Fang Tonghua disembarks, Yan Jiujiang takes the helm: How does Zhenbao Island stabilize its fundamentals amid the pain?

Ask AI · After Fang Tonghua’s resignation, how will his industrial network continue to empower Zhenbao Island?

Produced by | Zhongfang Network

Reviewed by | Li Xiaoyan

On March 13, Heilongjiang Zhenbao Island Pharmaceutical Co., Ltd. (hereinafter referred to as “Zhenbao Island”, 603567.SH) released a significant announcement. The company’s founder, Fang Tonghua, officially resigned from all positions as chairman, director, and member of the board’s specialized committees due to health reasons, and will no longer hold any positions within the company after his resignation. On the same day, the company held a board meeting and unanimously elected internal general manager Yan Jiujiang as the new chairman, who will also serve as the convener of the Strategic and Investment Committee, with changes to the legal representative completed simultaneously. This seemingly smooth personnel transition not only marks the official entry of this leading traditional Chinese medicine enterprise into a new management phase but also carries deep expectations for navigating industry cycles and achieving a second leap.

As the “soul figure” of Zhenbao Island, Fang Tonghua’s career is deeply intertwined with the company’s development. Born in 1963, he has dedicated nearly forty years to the traditional Chinese medicine industry, holding a master’s degree and having served as a graduate advisor at Heilongjiang University of Chinese Medicine, embodying both professional depth and industry vision. In 1987, he entered the pharmaceutical distribution field, engaging in raw material procurement in Harbin, thus accumulating solid industry experience; in 1996, he founded Heilongjiang Zhenbao Island Pharmaceutical Co., Ltd., embarking on the company’s entrepreneurial journey.

Over the past thirty years, Fang Tonghua has led the company forward with vision and insight: in 2011, he promoted the company’s shareholding reform, laying the foundation for capitalizing; in 2015, he assisted Zhenbao Island in successfully listing on the Shanghai Stock Exchange, achieving a leap from a local pharmaceutical company to a public enterprise. During his tenure, he served as chairman for a long time, and also held the position of general manager for many years, leading the full-chain layout of the company from product development and manufacturing to market expansion, constructing an industrial pattern that includes diverse business segments such as traditional Chinese medicine preparations, chemical preparations, pharmaceutical commerce, and raw material industries. The company established three major production bases in Harbin, Hulin, and Jixi, creating 21 production workshops and 43 modern production lines, becoming one of the benchmark enterprises in the traditional Chinese medicine industry.

Despite resigning from all management positions, Fang Tonghua had already solidified the company’s foundation for development. He directly controls 20 enterprises and indirectly holds shares in 47 enterprises, forming an industrial network covering pharmaceutical technology, medical investment, and raw material cultivation. His long-accumulated industry resources and strategic experience will continue to empower the company’s development in an implicit manner. This “stepping back” is more like a transitional arrangement for the founder to retreat behind the scenes, reflecting a rational consideration of his health status, and also showcasing the long-term consideration for promoting standardized corporate governance and achieving sustainable development, paving the way for the new leader.

Unlike many listed companies that parachute in executives, Yan Jiujiang’s succession exemplifies “internal succession.” Born in 1978, he joined Zhenbao Island in 2006, starting as a workshop director at the grassroots level, and has since engaged deeply in core positions such as production and operations. He has held roles including production vice president, executive general manager, assistant general manager, and vice president, and has served as a director and general manager since 2019, participating fully in the company’s development and transformation.

This solid internal background conveys a clear message: Zhenbao Island chooses to prioritize “stability,” ensuring strategic continuity and operational stability. In the context of deep transformations facing the industry, such as normalizing collective procurement, strengthening medical insurance cost control, and intensifying competition for innovative drugs, an internally grown leader is more likely to continue the company’s existing strategy and quickly advance execution. Yan Jiujiang’s deep familiarity with the company’s production system, market channels, and operational management will effectively avoid the fluctuations that come with changes in management, providing a solid guarantee for the company’s stable operations and response to challenges.

In fact, Yan Jiujiang has already demonstrated exceptional management capabilities. During his tenure as general manager, he promoted deep marketing reforms, proposed solidifying detailed investment attraction, establishing a scientific agent selection mechanism, emphasizing “controllable channels and visible terminals,” and fostering collaborative efforts among the marketing team, which effectively stabilized the market during industry pressure. Now stepping up as chairman, he will comprehensively coordinate the company’s strategic planning and investment layout, relying on his profound understanding of the industry and internal management advantages to drive breakthroughs for Zhenbao Island in consolidating and upgrading traditional Chinese medicine business while exploring new growth paths.

