Kelun Pharmaceutical | Q4 Returns to Growth, Synthetic Biology and Innovative Drugs Gradually Deliver Results

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（Source: Shengma Finance）

A dual recovery in performance and valuation

Author | Shengma Finance Xin Zimo

Editor | Ouyang Wen

In 2025, China’s pharmaceutical industry moved forward amid transformation. With multiple factors—including centralized procurement becoming normalized, healthcare reimbursement reform, and fluctuations in end-market demand—stacked together, traditional pharmaceutical companies generally faced growth pressure. Against this backdrop, domestic pharmaceutical leader Kelun Pharmaceutical recently turned in an annual performance report that reflects both pressure and breakthroughs. Its performance not only mirrors industry-wide challenges, but also highlights the company’s strategic resilience.

The disclosed annual report shows that in 2025, Kelun Pharmaceutical achieved full-year operating revenue of RMB 18.51B and attributable net profit of RMB 1.7B. Beyond the surface of short-term performance fluctuations, what deserves closer attention is the strategic focus and innovation breakthroughs behind the company—high-end product growth against the trend, unwavering R&D investment, accelerated commercialization of synthetic biology and innovative drugs, and the harvest period that is now approaching.

Strong performance from high-end products

Q4 returns to the growth track

Kelun Pharmaceutical’s 2025 financial performance can best be summarized as “enduring pressure without losing stability.” Although full-year results fluctuated year over year, the foundation of its core business remains solid, and its financial structure is stable. In particular, the strong rebound in Q4 injects powerful momentum into the company’s subsequent development.

As the company’s founding business, the infusion business in 2025 generated revenue of RMB 7.48B, accounting for 40.4% of total revenue. Meanwhile, non-infusion businesses achieved revenue of RMB 8.87B, and their revenue share increased to 47.90%. Together, the two segments’ combined share of total revenue reached 88.33%, forming the core support for the company’s performance. Notably, the continued rise in the share of non-infusion businesses has become an important signal of the company’s structural transformation.

Regarding the reasons for the full-year performance fluctuations, Kelun Pharmaceutical provided a clear explanation in its annual report: first, the infusion business was affected by the decline in incidence of infectious diseases such as influenza, as well as ongoing healthcare cost-control policies, leading to a downturn in overall market demand; second, prices of penicillin-class products fell year over year, and sales volumes of some products decreased. At the same time, R&D for new products and trial production increased expenses, further squeezing profit margins.

Therefore, if we exclude industry-wide common factors such as overall pressure and place Kelun Pharmaceutical within the industry’s coordinate system, its ability to withstand pressure has become evident and reflects the leading advantage of a flagship company. In addition, from absolute figures, attributable net profit of RMB 1.7 billion still remains at a relatively strong level within China’s pharmaceutical manufacturing industry.

More importantly, Kelun Pharmaceutical’s逆势 growth in high-end products has become an important force offsetting the decline in its traditional business. For example, the in-line product performance of the Ready-to-Use with Multi- Chamber Bag stands out most. As a leading player in the domestic ready-to-use infusion field, Kelun is currently the only pharmaceutical manufacturer in the market that can tackle technical challenges across all three categories of ready-to-use products—liquid-liquid dual-chamber bags, three-chamber bags, and powder-liquid dual-chamber bags—and can also reliably produce and supply them. In 2025, sales of the three-chamber bags for parenteral nutrition reached 11.16 million units, up 30.90% year over year, continuing to maintain a leading position in domestic market share. This growth trend aligns with the year-on-year increase of the same product in the company’s first half of 2025, underscoring the product’s core competitiveness.

In terms of timing, the company’s operating conditions have been gradually repaired and moving in a favorable direction, with a clear turning point arriving in the fourth quarter. The annual report shows that in the single quarter of Q4, the company achieved revenue of RMB 5.24B and attributable net profit of RMB 501 million. Of this, revenue increased 24.8% quarter over quarter, and net profit surged 150.6% quarter over quarter. This also indicates that the company has gradually exited the short-term adjustment period and returned to the growth track.

In terms of shareholder returns, Kelun Pharmaceutical plans to distribute a cash dividend of RMB 4.68 per 10 shares (including tax). Using 1.59 billion shares as the base, the total dividend amount is approximately RMB 744 million, accounting for 43.7% of the company’s attributable net profit. If we consider the dividends already implemented in the first half of 2025, the full-year dividend payout ratio exceeds 55%. By returning value to all shareholders with “hard cash,” the company fully demonstrates its solid operational confidence and its sense of responsibility to shareholders.

“Three-Engine Strategy” deep coordination

Shoring up the foundation for transformation

Kelun Pharmaceutical’s current business layout is not simply expanding into diversification. Instead, it is a coordinated “three-horse carriage” system built on its “Three-Engine-Driven” strategy, where the three support one another and work in concert, laying a solid foundation for the company’s transformation and development.

Specifically, the large-volume infusion business serves as the company’s ballast, contributing stable cash flow every year and providing sufficient funding to support R&D investment and capacity expansion for the other two “carriages.” Biochuan-Ning focuses on antibiotic intermediates and APIs, which is a key move as the company extends its industrial chain upstream—enabling core raw materials to be independently controlled and reducing supply chain risks. Meanwhile, Kelun Biotech focuses on the R&D and commercialization of innovative drugs (especially in the ADC field). It is the biggest source of valuation upside for the company and the core carrier for achieving a transformation from “scale-driven” to “innovation-driven.”

