"Herbal Medicine King" reports the worst financial results in ten years: Q4 net profit plummeted by 90%, inventory surged, and the old brand really can't sell anymore? | Traditional Chinese Medicine Rust Belt

Ask AI · Can traditional brands break their reliance on big single products by ramping up R&D spending?

This newspaper (chinatimes.net.cn) reporter Wang Yu, and Zhao Na, Beijing report

With 356 years of history, the “No. 1 traditional Chinese medicine” Beijing Tongrentang (SH:600085, hereinafter “Tongrentang”), delivered its worst performance in nearly a decade in 2025. According to the annual report, the company’s revenue and net profit both declined year over year throughout the year, and fourth-quarter net profit even plunged by more than 90%. Single-quarter non-recurring profit turned from profit to loss; meanwhile, inventory of core products surged sharply, and turnover days rose to the highest level in nearly ten years. Once a shining old brand, Tongrentang now finds itself trapped in a situation where products won’t sell and performance keeps retreating—so what exactly is wrong with Tongrentang?

Q4 net profit plunges 93%

The annual report shows that in 2025 Tongrentang achieved operating revenue of RMB 17.256 billion, down 7.21% year over year. Attributable net profit was RMB 1.189 billion, down sharply 22.07% year over year; the decline expanded significantly compared with 2024’s 8.54%, setting the largest annual drop in the past decade. Non-recurring attributable net profit was RMB 1.147 billion, down 22.57% year over year, with profitability continuing to weaken.

In particular, the fourth quarter became a “danger zone” for the full year’s results: quarterly revenue was RMB 3.948 billion, down sharply 17.02% year over year. Attributable net profit was only RMB 11.8185 million, down 93.29% year over year. Non-recurring attributable net profit turned from profit to loss, with a loss of RMB 15.3982 million—marking the first time in the past 10 years that non-recurring profit was negative in a single quarter. Shi Tianyi, a senior consultant at Junyi Consulting, told Huaxia Times reporters that the loss was driven by one-time large inventory write-downs recognized at year-end (high-priced bezoar) and credit impairment, along with the centralized recognition of expenses such as year-end bonuses, which caused non-recurring net profit to turn to loss. Tongrentang’s board secretary office also told the reporter that financial issues will be communicated during the earnings briefing.

Tongrentang’s sharp decline in performance is influenced both by weaker overall industry demand and directly related to the continued sluggish terminal sell-through of the company’s core products.

As the company’s “performance ballast,” cardiovascular products (including An Gong Niu Huang Wan, Niu Huang Qing Xin Wan, etc.) have long accounted for about one quarter of total revenue. In 2025, however, they suffered a “failure” moment: full-year revenue was RMB 4.093 billion, down sharply 20.46% year over year, becoming the main drag on overall performance.

Specifically, for this segment, full-year sales were 15.3037 million boxes, down 7.05% year over year, ending a three-year growth trend. Inventory volume surged 57.38% year over year to 5.8703 million boxes, with serious stockpiling and overhang.

The second-largest product category by revenue is tonifying and supplementing products. Full-year revenue was RMB 2.360 billion, up 10.94% year over year, but this segment accounts for only 13% of total revenue. Its scale—such as gynecology categories, heat-clearing categories, etc.—is smaller, so it cannot offset the performance gap in the cardiovascular segment.

The capital market response was immediate: the day after the annual report was disclosed, Tongrentang’s share price fell 1.45%. Tongrentang’s share price has kept declining since 2024. The declines in 2024, 2025, and from 2026 to date were 22.43%, 19.42%, and 11.75%, respectively. Compared with the highest price of RMB 61.40 per share in 2023, it has already fallen by more than half. This shows that the capital market has concerns about its reliance on big single products and its long-term growth logic.

