Another pharmaceutical OEM giant is in trouble! This time it's Xiuzheng Pharma

Question AI · Private Label Model Will It Follow the Same Path as Xiuzheng Tang?

This year’s “3.15” has once again brought a veteran private label giant into the spotlight.

On March 13, media discovered that on platforms like Pinduoduo and Taobao, many products labeled “Xiuzheng” are actually unrelated to Xiuzheng Pharmaceutical. Instead, they are produced through private labeling. For example, the “Xiuzheng Little Gold Bottle Black Hair Tablets,” which claim that “three bottles can turn white hair black,” and the “Xiuzheng Yimu Grass Glycerin Gel” focusing on “pelvic floor muscle tightening,” are all private label products.

Further investigation revealed that the threshold for private labeling “Xiuzheng” products is surprisingly low: it only costs about 15,000 yuan to set up an online store under the “Xiuzheng” brand and sell your own products.

Over the past 20 years, Xiuzheng Pharmaceutical has built its brand reputation through OTC drug advertising and marketing. However, today’s “Xiuzheng” is no longer the same as before. Many consumers place orders under the “Xiuzheng” name, but what they receive may be private label products that Xiuzheng Pharmaceutical has not reviewed.

“Conscientious medicine, trustworthy medicine, choose Xiuzheng medicine, effective medicine.” This once-familiar advertising slogan now sounds particularly jarring.

Huge Private Label Revenue

Media reported a store called “Xiuzheng Kelinfei Specialty Store” selling the “Xiuzheng Little Gold Bottle Black Hair Tablets.” The seller promised that one bottle would show results, and three bottles would completely change white hair. However, many consumers reported no effect after use.

Another product, branded as “medical-grade” and marketed for “pelvic floor muscle tightening,” called “Xiuzheng Yimu Grass Glycerin Gel,” has sold over 50,000 units in a store named “Jin Zhi Yan Health.” But in reality, it is just a “Xiaogao” antibacterial product, with no relation to treating pelvic floor muscle relaxation.

Jienshi Bureau found that these two products are sold in many online shops at relatively high prices. For example, “Xiuzheng Black Hair Tablets” range from 56 to 95 yuan per bottle, with the highest-selling store having sold over 5 million bottles; “Xiuzheng Yimu Grass Glycerin Gel” costs between 16 and 38 yuan, with the highest sales reaching 1.09 million units.

Searching “Xiuzheng Pharmaceutical” on the Black Cat Complaint Platform, there are currently 166 complaints, including issues like no effect after use and suspected false advertising. Many of these complaints concern private label Xiuzheng products.

How do so many false advertisements and inferior products get the Xiuzheng trademark?

Red Star News investigation shows that Xiuzheng Pharmaceutical’s licensing has two modes: one is authorizing distributors to open online stores under the “Xiuzheng” brand, which is a form of affiliation, costing about 15,000 yuan, with the seller responsible for their own product costs; the other is entrusting factories to produce, which costs more, with the brand owner reviewing the factory and product qualifications.

“The first method is the cheapest way, everyone does it,” a licensing staff member revealed. After obtaining authorization, companies can open stores under “Xiuzheng XX Specialty Store” and operate 8 to 15 stores on different e-commerce platforms.

Xiuzheng Pharmaceutical has attempted to go public more than once but has yet to succeed. The company’s business structure remains largely unknown. A comparable case is Renhe Pharmaceutical, which also relies on private labeling. In 2020, Renhe disclosed that the company’s revenue was about 5 billion yuan, with roughly half from self-developed products and half from OEM private label products.

Compared to that, Xiuzheng Pharmaceutical is a “giant” in the pharmaceutical industry. In 2016, it ranked first among private Chinese pharmaceutical manufacturing companies. By 2023, its revenue reached 67.73 billion yuan, nearly twice that of Qilu Pharmaceutical, three times Hengrui Medicine, and 14 times Renhe Pharmaceutical. Even if private label business accounts for only 10%-20% of total revenue, it still contributes 6.7 to 13.5 billion yuan annually, far exceeding the revenue of typical innovative drug companies.

Private Label Business Extends to Other Fields

Xiuzheng Pharmaceutical’s success relies on the “Harbin Medicine Model,” which involves heavy TV advertising.

Initially, Xiuzheng advertised on Tonghua TV, achieving excellent results; “Taihe Shenggan Capsules” alone generated 37 million yuan in output that year. In 1998, Xiuzheng launched “Stada Shu,” and began running continuous TV ads on CCTV for “Stomach pain, acid, bloating? Use Stada Shu,” which quickly grew from a few million yuan in annual sales to 800 million yuan.

With a few flagship products, Xiuzheng’s performance soared. Xiuzheng Laigui also appeared on the Hurun Rich List in 2007 and remained Jilin Province’s richest for several years.

But the era of TV advertising has long passed, and the OTC market has become more fragmented and competitive. Relying on advertising to create star products is no longer sustainable. Under this context, Xiuzheng found another shortcut — through private labeling, quickly monetizing its accumulated brand value— without building factories or R&D, just “selling trademarks” for steady income.

After Xiuzheng Laigui’s son took over, Xiuzheng Pharmaceutical was no longer satisfied with just private labeling. In 2024, “China Medical News” exposed the “Xiuzheng Future Smart Pharmacy” project. This project is an authorization from Xiuzheng Group to Hainan Qingxiu Digital Pharmacy Health Industry Group, allowing them to promote using the “Xiuzheng” trademark.

The project is simple: a smart medicine vending machine, with sales staff promising that an investment of about 70,000 yuan to buy a machine can generate over 60,000 yuan in annual profit sharing, with a 10-year ongoing split. However, many investors not only failed to receive the promised dividends but also lost their entire investment.

In 2025, Xiuzheng Laigui recounted an incident during an interview. When he first took over the pharmaceutical factory, he tried to capture the market with “Tianma Pills.” The cost was 2 yuan, but the market price was only 1.7 or 1.8 yuan because the low-cost Tianma Pills contained no Tianma—materials were fake.

He chose a different approach, making genuine Tianma Pills, priced just 5 cents below the market. “That’s when our conscience medicine was born.”

Now, Xiuzheng, which once carved out a path with genuine ingredients, is being gradually undermined by its own authorized private label merchants. At the end of last year, Tongren Pharmaceutical was publicly criticized for its “Prawns Oil” private label product, forced to issue an apology and conduct self-examination. Will Xiuzheng Pharmaceutical be the next?

Written by: Li Ao

Edited by: Jiang Yun, Jia Ting

Operations: Li Mzi

Illustration: Visual China

Statement: Original content by Jiankeshu, please do not reproduce without permission.