The market value of the hundred billion is in jeopardy! After a 20% plunge in profits, how will "Chinese medicine Moutai" ZZPZH turn the tide?

In 2025, the traditional Chinese medicine industry is standing at a new turning point. According to Wind data, in the first half of 2025, among the 69 listed traditional Chinese medicine companies in A-shares, nearly one-third achieved positive revenue growth, and less than half of the companies achieved positive profit growth. At that time, some analysts pointed out that the traditional Chinese medicine industry had entered a turning point, and the golden era of high growth performance supported by exclusive varieties was about to be a thing of the past.

As we reached the third quarter, the "worst ever" third-quarter report from Pien Tze Huang, showing a double-digit decline in both revenue and net profit, further validated this conclusion.

Clearly, price increases are no longer effective, inventory destocking continues, the distribution system is showing signs of fatigue, consumer downgrade is occurring, and high raw material costs are collectively tearing apart the "steady growth" facade.

The growth myth built on price increases and scarcity is gradually collapsing, most directly reflected in the secondary market's vote with their feet. As of the close on October 24, Pien Tze Huang's total market value was only 109.031 billion yuan, evaporating nearly 60% from its peak of 270 billion yuan in 2021.

However, Pien Tze Huang's predicament is not an isolated case but a microcosm of the structural turning point in the entire traditional Chinese medicine industry. The traditional single-product logic and resource dividends are dissipating, and new growth methods are still being explored. The industry must complete a value reshaping during this cyclical adjustment, shifting from price-driven to innovation-driven, from brand premium to systemic competition.

The Myth of "Traditional Chinese Medicine King" Shattered

As of the close on October 24, Pien Tze Huang was priced at 180.72 yuan per share, down 0.42%, with a total market value of 109.031 billion yuan. This is not only a weekly low but also the lowest point in the past four years. It is worth noting that in 2021, Pien Tze Huang's market value once exceeded 270 billion yuan, evaporating nearly 60% in four years.

Of course, the direct reason for this round of decline points directly to the third-quarter report disclosed by Pien Tze Huang on the evening of October 17.

If the performance figures in the 2025 mid-year report still left the secondary market questioning Pien Tze Huang's future profitability, then when the third-quarter report was released, the news of the "Traditional Chinese Medicine King" myth being shattered had almost been confirmed in the minds of secondary market investors.

The financial report shows that Pien Tze Huang's revenue in the first three quarters was 7.472 billion yuan, a year-on-year decrease of 11.9%; the net profit attributable to the parent company was 2.129 billion yuan, down 20.7%; the net profit excluding non-recurring items was 1.891 billion yuan, down 30.4%; and operating cash flow sharply decreased by 62.5%. The third quarter was particularly weak, with revenue of only 2.064 billion yuan, net profit of 687 million yuan, and net profit excluding non-recurring items of 438 million yuan, with year-on-year declines of 26.3%, 28.8%, and 54.6% for the three core indicators, respectively.

This "three-in-one" plummeting financial report has once again focused attention on this well-known "Traditional Chinese Medicine King" in the industry, as the once high-growth myth seems to be being shattered layer by layer by reality.

Looking back over the past few years, Pien Tze Huang's shining moment occurred in 2021. That year, the company's revenue first broke through 8 billion yuan, a year-on-year increase of 23.2%; the net profit attributable to the parent company reached 2.43 billion yuan, a year-on-year increase of 45.46%, setting historical highs in both revenue and profit However, such rapid growth did not continue. By 2022, the revenue, net profit, and net profit excluding non-recurring items of ZZPZH plummeted to single-digit growth rates. In the following two years, the company's performance fell into a "high-low alternating" fatigue: double-digit growth one year, single-digit growth the next. Until the release of the mid-2025 report, when net profit plummeted by 16%, the market speculated that this traditional Chinese medicine leader was about to be pulled back to reality.

In fact, the "thunder" of performance fluctuations had been buried years earlier.

As is well known, ZZPZH's core product, ZZPZH pill, is a type of heat-clearing and detoxifying traditional Chinese medicine, effective in reducing swelling and pain, and protecting the liver. Due to its state-secret formula and rare raw materials, it has become a typical stockpiling product. The natural bezoar and musk in the raw materials are extremely rare, with musk being subject to strict restrictions.

However, scarcity is both a moat and a "wall."

At that time, price increases were almost equivalent to profit growth. Analyses estimated that from 2016 to 2019, the company's ex-factory price increased by 9%, and the retail price increased by 6%, but sales could achieve a year-on-year growth of 92%, far exceeding the price increase. Clearly, the trend of speculative stockpiling drove up demand, which translated into high valuations in the capital market, further amplifying the bubble.

Data source: Wind

According to its third-quarter report, as of September 30, inventory reached 6.16 billion yuan, an increase of over 1 billion yuan compared to December 31, 2024, and accounts receivable exceeded 970 million yuan, increasing by over 23% in nine months.

However, a deeper concern lies in the overly singular product structure. Compared to established traditional Chinese medicine companies like Yunnan Baiyao and TONGRENTANGCM, ZZPZH is clearly lagging in diversification. Whether in health products, cosmetics, or innovative traditional Chinese medicine development, ZZPZH has always focused on the core product of pills, with limited contributions from other businesses.

As the myth of high prices begins to fade, ZZPZH also reveals the fragile reality of excessive reliance on a single product.

From the myth of high prices to the quagmire of performance, ZZPZH's story also reflects a turning point in the traditional Chinese medicine industry. The past model, which relied on exclusive products and brand image, is being reconstructed by new market logic. When raw material costs are hard to reduce, consumption is downgraded, and regulation becomes stricter, traditional Chinese medicine leaders must answer a more fundamental question: Without price increases and speculation, where is the second curve of growth?

Author of this article: Erin, Source: E Pharmaceutical Manager, Original title: "The market value of 100 billion is at risk! After a 20% plunge in profits, how will 'Chinese medicine Mao' ZZPZH turn around?"

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