In the past two days, the most interesting thing in the pharmaceutical sector is the CRO leader Zhaoyan New Drug.
The reason is that on Sunday night, Zhaoyan New Drug announced that the fourth largest shareholder Gu Xiaolei and the seventh largest shareholder Gu Meifang (aunt-nephew relationship) planned to liquidate their positions and sold all 30.74 million shares, accounting for 4.1% of the total share capital. The reason for liquidation is just 6 words – own capital needs.
On Monday, March 17, Zhaoyan New Drug's A shares fell by the limit, and H shares fell 11.7%. After the plunge, the stock price has almost halved from its high point at the beginning of the year.
However, what is even more darkly humorous is that when the stock price collapsed, the two quickly "gived up" and urgently revised their shareholding reduction plan that night, changing the liquidation and reduction to a reduction of no more than 3% of the total share capital, cashing out approximately 700 million. This was a show of "knowing mistakes and being able to correct them" that benefited investors.
This kind of operation is almost child's play. Retail investors want to curse and institutions want to laugh. But what’s really worth pondering is: Suzhou Gu’s strategic investment in Zhaoyan New Drug has lasted for 18 years. Gu Xiaolei and Gu Meifang were also directors of the company. Why are they running away now?
The "Slipper King" family reduced its holdings
Gujia in Taicang, Suzhou is well-known in the Chinese medical industry.
Gu Xiaolei's grandfather, Gu Jianping, was the secretary of Xiangtang Village in the 1970s. He started out by processing corduroy slippers for Shanghai companies and was known as the "Slipper King." In 2000, he established Xiangtang Group on the basis of a shoe factory. Through restructuring, it developed into a dark horse private enterprise in Taicang.
The current chairman of Xiangtang Group is Gu Zhenqi, Gu Xiaolei's father. Gu Meifang is Gu Zhenqi’s sister.
The first time the Gu family came into contact with medicine was in 2002. Gu Jianping met Zhou Zhiwen and Feng Yuxia, a couple who started their own business in Beijing through a Japanese partner. Gu Jianping invested 30 million for the couple to make medicine, and this became Shutai Shen.
Before Shutai Shen, Zhou Zhiwen and his wife had already established Zhaoyan New Drug.
In 2008, the Gu family invested in Zhaoyan New Drug, forming today’s shareholding structure. Since then, Xiangtang Group has successively invested in 9 biopharmaceutical companies, all of which became the main customers of Zhaoyan's new drugs in the early stages of their launch.
According to this script, Xiangtang Group may become the second Fosun Pharma given time.
Especially when the share price of Zhaoyan New Drug was at a high level in the past two years, the Gu family did not reduce its holdings in a large proportion. Why is it suddenly being cleared now?
There may be some clues in the public information.
In 2022, Xiangtang Group ranked 476th among the top 500 private enterprises in China's manufacturing industry, with annual revenue of 13.523 billion (2021 data).
In 2023, Jiangsu ranks 87th among the top 100 private enterprises, with revenue of 14.52 billion (2022 data).
By October 2025, Xiangtang Group ranked 172nd on the list of the top 200 private enterprises in Jiangsu, with revenue in 2024 of 9.804 billion.
Xiangtang Group has four major business sectors, with biomedicine ranking first, followed by intelligent manufacturing, financial venture capital, and real estate.
Revenue dropped from 14.5 billion to 9.8 billion. It is not difficult to guess which sector has the problem.
The company’s own people run faster
The Gu family's operation is eye-catching, but in terms of speed, it depends on the company's own people.
Just in January this year, Zhou Zhiwen, the male actual controller of the company, had just made a big move. Through block transactions and centralized bidding, he reduced his holdings by 14.979 million shares and cashed out about 568 million yuan.
Since this reduction, the share price of Zhaoyan New Drug has been falling all the way, with the latest closing price falling 22.72% from the average price of his reduction.
Looking further forward, from September to November 2025, a number of directors, supervisors and senior executives reduced their holdings by a total of 422,400 shares.
