Twice planning for a change of ownership within four months, the control of Baihua Pharmaceutical faces new turbulence

(Source: Beijing Business Daily)

In less than four months, Baihua Pharmaceutical (rights protection) has once again reached a crossroads of changes in control. On March 30, Baihua Pharmaceutical issued an announcement stating that its controlling shareholder and actual controllers, Mi Zaiqi, Mi Enhua, and Yang Xiaoling, are in the process of planning a share transfer agreement, which may lead to a change in control. Just three months earlier, Baihua Pharmaceutical had also announced that it was planning a control transfer; however, it was terminated because the parties failed to reach an agreement. After resuming trading, the stock price hit the limit down for two consecutive trading days.

Baihua Pharmaceutical’s path of capital operations has been fraught with difficulties. It started from trading and then went through the information industry and the energy sector. In 2016, it transformed into a pharmaceutical company, but it fell into a low point because its acquisition of Huawei Pharmaceutical failed to meet performance expectations—over a two-year period, cumulative goodwill impairment exceeded 1.5 billion yuan. After the Mi family of the Xinjiang “Hualing Group” took control in 2019, Baihua Pharmaceutical’s performance was somewhat restored. However, as a small- to mid-sized CRO company, it still faces concerns such as intense competition pressure from leading companies like WuXi AppTec, as well as large cash collection pressure and high levels of accounts receivable.

Reinitiating the control transfer

The announcement shows that on March 30, Baihua Pharmaceutical received notice from its controlling shareholder and actual controllers, Mi Zaiqi, Mi Enhua, and Yang Xiaoling, stating that the three are planning a share transfer agreement. This matter may lead to a change in the company’s control. Baihua Pharmaceutical’s stock was suspended from trading starting from the market open on March 31, and the expected suspension period will not exceed 2 trading days. The announcement also notes that the equity agreement transfer is still under discussion, and there is still uncertainty.

Just three months earlier, Baihua Pharmaceutical had just been planning a control transfer. At the end of December 2025, Baihua Pharmaceutical issued an announcement stating that its controlling shareholder and actual controllers, Mi Zaiqi, Mi Enhua, and Yang Xiaoling, were planning a share transfer agreement, which may lead to a change in the company’s control; the company’s stock was suspended from trading starting from the market open on December 29, 2025. However, in the end, because the controlling shareholder and the actual controller and the transaction counterparty failed to reach an agreement on major matters related to the control change, they decided to terminate the plan to change control. Baihua Pharmaceutical’s stock resumed trading starting from January 7, 2026. After resuming trading, the stock price of Baihua Pharmaceutical hit the limit down for two consecutive trading days.

It is understood that in April 2019, Hualing Industry & Trade (Group) Co., Ltd. (hereinafter referred to as “Hualing Group”) took over 19.86% of Baihua Pharmaceutical’s equity, becoming its controlling shareholder. And one of the actual controllers currently involved in the planned transfer of control, Mi Enhua, is the founder of the enterprise group of the Xinjiang “Hualing Group.” Mi Zaiqi is the son of Mi Enhua and Yang Xiaoling.

In March 2024, Baihua Pharmaceutical announced that the registered capital of Hualing Group, its controlling shareholder, increased from 500 million yuan to 1.1 billion yuan. Through controlling Hualing Group, Mi Zaiqi, the sole controlling shareholder of Hualing Holding, newly became one of Baihua Pharmaceutical’s actual controllers. At that time, the market interpreted this change as the formal entrance of the second generation of the Xinjiang “Hualing Group” onto the stage.

As a family second-generation member, Mi Zaiqi had only entered the core of decision-making for two years, and within a short period, the family planned to change control twice, urgently seeking an overall exit. Zhuliang Jun, a pharmaceutical industry analyst, pointed out that the previous transfer failed because it “couldn’t be worked out”; in fact, the continuous limit-down after the resumption of trading squeezed the stock bubble. This time, with less than four months between the two events, the restart indicates that both sides have found a balance in the new proposal. Looking at it more deeply, the company’s revenue increased only slightly by 0.66%, while operating cash flow sharply dropped by 62%, highlighting growing pressure in fundamentals. When the controlling shareholder chooses to seek an exit again at this time, it can be understood as a “stop-loss” move before the value of assets shrinks further.

Regarding the matters related to this share transfer, Beijing Business Daily reporter sent an interview inquiry letter to Baihua Pharmaceutical. As of the time of publication, no response had been received.

From commerce to information, energy, and then pharmaceuticals

In the years before the Mi Enhua family took over Baihua Pharmaceutical, the company’s main business and equity structure had undergone multiple changes.

Originally named “Baihua Village,” in the early stage of its listing, Baihua Pharmaceutical’s main businesses were small-scale commercial activities such as department store retail, catering, and trading. In 2002, Baihua Pharmaceutical acquired 51% of the shares of Guangzhou Xintuo Technology Development Co., Ltd. By gaining control of that company, it directly entered the information industry and established a development direction with information industry as the main focus and traditional industries such as catering as supplementary, and its performance also briefly rebounded.