Growth engine sputters

An Gong Niu Huang Wan is Tongrentang’s most important growth engine and a key pillar supporting the steady expansion of the company’s performance. During the period from 2021 to 2024, when industry conditions were favorable, by leveraging the “Two Natural” raw material advantages and its century-old brand moat, An Gong Niu Huang Wan achieved both volume and price increases on a sustained basis. It drove the cardiovascular category to maintain double-digit growth for multiple consecutive years, becoming Tongrentang’s most stable source of revenue and profit. But in 2025, the growth engine showed signs of fatigue.

From the perspective of the overall market structure, in recent years although the terminal scale of An Gong Niu Huang Wan has still remained around RMB 5 billion, and Tongrentang holds half of the market share, industry competition has become increasingly fierce. There are 126 companies that can produce An Gong Niu Huang Wan, and among them, those that can produce “Two Naturals” (natural bezoar and natural musk) include Guangyu Yuan, Qianzijang, Daren Tang, and Nanjing Tongrentang. Tongrentang’s position as the single dominant player is being broken.

On pricing, An Gong Niu Huang Wan has long maintained a high price of RMB 860 per piece. Against a backdrop of weak consumer demand, terminal sell-through has been blocked.

Financial reports show that Tongrentang’s inventory turnover days rose from 287.82 days in 2021 to 389.78 days in 2025, the highest in the past decade. In 2025, Yunnan Baiyao’s inventory turnover days were 77 days, and Qianzijang’s were 330 days. Overstocking forms a vicious cycle of “inventory buildup—de-stocking—revenue decline.”

A surge in core raw material costs makes matters even worse. The price of natural bezoar jumped from RMB 430,000 per kilogram in 2020 to RMB 1.65–1.70 million per kilogram in mid-2025, nearly triple the increase; it currently still remains above RMB 1.5 million per kilogram. The gross margin of Tongrentang’s cardiovascular segment fell from 59.96% in 2021 to 49.24% in 2025.

And the fact that An Gong Niu Huang Wan has been pulled from online catalogs in multiple places further “damages” its “drug attribute.” From late 2025 to early 2026, several provinces carried out a cleanup of drug listings. In Shanxi, An Gong Niu Huang Wan was canceled from the list for being “listed but not sold,” and was banned from entry within two years. This round of cleanup was not aimed at a single company; it was a nationwide campaign to rectify “sleeping drugs.” Products that had long relied on the off-hospital market and had no transactions in hospitals were the first to be hit. Behind this phenomenon is the ongoing advancement of healthcare reimbursement payment reforms: the 2024 version of the national medical insurance drug catalog clearly states that Two-Naturals An Gong Niu Huang Wan will not be reimbursed, while the ordinary version is limited to use for emergency inpatient care. Under DRG/DIP cost controls, public hospitals prioritize purchasing drugs with higher cost-effectiveness, and An Gong Niu Huang Wan’s in-hospital market has nearly come to a standstill. Although relevant personnel from Tongrentang told Huaxia Times reporters that canceling its listing would not affect its sales volume, the continued shrinking of its in-hospital channels weakens the product’s clinical authority, causing it to gradually develop toward being treated like a health product, making it difficult to support future growth.

A deeper issue is the company’s overly single product structure and insufficient innovation. Among more than 400 product specifications that Tongrentang has, most are generic medicines with thin profits and lack competitiveness. Meanwhile, the company’s R&D investment is severely insufficient: in 2025, R&D expenses were only RMB 292 million, while selling expenses were as high as RMB 3.532 billion.

Tongrentang’s predicament is a microcosm of the dilemma facing traditional Chinese medicine old brands. Under multiple pressures—including rising costs, tighter policies, consumption upgrading, and intensifying competition—relying only on branding and a handful of big single products is no longer sustainable. To get out of the predicament, Tongrentang needs to break its reliance on big single products, increase R&D investment, optimize its product structure, rebuild its channel system, and return to the core of “quality and efficacy,” so it can regain growth momentum.

责任编辑：姜雨晴 主编：陈岩鹏