It is worth noting that from November 2020 to February 2021, Zhou Zhiwen and Feng Yuxia were issued a warning letter by the Beijing Securities Regulatory Bureau in February 2024 due to excessive reduction of holdings in violation of regulations and a delay of one year and three months in information disclosure.
Counting from the first reduction of holdings in November 2020, Zhou Zhiwen has cashed out a total of approximately 1.52 billion yuan.
The actual controller is running away, the executives are running away, and the old shareholders are running away. The posture of Zhaoyan New Drug is like "the monkey king is rushing to fall from the tree."
Making profits by raising monkeys
Let’s look at Zhaoyan New Drug itself.
On January 21, the company issued a "good performance forecast" announcement. Revenue in 2025 is expected to decrease by 13.9%-22.1%, but net profit will increase by 214%-371%.
This means that Zhaoyan New Drug’s profit growth does not stem from its core service businesses such as drug safety evaluation and pharmacodynamic research.
Why did net profit surge? The secret lies in biological assets.
A-share companies classify living animals as "biological assets" and price them at fair value. The biological assets here at Zhaoyan New Drug are experimental monkeys. At the end of the year, it depends on the market price of the monkey and it is included in the income statement.
At present, Zhaoyan New Drug is one of the CROs with the most self-owned monkey resources in China, and is known as the "Monkey King".
In 2024, the price of monkeys dropped, and Zhaoyan made an impairment provision of nearly 200 million. At the beginning of 2025, the initial value of book biological assets was 383 million. But at the end of June, Monkey was still falling, and another loss of 22.14 million was accrued.
But according to Zhaoyan, in the second half of 2025, the monkey suddenly became a "monkey flying in the sky", and the fair value at the end of the year directly exceeded 450 million. You know, those monkeys in the company were worth only 376 million at the end of June last year, which is equivalent to more than doubling the value in half a year. During the same period, the number of monkeys in the company changed little.
Monkey prices are indeed rising. Procurement information from the Wuhan Institute of Virology, Chinese Academy of Sciences in April 2025 shows that the budget for nine cynomolgus monkeys is 855,000, corresponding to a unit price of about 95,000. In February this year, the Shanghai Institute of Drugs launched a tender with a budget of 62 million for 450 cynomolgus monkeys, and the corresponding unit price has risen to about 137,000.
Superimposed on the natural growth and appreciation of the monkeys themselves, simply speaking, it is the age jump from infant monkeys to young monkeys to experimental monkeys of appropriate age. The value will rise in a stepwise manner, thus jointly promoting the soaring of the fair value of the company's biological assets.
But the problem is that while raising monkeys becomes a resource barrier for the company, it also amplifies the company's vulnerability.
The Troubles of the "Monkey King"
On February 26 this year, "Study Times" published an article, "Actively seize the commanding heights of digital cell technology." It mentions "simulating cells", which is what the FDA promoted last year to gradually cancel animal experiments and shift to AI toxicity prediction and organoid testing.
There is no need to explain what kind of media "Study Times" is.
Coincidentally, there was news in the past two days that Roche planned to buy 2,176 Nvidia chips to expand its AI infrastructure. Sooner or later, the war between China and the United States in the AI competition will burn into the pharmaceutical industry. How much a monkey is worth may not really matter in the future.
Looking at the company's core business, the CRO industry has gradually transformed from Xiaotiantian to Niu Madam in the past few years. There is overcapacity, declining orders, low-price competition is more serious, and the company's gross profit margin has been declining. At the same time, the monkey price is fluctuating again. In 2023 and 2024, the company's net profit plummeted by 63% and 81% respectively.
This is not the worst. In 2025, laboratory services and other main businesses will lose 130 to 210 million yuan, which is the first full-year loss since the company went public. Currently, the company's market value has evaporated by nearly 70% from its 2021 high.
This may be the real reason why the Gu family in Taicang wants to clear their warehouses, and it also heralds a turning point of an era.
However, the recovery of the general environment, the explosion of emerging fields such as antibodies and small nucleic acids, and the improvement of overseas business still retain the possibility of rewriting the outcome.
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