fewer monkeys available.
There are approximately 220,000 experimental monkeys in China, but only about 30,000 are released for use each year. Worse still, during the peak period of monkey prices from 2019 to 2022, breeding farms sold all the fertile female monkeys that could give birth to reduce their inventory, leading to an aging population of monkeys. With fewer monkeys available for breeding and those that can reproduce having been sold early, the supply cannot keep up in the short term.
- Demand Side: There is a surge in demand for monkey experiments due to new drug development.
By 2025, the number of domestic pharmaceutical clinical trials is expected to exceed 5,000, with a 18% increase in new drug trials. The demand for monkey experiments, especially for emerging drugs like ADC (antibody-drug conjugates) and nucleic acid therapies, far exceeds the supply (annual demand of over 40,000 vs. annual release of 30,000). Official purchase prices have risen from 130,000 yuan to 180,000 yuan, with market transaction prices exceeding 250,000 yuan—more expensive than luxury cars.
Zhaoyan’s Profits: The “Paper Value” of Monkeys Drives All Performance
Zhaoyan New Drug specializes in outsourcing new drug development experiments for pharmaceutical companies. What sets it apart is that it owns 50,000 capuchin monkeys, the largest population in China. These monkeys are recorded as “biological assets” on the company’s books, similar to a house; when housing prices rise, you earn a profit on paper without having to sell the property.
- Profit Source: The increase in monkey prices.
In the first half of this year, Zhaoyan’s revenue barely increased, but its net profit soared by 885%–1377%, thanks to the “fair value change” (paper value increase) of these monkeys, contributing 703 million–777 million yuan. In contrast, its main business (pharmaceutical safety evaluation services) lost money, ranging from a loss of 140 million yuan to a meager profit of 65 million yuan. Essentially, the company’s profits come from the rise in monkey prices, not from its core activities.
- Apparent Wealth Without Real Cash: Last year, Zhaoyan only earned 7.75 million yuan from selling monkeys (at a cost of 11.94 million yuan), selling just a few dozen out of a total inventory of 50,000. These profits are merely figures on paper and do not generate actual cash flow. If monkey prices fall (they dropped to 70,000–90,000 yuan in 2024), Zhaoyan would immediately lose 114 million yuan.
Stock Price Surge: The Capital Market is Speculating on Monkey Prices
Zhaoyan’s stock price has risen significantly faster than its actual performance, reflecting the market’s belief that monkey prices will continue to rise:
- Short-Term Speculation: Investors are buying into the trend due to the perceived inability of the supply and demand imbalance to be resolved in the short term. For example, Zhaoyan’s stock price increased from 39 yuan to 54 yuan, while Bai’ao Situ’s stock rose by over 35%.
- Cyclical Risks: There are precedents for such price fluctuations. In 2024, when monkey prices fell, Zhaoyan’s net profit plummeted by 80%; in 2025, it rebounded by 302%. Stock prices follow the same pattern—current gains could quickly turn into losses if monkey prices reverse.
Zhaoyan’s Hidden Concerns: Weak Core Business and Unsustainable “Paper Wealth”
The rise in monkey prices does not hide the company’s underlying problems:
- Poor Main Business: In 2025, Zhaoyan’s revenue from pharmaceutical safety evaluation services decreased by 17.75%, and its gross margin dropped from 56% in 2017 to 20% in 2025 (a new low since listing). The company claims the industry is highly competitive, but it lacks bargaining power and cannot handle low-price orders, making it difficult to improve its main business.
- Major Shareholder Sales: The original major shareholders, Mr. and Mrs. Gu Xiaolei, sold their shares in March and June of this year during the price rebound, earning 630 million yuan. This indicates that they believe the current stock price already overvalues the company’s future prospects.
- Focus on Financial Investments Over Core Business: By the end of 2025, Zhaoyan’s total investments in financial products and equity amounted to 2.439 billion yuan, far exceeding its annual revenue of 1.5 billion yuan. The company is investing more in finance than in its core business, showing a lack of confidence in its long-term growth.
Conclusion: Zhaoyan Remains a Cyclical Company Relying on Monkeys
The surge in monkey prices has led to significant profits and a soaring stock price, but the company’s nature hasn’t changed:
- It does not earn money through core technologies (safety evaluation services) but rather from fluctuations in monkey prices.
- Profits are merely paper-based and not supported by cash flow.
- The main business continues to lose money, with declining margins and major shareholders selling their shares, indicating significant long-term risks.
In simple terms, Zhaoyan is currently benefiting from the current market trend, but if monkey prices fall, both its performance and stock price will return to reality. It remains a company that depends on monkey-based services and is not truly a “good company.”