Revenue hits new highs: How is the "No. 1" Chinese medicine stock, Yunnan Baiyao, transforming into a modernized general health enterprise?

Today, Yunnan Baiyao Group Co., Ltd. (hereinafter referred to as "Yunnan Baiyao") has reclaimed the top spot in market capitalization among A-share traditional Chinese medicine (TCM) enterprises, with a closing share price of 52.75 RMB/share and a total market cap of 94.12 billion RMB. This century-old brand, founded in 1902, has provided its answer through a financial report spanning over three decades: since its IPO, operating revenue has grown for 35 consecutive years, rising from less than 0.5 billion RMB in 1992 to 41.187 billion RMB in 2025; net profit attributable to shareholders has climbed from less than 0.1 billion RMB to 5.153 billion RMB in 2025. Against the backdrop of pressure in the TCM industry, this performance is particularly remarkable.

What exactly allows the century-old brand Yunnan Baiyao to sustain a market capitalization of over 90 billion RMB?

The "New Face" of a Century-Old Pharmaceutical Enterprise

Most people's impression of Yunnan Baiyao may still be stuck on "an old pharmaceutical factory selling Baiyao powder," but today's century-old brand is no longer what it used to be. It holds over 500 drug approval numbers and 44 exclusive proprietary Chinese medicines. In the field of proprietary Chinese medicines for skeletal and muscular system diseases, whether in retail pharmacies or public medical institutions, it firmly holds the number one position. According to the annual report, the sales revenue of Yunnan Baiyao Aerosol exceeded 2.5 billion RMB in 2025, and Yunnan Baiyao Plaster exceeded 1.2 billion RMB; the annual sales volume of Qixuekang Oral Liquid exceeded 300 million bottles, with sales revenue increasing by 68% year-on-year.

However, what is even more noteworthy is its "other side." Yunnan Baiyao Toothpaste ranks first in domestic omnichannel market share; Yangyuanqing hair care products generated revenue of 460 million RMB, retaining the top spot on Tmall for domestic anti-hair loss shampoo brands. The four business groups—pharmaceuticals, health products, TCM resources, and provincial pharmaceutical companies—form its operational foundation. In 2025, its industrial revenue reached 16.016 billion RMB, a year-on-year increase of 10.7%, raising its proportion of total revenue to 38.89%. It is evident that the continuous rise in the proportion of high-margin industrial sectors is the true driver behind Yunnan Baiyao's profit growth.

Why is the Century-Old Brand Transforming?

Some might ask, given Yunnan Baiyao's substantial assets and consistently growing performance, why go through such a major transformation? In fact, beneath the surface glamour, Yunnan Baiyao faces numerous challenges.

It can be said that Yunnan Baiyao's transformation involves both proactive foresight and passive pressure.

Yunnan Baiyao possesses a state-level secret formula, which serves as the company's most solid brand moat. However, precisely because of this, it once lacked the urgency to develop innovative drugs. When Yangzijiang declared its first chemical new drug in 2008, and Tasly completed clinical trials and received approval for its first biological new drug in 2011, Yunnan Baiyao had almost no Class I innovative drugs approved in nearly 20 years. In the eyes of investment institutions, Yunnan Baiyao is often categorized as a consumer goods company, with the toothpaste segment's sales approaching the scale of the entire pharmaceutical business group.

Of course, the external environment is also changing. The normalization of centralized procurement for proprietary Chinese medicines, revisions to package inserts, and adjustments to the medical insurance catalog have impacted the sales of several major TCM single products. Since the second half of 2025, while Pien Tze Huang's stock price halved and Tongrentang fell by 40%, Yunnan Baiyao's decline was about 20%. It proved resilient because the "secret" attribute of its core single products is difficult to replace. But being "resilient" does not mean "able to rise." To truly break through its ceiling, Yunnan Baiyao must find new growth curves.

Another 不容忽视 background is that in 2021, Yunnan Baiyao's net profit dropped significantly by nearly 50% due to losses from "stock trading." After the capital market voted with its feet, Yunnan Baiyao learned from its mistakes and returned to its main business. The 2025 results prove this direction was correct, with net operating cash flow reaching 4.6 billion RMB and weighted average return on equity at 13.02%, the highest level in nearly five years.

How to Reconstruct the "New Baiyao"?

Since the direction is set, how should it be executed? Yunnan Baiyao knows well that merely shouting slogans of "transformation" is useless; concrete methodologies are needed. Over the years, it has developed three clear strategies.

Creating new variations from "old medicines." One of Yunnan Baiyao's smartest strategies is to maximize the potential of traditional TCM blockbuster products. Aerosols, plasters, capsules, band-aids, powders... these seemingly "outdated" products have had their clinical value re-proven through evidence-based medical research. Research on using aerosols to treat pain from closed rib fractures received support from provincial major science and technology special projects; Qixuekang Oral Liquid was selected for the National Key R&D Program, conducting multi-center clinical trials focused on vascular aging. Statistics show that there are 18 TCM blockbuster products under development involving secondary development. Retelling the story of TCM using the language of modern science is Yunnan Baiyao's core logic.

Expanding from "pharmaceutical manufacturing" to the "big health" sector. The success of Yunnan Baiyao Toothpaste demonstrated its brand extension capabilities. But its ambition goes further—anti-sensitivity and whitening functional toothpastes are growing rapidly, and the children's toothpaste niche track is growing steadily; in the anti-hair loss care field, Yangyuanqing continues to exert force; in 2025, non-pharmaceutical businesses such as medical devices, cosmetics, and special medical foods saw year-on-year sales growth of 11.7%. In September 2025, Yunnan Baiyao's Smart Factory was selected as a global "Lighthouse Factory," becoming the first in the global TCM health product sector to receive this certification. From pharmaceuticals to daily chemicals, from treatment to care, Yunnan Baiyao is building an all-scenario product ecosystem centered around "health."

Source: Medical Research Society