IPO Radar | Jingxin Pharmaceutical Strives for "A+H" Listing, Sales Investment Significantly Greater Than R&D

Jingxin Pharmaceutical (listed on A-shares with the relevant ticker) has officially initiated the process of dual listing on the A+H markets. According to the prospectus, the funds raised will mainly be used for product development, ongoing drug research, and marketing network expansion. As a company deeply involved in the central nervous system field, its first Class 1 innovative drug, Dadesini capsules, has been launched, aiming to open a new chapter in capital storytelling.

It is worth noting that, in the current environment of normalized industry centralized procurement and external price wars reshaping profit distribution, this established pharmaceutical company faces a conflicting situation. On one side, it has ample cash and financial products, with continuous net inflow of operating cash flow; on the other side, it is willing to accept potential valuation discounts from issuing H-shares to seek incremental funds across markets.

Product Volume Expansion Window

Jingxin Pharmaceutical’s decision to initiate H-share issuance at this time is directly related to the rapid volume increase after the listing of Dadesini. According to hearing materials, this drug is a Class 1 new drug independently developed by the company over ten years, used to treat insomnia. It was approved for market launch by the National Medical Products Administration in November 2023, with the first prescriptions issued domestically in December of the same year. By November 2024, Dadesini was included in the latest national medical insurance catalog, achieving nationwide reimbursement coverage.

Under favorable policy conditions, the commercialization process of new drugs has accelerated significantly: the same year as medical insurance access, Dadesini quickly entered hospital and retail pharmacy channels at all levels, greatly reducing patient burden and laying the foundation for sales growth. It is reported that within a year of its launch, Dadesini has covered key hospitals in major provinces and cities nationwide, and within less than two months, it entered the medical insurance designated hospital list through centralized procurement, enabling rapid conversion from approval to insurance reimbursement. These developments have created favorable conditions for the company’s window of opportunity to list in Hong Kong.

According to the prospectus disclosed by HKEX, Jingxin Pharmaceutical recorded operating revenue of 3.344 billion yuan in the first ten months of 2025, slightly below 3.438 billion yuan in the same period last year. During the same period, the pharmaceutical industry saw a surge in Hong Kong financing. Compared to many biopharmaceutical startups still unprofitable, Jingxin Pharmaceutical’s solid fundamentals—over 700 million yuan in net profit and nearly 50% gross margin—give it an advantage when “transferring boards” to list in Hong Kong.

However, the company’s growth momentum largely depends on Dadesini. Financial data shows that in the first ten months of 2025, revenue from the drug segment decreased by 4.8% year-on-year to 2.009 billion yuan, and raw material drug segment decreased by 3.8% to 698 million yuan. Although sales growth of the innovative drug Dadesini partly offset the decline caused by price cuts of traditional drugs, it still could not fully compensate for revenue gaps caused by price reductions and sales shrinkage of older products.

In other words, the current growth foundation of the company remains weak, with new drugs mainly contributing to slowing the decline rather than driving overall growth.

More notably, Jingxin Pharmaceutical’s innovative product pipeline has yet to form a relay. Besides Dadesini, the fastest progressing pipeline candidate targeting Lp(a) cardiovascular targets is JX2201, which as of the end of 2025 is still in Phase Ib clinical trials domestically. The prospectus discloses that R&D investments from 2023 to October 2025 were 401 million yuan, 383 million yuan, and 290 million yuan respectively, accounting for less than 10% of revenue, still below the 15-20% typical for innovative pharmaceutical companies.

Source: Prospectus

Pharmaceutical researcher Yang Xianze told Jiemian News, “The company is still in an intermediate stage of innovation transformation. Major innovative products are still in cultivation, and except for Dadesini which has been commercialized, other projects have not yet entered revenue stages. In the short term, it’s difficult to form a product matrix like a ‘combination punch’.” The short-term valuation of Jingxin Pharmaceutical now depends less on how many generics it sells and more on whether it can sell its innovative pipeline at a good price, through licensing and cooperation to realize value.

Cost Structure Under Pressure

Although Jingxin Pharmaceutical has stabilized its performance through volume growth of innovative drugs, details of profit quality and cost structure still warrant scrutiny.