The personnel transition behind this is Zhenbao Island’s inevitable choice to actively respond to industry cycles and achieve risk clearance. In 2024, the company will still maintain steady operations, achieving operating revenue of 2.707 billion yuan and a net profit attributable to shareholders of 438 million yuan, and will implement a cash dividend plan of 1.5 yuan per every 10 shares, reflecting its responsibility to shareholders. However, entering 2025, the company faces phased operational pressure due to multiple factors such as industry policy adjustments and delays in the collective procurement of traditional Chinese medicines.

According to the company’s performance forecast, the net profit attributable to shareholders is expected to suffer a loss of 1.012 billion to 1.173 billion yuan in 2025, shifting from profit to loss. The core reasons for the loss stem from three aspects: first, core product sales did not meet expectations, with some products experiencing a dual decline in price and sales, resulting in a year-on-year revenue decrease of about 53% and a drastic year-on-year decline in gross profit of 93%; second, the risk of accounts receivable has increased, with delayed payments from some clients leading to a credit impairment loss of about 395 million yuan; third, inventory asset impairment occurred, with the realizable value of inventory declining, leading to a provision for impairment of about 266 million yuan.

Despite short-term performance pressure, Zhenbao Island’s fundamentals remain solid. As of the third quarter of 2025, the company’s total assets reached 11.797 billion yuan and shareholders’ equity stood at 7.287 billion yuan, providing a solid support for subsequent adjustments with ample asset scale. More importantly, this performance fluctuation represents a phase-specific challenge under the industry cycle and does not indicate a decline in the company’s core competitiveness. In the face of pressure, Zhenbao Island actively provisions for impairments and fully releases risks, responding to market changes with a transparent governance attitude, clearing obstacles for subsequent agile progress.

Currently, the Chinese pharmaceutical industry is at a critical juncture of transforming from rapid growth to high-quality development. The traditional Chinese medicine sector welcomes favorable policies such as the “High-Quality Development Plan for Traditional Chinese Medicine Industry (2026-2030),” offering new opportunities for enterprise development. For Zhenbao Island, the core challenge for the new management team is to explore new growth engines while consolidating its traditional main business, achieving the dual goals of “stabilizing growth and seeking breakthroughs.”

The traditional Chinese medicine business remains Zhenbao Island’s “ballast.” The company has a complete production system and a rich product pipeline covering multiple dosage forms such as freeze-dried powder injections, oral solid preparations, and traditional Chinese medicine decoction pieces, possessing large-scale production capabilities. In the future, Yan Jiujiang will lead the team to focus on core varieties, strengthen brand scientific endorsement through evidence-based medical research, optimize product structure, and enhance the proportion of high-end products; at the same time, deepen supply chain reforms, practicing the strategy of “opening markets in the off-season and supplying markets in the peak season,” reducing costs through economies of scale and enhancing market response speed.

Diversified layout will become the company’s “new growth engine.” Relying on the industrial network established during Fang Tonghua’s era, Zhenbao Island has laid out in fields such as pharmaceutical technology and medical investment, and will further promote industrial synergies beyond the pharmaceutical industry chain, strengthening channel communication and resource sharing, and exploring new scenarios in the health industry. Additionally, the company will continue to increase investment in innovative drug research and development, introducing products with significant potential, and building a diversified business pattern of “traditional Chinese medicine + innovative drugs + health,” enhancing resilience across industry cycles.

Furthermore, the continuous optimization of the corporate governance system will safeguard development. As Yan Jiujiang takes full command, the company will further improve decision-making mechanisms, strengthen strategic execution efficiency, focus on enhancing the core business quality and efficiency, and strictly control operational risks. At the same time, leveraging shareholder resources and platform advantages, it will deepen digital transformation and improve operational management precision, injecting endogenous momentum into the company’s high-quality development.

From Fang Tonghua to Yan Jiujiang, the smooth transition of leadership marks the maturity of Zhenbao Island’s governance and the starting point for the company to navigate cycles and embark on a new journey. Fang Tonghua’s more than thirty years of dedication has laid a solid industrial foundation and brand base for the company; Yan Jiujiang’s takeover will lead the company to face challenges and seize opportunities with steady management and clear strategy.

The short-term performance pain is an inevitable path during the industry’s transformation period and an opportunity for the company to optimize assets and enhance quality. The risk clearance in the form of goodwill impairment will allow Zhenbao Island to shed historical burdens and embrace industry recovery with a lighter posture. As the policy dividends for the traditional Chinese medicine industry continue to be released and the effects of enterprise integration gradually become apparent, a pattern of “stable traditional main business and multiple breakthroughs in new business” will gradually take shape.

As an important force in the traditional Chinese medicine industry, Zhenbao Island’s transformation and upgrading reflect the development direction of China’s pharmaceutical industry. In the wave of high-quality development, enterprises can only achieve lasting stability by adhering to their main business, being cautious in innovation, responding to fluctuations with a cyclical mindset, and traversing valleys with a long-term perspective.