The “Three-Engine-Driven” strategy mutually supports one another and provides solid assurance for the company’s innovation investment. In 2025, Kelun Pharmaceutical’s R&D spending reached RMB 2.2 billion, and R&D expenses as a percentage of sales revenue were 11.91%. With continued high-intensity R&D investment, the company has driven breakthroughs across multiple technical areas. Among them, ADC drugs made a crucial leap from clinical breakthroughs to full-scale commercialization—making Kelun the leader in the global TROP2-ADC track. In the field of synthetic biology, leveraging Biochuan-Ning, the company completed a landing from technical breakthroughs to ton-level mass production, opening a new blue ocean in the pharmaceuticals and healthcare sector with green, high-value-added products.

To further enhance core competitiveness, Kelun Pharmaceutical is also actively laying out artificial intelligence technology. It integrates AI deeply into the entire process, including synthetic biology R&D, fermentation control for large tanks, and optimization of small-scale lab processes—achieving improved production efficiency, reduced energy consumption, and cost optimization through intelligent control and route optimization, thereby further consolidating the company’s competitive advantages in the market.

At present, technological innovation has become an accelerator for converting into commercial value. For example, in synthetic biology, several synthetic biology products under the company—including dihydroartemisinin? (This seems like a mismatch) — actually: “red fever? (red r…?)”—wait: the text says “红没药醇、5-羟基色氨酸、麦角硫因.” These multiple synthetic biology products have already achieved scaled production and market sales, making them among the very few synthetic biology companies in China that have truly completed end-to-end delivery from R&D to product commercialization.

These breakthroughs have driven the company to experience a turning point toward structural optimization: in 2025, the share of non-infusion formulations rose to 47.9%, which is 7 percentage points higher than the share of infusion business. This change indicates that Kelun Pharmaceutical has officially said goodbye to reliance on a single infusion business and has taken a key step toward transforming into “coordinated development across multiple businesses,” with a significant enhancement in its ability to withstand risks.

Innovative drug breakthroughs

Opening a new growth cycle

In 2025, Kelun Pharmaceutical’s innovative drug strategy entered its “submission phase,” with ADC drugs leading the way and the innovation transition moving into a harvest period. The ADC drug being developed by Kelun Biotech, Lurcon? (actually “芦康沙妥珠单抗”): Lufkansatu?—the text is: “芦康沙妥珠单抗（佳泰莱®，代码SKB264）,” received approval in 2025 for a lung cancer indication. It became the world’s first TROP2 ADC drug approved in the field of lung cancer treatment, filling a clinical gap and pushing China’s treatment for EGFR-mutant drug resistance into a new ADC stage.

At present, the SKB264-related方案? (it’s “方案”) has been included in the 2025 edition of the “CSCO Non-Small Cell Lung Cancer Diagnosis and Treatment Guidelines” and the 2025 edition of the “Chinese Medical Association Lung Cancer Diagnosis and Treatment Guidelines.” Clinical value has received authoritative recognition. And the approval of SKB264 is meaningful for Kelun far beyond the commercial level. First, it is proof of technical strength. Competition in the TROP2-ADC track is extremely fierce, with multiple global pharmaceutical companies developing similar products. Kelun Biotech managing to be first to the line indicates that its ADC technology platform has reached international first-tier standards.

Second, it represents a reconstruction of the valuation framework. Before this, the market’s valuation of Kelun Pharmaceutical was mainly based on the infusion business and Biochuan-Ning. Although Kelun Biotech has a pipeline, it lacked commercialized products, making its value difficult to quantify. But as new drugs continue to be launched, its innovative drugs business gains revenue and valuation anchors.

As Lancon? (the text is “芦康沙妥珠单抗（佳泰莱®）、塔戈利单抗（科泰莱®）、西妥昔单抗 N01（达泰莱®）、博度曲妥珠单抗（舒泰莱®）”) are approved one after another—four products—in 2025 they achieved sales of RMB 543 million. With expansion of indications and inclusion in medical insurance access, sales of this category of innovative drug products are expected to scale up rapidly in the future.

Even more worthy of attention is the progress in internationalization. Kelun Biotech’s cooperation with Merck & Co. (MSD) was one of the largest outbound licensing transactions in China’s biopharmaceutical history. In 2022, the two parties reached licensing cooperation for three ADC pipelines. Merck & Co. owns the global rights to SKB264 (excluding China), and it advances clinical trials worldwide. If overseas approvals are granted, Kelun will receive milestone payments and sales sharing. This “borrowing a ship to go abroad” strategy is Kelun’s smart move: internationalization of innovative drugs requires huge investment, a global clinical network, and overseas commercialization teams. Kelun Biotech chose to cooperate with Merck & Co., focusing itself on R&D and manufacturing, which is a pragmatic internationalization path.

In terms of pipeline layout, Kelun Biotech’s ADC platform has formed a rich product matrix. In addition to SKB264 and A166 that have been launched, multiple other products are in clinical stages. SKB315 (CLDN18.2-ADC) is used to treat gastric cancer and has entered Phase II clinical trials; SKB410 (Nectin-4-ADC) is used to treat urothelial cancer and has entered Phase I clinical trials; SKB518 (EGFR-ADC) is used for non-small cell lung cancer and is at the preclinical stage. This tiered layout ensures continuity in the company’s innovative drug business. Even if one product fails, other products will keep advancing. As long as one product succeeds, it may generate substantial revenue.

Shengma Finance believes that, as the ADC market grows rapidly and synthetic biology continues to deliver effectively, they are jointly driving Kelun Pharmaceutical to achieve a dual recovery in performance and valuation. Going forward, with the support of innovation-driven momentum and internationalization layout, Kelun is expected to take a leading position amid structural changes in the pharmaceuticals industry, achieving simultaneous improvement in performance and corporate value.

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