Suzhou Gu Family, clearing out Zhao Yan New Drug inventory?

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Source: Thumb Medicine Brief

There’s quite a bit going on inside

Author: Northwest Geng

Today’s most interesting news in the pharmaceutical sector is about Zhaoyan New Drug. It started Sunday night when Zhaoyan New Drug suddenly announced that shareholders Gu Xiaolei and Gu Meifang plan to reduce their holdings by a total of 30.74 million shares, accounting for 4.1% of the company’s total share capital.

Gu Xiaolei and Gu Meifang are acting in concert, ranking as the fourth and seventh largest shareholders of Zhaoyan New Drug, holding a combined total of 30.74 million shares. This reduction plan essentially means they will completely liquidate their positions.

This caused a stir. On March 17, Zhaoyan New Drug hit the daily limit down. Facing nearly 1 billion yuan worth of share reduction plans, retail investors naturally chose to sell first. Seeing the stock price struggling, the two shareholders issued a supplementary announcement on the evening of March 17, saying they would sell less,

▌Only reducing by 3%, roughly 700 million yuan in cash

Before the Spring Festival, Zhaoyan New Drug experienced some hype over the rising price of experimental monkeys. Although its market value has declined from previous highs, it still remains respectable among CXO companies. A “full clearance” reduction would undoubtedly harm the company, and public opinion quickly focused on the Gu family shareholders.

The Gu family from Taicang, Suzhou, is a well-known family in China’s pharmaceutical industry. Two companies listed on A-shares are closely related to the Gu family: Shutaishen and Zhaoyan New Drug. Over the past few years, the Gu family has been continuously divesting from Shutaishen, while their holdings in Zhaoyan New Drug have fluctuated but generally increased.

Moreover, the Gu family has deep roots with the founders of these two listed companies. Suddenly wanting to clear all their shares suggests there’s more to the story.

1

Behind Taicang Gu’s family is the well-known local township enterprise Xiangtang Group. Gu Xiaolei’s grandfather, Gu Jianping, was the secretary of Xiangtang Village in the 1970s, making his first fortune by processing velvet slippers for Shanghai companies, earning the nickname “Slipper King.” Gu Xiaolei’s father, Gu Zhenqi, is now chairman of Xiangtang Group, and Gu Meifang is Gu Zhenqi’s sister.

The Gu family first entered the biopharmaceutical industry in 2002. Gu Jianping, through Japanese partners, met Feng Yuxia and Zhou Zhiwen, who had started a business in Beijing. Gu Jianping decided to invest 30 million yuan in their pharmaceutical venture, which later became Shutaishen.

Before Shutaishen was established, Feng and Zhou had already founded Zhaoyan New Drug. In 2008, the Gu family invested in Zhaoyan New Drug, forming the current shareholding structure.

Zhaoyan New Drug opened the Gu family’s eyes to biotech investments, as they could provide technical services to downstream biotech firms. Since then, Xiangtang Group has invested in nine biotech companies, including Suzhou Concord, Suzhou Jinmeng Bio, Suzhou Haitbio, and Suzhou Sitanyi Bio, with varying stakes.

All these companies, without exception, became major clients of Zhaoyan New Drug at its IPO.

In fact, the Gu family’s related listed companies are more than just two. In 2014, Xinlitai fully acquired Suzhou Jinmeng Bio, forming Xinlitai Suzhou Pharmaceuticals, and Xiangtang Group exited.

If this pattern continues, Xiangtang Group might become the second Fosun Pharma someday. Especially considering that they didn’t significantly reduce their holdings when Zhaoyan New Drug’s stock was high a few years ago. Why now suddenly want to liquidate everything?

Detailed information isn’t fully available, but some public data can be checked.

On September 7, 2022, the All-China Federation of Industry and Commerce released the “2022 China Private Manufacturing Top 500 Companies.” Xiangtang Group ranked 476th, with reported annual revenue of 13.523 billion yuan, likely referring to 2021.

On September 29, 2023, Jiangsu announced the “2023 Jiangsu Private Enterprise Top 100 List,” with Xiangtang Group at 87th, reporting 2022 revenue of 14.52 billion yuan—an increase from the previous year.

On October 12, 2025, Jiangsu Federation of Industry and Commerce released the “2025 Jiangsu Private Enterprise Top 200,” with 168 companies reporting over 1 billion yuan in revenue. Xiangtang Group ranked 172nd, with reported 2024 revenue of 9.804 billion yuan.

Currently, Xiangtang Group has four main business segments: biopharmaceuticals (top), followed by intelligent manufacturing, financial venture capital, and real estate. The significant revenue changes likely relate to these sectors.

2

Analyzing such a large group is somewhat beyond our expertise, but we’ve previously covered Zhaoyan New Drug multiple times. (See “The Sky is Falling for Zhaoyan New Drug”)

On January 21, Zhaoyan New Drug issued a positive earnings forecast: revenue in 2025 is expected to decrease by 13.9%-22.1% compared to the previous year. However, net profit is expected to increase by at least 1.59 billion yuan, potentially doubling or tripling.

How can profits grow significantly while revenue drops sharply? Zhaoyan New Drug openly states that changes in biological assets’ fair value contribute to net profit,

▌Over 450 million yuan

Here’s a simple explanation: in A-shares, “biological assets” are valued at fair value, which for Zhaoyan New Drug means valuing the monkeys based on market prices at year-end.

Data shows that in 2024, monkey prices declined throughout the year, with nearly 200 million yuan in impairment provisions. At the start of 2025, the biological assets on the books were valued at 383 million yuan. By the end of June, as monkey prices continued to fall, the company recorded an additional loss of 22.14 million yuan.

Moreover, the “current period changes” in the books—sales, disposals, culling—were significantly lower in 2024H2 and 2025H1: about 17 million yuan in 2024H2 and only 7 million yuan in 2025H1.

These figures suggest that until mid-2024, monkey prices and market demand were both declining.

However, according to Zhaoyan New Drug, in the second half of 2025, monkey prices suddenly surged, with fair value jumping over 450 million yuan. Last June, the monkeys were only worth 360 million yuan, so this represents a more than doubling in half a year.

Official procurement info confirms this. One is a single-source procurement notice from