China National Pharmaceutical Group's net profit increased by nearly 80% behind the scenes: store closures, reduced impairments, and frequent management changes

(Based on Beijing Business Daily)

After provisions for impairment decreased, Sinopharm Holding experienced a significant increase in net profit. On April 1, Sinopharm Holding released its 2025 earnings report: net profit attributable to parent company was 1.14B yuan, a year-on-year increase of 76.8%. Behind this impressive net profit performance was a reduction of 686 million yuan in goodwill and intangible asset impairment provisions, whereas in 2024, impairment provisions reached as high as 970 million yuan, causing net profit to plummet nearly 60% that year. Excluding this factor, the true profitability of Sinopharm Holding still needs verification.

Looking at business segments, the retail sector has been the main factor dragging down overall performance in recent years. In 2025, revenue from this segment declined by 6.16%, and although net profit increased, it still recorded a loss of 217 million yuan. To “stop the bleeding,” China National Pharmaceutical Group has closed over 2,000 stores in two years, reducing the total number of stores from 10,516 to 8,221. Meanwhile, management has been undergoing intensive adjustments. From large-scale store closures to frequent executive changes, Sinopharm Holding seems to be undergoing a deep restructuring.

Narrowing impairment provisions drove a rebound in net profit

Sinopharm Holding’s 2025 annual report shows that during the reporting period, the company achieved operating revenue of 73.42B yuan, a decrease of 1.29% year-on-year; net profit attributable to parent was 1.14B yuan, up 76.8%; net profit after deducting non-recurring items was 1.1B yuan, up 88.53%.

In 2025, Sinopharm Holding’s net profit rebounded sharply, partly due to reduced asset impairment losses. In 2024, the retail segment was affected by industry policy changes and intensified market competition, leading to a decline in performance. The company’s acquisition assets’ operating results fell short of expectations, resulting in a provision for impairment of goodwill and acquisition-related intangible assets (brand rights and sales networks) totaling 970 million yuan, which reduced net profit attributable to the parent by 561 million yuan, recording only 642 million yuan, a decrease of 59.83% year-on-year. In 2025, impairment provisions for goodwill and intangible assets decreased by 686 million yuan year-on-year, directly boosting Sinopharm Holding’s net profit.

From the revenue structure perspective, Sinopharm Holding’s main business is divided into two segments: pharmaceutical distribution and pharmaceutical retail. The distribution business, as the foundation of the overall operation, accounts for over 70% of revenue, achieving 53.32B yuan in 2025, a slight increase of 0.64%; net profit was 949 million yuan, up 2.94%, showing steady performance.

The real issue lies in the retail segment, namely China National Pharmaceutical Group. Since 2024, the retail business’s net profit has shown a clear decline. Revenue decreased by 8.41% year-on-year, and net profit attributable to the parent plummeted by 388.83%, resulting in a loss of 1.07B yuan, directly dragging down the company’s overall performance.

In 2025, the retail segment stabilized somewhat, with revenue reaching 20.98B yuan, down 6.16% year-on-year; net profit still recorded a loss of 217 million yuan, a decrease of 803.6% from the previous year.

Deng Yong, a professor of health law at Beijing University of Chinese Medicine and a doctoral supervisor, pointed out that the decline in Sinopharm Holding’s revenue reflects pressure on growth in distribution and retail core businesses. Profitability improvement is more due to the reduction of historical burdens and cost control, representing a “stop the bleeding” type of recovery rather than strong endogenous growth. The significant improvement in net profit after deducting non-recurring items indicates that the clearance of inefficient stores and initial cost management effects are taking hold, but sustainable profitability still depends on subsequent improvements in store efficiency, product mix, and the true recovery of distribution business.

Regarding performance-related issues, Beijing Business Daily reporters sent interview requests to Sinopharm Holding but had not received a response as of press time.

Large-scale store closures and personnel adjustments

Another reason for the improved net profit is the reduction in rigid costs such as labor and rent resulting from store adjustments. Sinopharm Holding’s annual report shows that in 2025, the company added 61 directly operated stores, closed 1,140 stores, added 65 franchise stores, and closed 334 franchise stores.

Beijing Business Daily noted that at the end of 2023, China National Pharmaceutical Group had over 10,516 stores. In 2024, Sinopharm Holding began large-scale closures, and by the end of that year, the total number of stores was 9,569. As of December 31, 2025, the total number of China National Pharmaceutical Group stores was only 8,221, including 6,691 directly operated stores and 1,530 franchise stores, closing over 2,000 stores in two years.

In its annual report, Sinopharm Holding stated that the company is focusing on optimizing store layout. In 2025, China National Pharmaceutical Group accelerated the “stop the bleeding” process by closing unprofitable stores, initially completing the consolidation of loss-making stores.

Deng Yong pointed out that the chain pharmacy industry is shifting from rapid expansion to a deep adjustment phase focused on quality improvement of existing stores. The industry faces oversupply of stores, online-offline channel shifts, and rising rigid costs for rent and labor. The “opening stores equals profit” model is no longer sustainable, with many low-efficiency stores suffering losses, and the industry entering a phase of active cleanup.

Meanwhile, management has also been undergoing intensive personnel adjustments. On March 18, Sinopharm Holding announced that Vice President Wang Chu had resigned due to work transfer, with Huang Minchun, Chi Guoguang, and Wang Hubiao from Sinopharm Holdings Guangzhou stepping in. Wang Chu had only recently taken office in 2025. More critically, this is the second vice president to leave early within half a year; in November 2025, Chen Changbing, responsible for strategy and M&A, resigned early, despite a planned term until 2027. Over the past year, Sinopharm Holding’s senior management has experienced multiple changes.

Deng Yong emphasized that Sinopharm Holding’s strategy of reducing costs and increasing efficiency through closing unprofitable stores and optimizing network layout is pragmatic and aligned with industry trends. Short-term store closures and personnel adjustments cause some pain, but fundamentally, they are strategic corrections aimed at removing bubbles and improving quality. In the future, the core competition in chain pharmacies will shift to store profitability, supply chain efficiency, and professional service capabilities. Leading companies that complete structural optimization will have stronger resilience through cycles.

Beijing Business Daily Wang Yinhao, Song Yuying