But the good times did not last. In 2004, Baihua Pharmaceutical fell into losses again, and around 2007 it began transforming into the energy industry. In its 2007 annual report, Baihua Pharmaceutical mentioned that given an unfavorable situation—its main business was not prominent, its sustained profitability was weak, and the company still faced significant operating pressure—it established the main-business transformation direction through asset restructuring, injecting coal assets with promising market development prospects. According to Baihua Pharmaceutical’s 2010 annual report, “With the completion of the second restructuring, the company has formed a complete industrial chain, from coking coal mining and washing to the production of coke, urea, and other coal chemical products.”

However, after two consecutive years of large losses in 2014 and 2015, coupled with unclear development prospects, from the end of 2015 to the beginning of 2016, Baihua Pharmaceutical—having moved through multiple industries—started yet another new asset restructuring plan.

In 2016, Baihua Pharmaceutical acquired Nanjing Huawei Pharmaceutical Technology Group Co., Ltd., transforming into a pharmaceutical enterprise, and also appointed Zhang Xiaoqing, the head of Huawei Pharmaceutical, as general manager. At that time, Baihua Pharmaceutical and Zhang Xiaoqing signed a profit forecast compensation agreement. As the party with the compensation obligation for Huawei Pharmaceutical, Zhang Xiaoqing committed that the net profits attributable to the owners of the parent company after deducting non-recurring gains and losses that Huawei Pharmaceutical achieved in 2016, 2017, and 2018 would be no less than 100 million yuan, 123 million yuan, and 147 million yuan respectively; and that the cumulative net profits attributable to the owners of the parent company after deducting non-recurring gains and losses achieved over the three years from 2016 to 2018 would be no less than 370 million yuan.

The annual report shows that Huawei Pharmaceutical failed to fulfill the related commitments. As a result, in 2017—2018, Baihua Pharmaceutical recorded goodwill impairment for two consecutive years, with total impairment exceeding 1.5 billion yuan. That year, Baihua Pharmaceutical’s net losses were 564 million yuan and 808 million yuan respectively.

After Huawei Pharmaceutical’s performance blew up, Baihua Pharmaceutical’s original controlling shareholder, Xinjiang Production and Construction Corps Sixth Division State-owned Assets Management Co., Ltd., transferred control of the listed company, and the Mi Enhua family took over Baihua Pharmaceutical.

Zhu Kui, an individual in the pharmaceutical investment sector, told Beijing Business Daily that Baihua Pharmaceutical’s history of moving from commerce to information industry, energy sector, and then to pharmaceuticals is essentially a sample of a “shell company” chasing hot trends without strategic resolve. This twisty history can easily leave the market with the impression of “its main business is unstable and it could sell the shell at any time,” resulting in its valuation being discounted for a long time compared with industry leaders.

2025 operating cash flow plunges by more than 60%

During the years under the control of the Mi Enhua family, Baihua Pharmaceutical’s performance has seen big ups and downs. From 2019 to 2024, Baihua Pharmaceutical respectively achieved net profits of 34.38 million yuan, -320 million yuan, 59.8271 million yuan, -34.755 million yuan, 12.9723 million yuan, and 41.479 million yuan.

On March 27, Baihua Pharmaceutical released its 2025 annual report. In 2025, the company realized operating revenue of 388 million yuan, up 0.66%; net profit attributable to shareholders of listed companies was 40.6879 million yuan, down 1.91% year over year; and net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was 32.7858 million yuan, up 10.57% year over year.

From the financial data, over the past three years, Baihua Pharmaceutical’s performance has been relatively stable. However, in terms of business scale, as a small- to mid-sized CRO enterprise, it is difficult to compete with leading companies such as WuXi AppTec and which have revenue over 100 billion yuan, and there is still a considerable gap compared with companies such as Tigermed and BeiGene.

What is more, Baihua Pharmaceutical also faces significant pressure on cash collection. The annual report shows that in 2025, Baihua Pharmaceutical’s net cash flow from operating activities was 30.4186 million yuan, down 62.11% from 2024. The cash coverage ratio of current profits was 0.75, down 1.19 from 1.94 in the same period of 2024. This was mainly due to delayed payments by cooperation partners in pharmaceutical R&D, which increased receivables.

According to the annual report, by the end of 2025, Baihua Pharmaceutical’s accounts receivable increased by 54.06% from the end of 2024 to 125 million yuan, accounting for 11.36% of total assets.

Zhu Mingjun pointed out that Baihua Pharmaceutical cannot compete head-on with giants like WuXi AppTec. Its survival logic lies in focusing in a “high-end generic drugs” niche market with a different positioning. Leveraging the nearly 25 years of accumulation of Huawei Pharmaceutical, it has certain technological “moats” in areas such as chiral synthesis, controlled- and sustained-release formulations, and nasal spray formulations. These high-difficulty generic drug development projects are the “dirty and labor-intensive” work that big companies are unwilling to go deep into, but market demand is still strong. At the same time, the company has a one-stop capability combining “pharmaceutical research + clinical services + bioanalysis,” enabling it to provide more flexible and cost-effective services compared with giants. However, Baihua Pharmaceutical also faces severe challenges: the sharp 62% plunge in operating cash flow reflects enormous pressure from cash collection, and the obvious transmission of tight funding from downstream pharmaceutical companies; leading companies are squeezing the long-tail market by cutting prices. If it cannot improve cash flow and continuously strengthen technology barriers in its sub-sectors, Baihua Pharmaceutical is still unlikely to escape the fate of being marginalized or becoming an acquisition target.

Beijing Business Daily reporter Wang Yinhao and Song Yuying

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