From gross profit margin perspective, the overall level has not significantly improved due to the launch of high-margin new products. In 2024, Jingxin’s comprehensive gross margin was 48.5%, roughly unchanged from 49.2% the previous year, and slightly decreased to 48.3% in the first ten months of 2025. This reflects, on one hand, the strategy of price concessions after Dadesini’s inclusion in insurance, exchanging volume for market share; on the other hand, it indicates that price reductions of older products and promotional costs for new products are eroding incremental margins.

Source: Prospectus

Similarly, the gross margin of the drug segment has shown a downward trend affected by centralized procurement—2024’s gross margin dropped from 63.3% to 61.3%, and in the first ten months of 2025, it rebounded to 62.8% but still below historical levels. Despite increased sales volume, profit margins have not improved proportionally, and high sales volume has not translated into higher unit revenue.

In terms of sales collection and expense investment, the company’s operating cash flow and profit growth show some divergence. The annual report indicates that in 2024, Jingxin’s net cash flow from operating activities was 726 million yuan, slightly below net profit for the year, and down from 793 million yuan the previous year.

In the first three quarters of 2025, net cash flow from operating activities was 615 million yuan, roughly aligned with net profit of 629 million yuan. While cash flow remains stable and positive, collection pressure is emerging. Data shows that as hospital sales expand, the trade receivables turnover days extended from 47.7 days in 2023 to 70.7 days in the first ten months of 2025.

Source: Prospectus

The lengthening of customer payment cycles forces Jingxin to extend payments to upstream suppliers to maintain operational turnover, indicating that initial volume-driven sales face capital turnover challenges. In other words, while Dadesini’s rapid expansion boosts revenue, it also puts new pressure on cash flow management, and profits from sales need more real cash inflow to verify their quality.

On the expense side, the “heavy sales, light R&D” characteristic remains prominent. In 2024, Jingxin’s sales expenses reached 692 million yuan, accounting for about 16.6% of revenue; R&D expenses were 383 million yuan, only 9.2%. Sales expenses not only far exceed R&D investments but also increased further with new product launches.

Additionally, as of the end of 2024, Jingxin held 828 million yuan in trading financial assets, all bank financial products, with about 300 million yuan in dividends paid that year. High financial management and generous dividends, combined with increased market investment, may attract investor and exchange scrutiny regarding capital efficiency.

Can Value Be Reassessed?

For Jingxin Pharmaceutical, this H-share listing is not just a financing move but a key step toward valuation reshaping. In the long term, China’s central nervous system disease drug market is broad, with rapidly growing demand for insomnia medications. According to Frost & Sullivan, in 2021, China’s insomnia drug market was approximately 12.28 billion yuan, expected to grow to 15.12 billion yuan by 2025.

Supported by policies, domestically developed innovative drugs entering insurance coverage and achieving rapid volume growth has become a common industry path. However, behind the volume expansion lies a challenge: insurance negotiations often involve significant price cuts in exchange for sales scale, forcing companies to accept lower gross margins for higher sales. Whether they can offset increased costs through scale effects and realize profit growth remains a test of their commercialization capabilities.

Dadesini’s volume growth exemplifies this model—after listing, it entered insurance through negotiations, with prices sharply reduced, but sales quickly ramped up. This has helped the company find new growth points amid centralized procurement squeezing profits of generics, but it also means future growth will rely more on “price-for-volume” external expansion rather than internal price increases.

Compared to peers, boosting valuation with a single new product is not easy. In the insomnia treatment field, both international and domestic companies are accelerating new product launches. In May 2025, Japan’s Eisai’s third-generation insomnia drug Egaros (Leboorexin) was approved in China, followed by the approval of the fourth-generation insomnia drug Daliresen introduced by Chia Tai-Tianqing in June of the same year.

Pharmaceutical researcher Liu Jiaxiang told Jiemian News that in the environment of numerous innovative drug companies listed in Hong Kong and investors demanding “stories,” “without continuous new product launches and sales exceeding expectations, it will be difficult for Jingxin to shift valuation from a generic drug company to an innovative drug company.” Therefore, the company urgently needs to leverage capital operations and performance realization to gain market recognition.

Overall, the volume growth of Dadesini provides a rare opportunity for Jingxin to push for an IPO in Hong Kong, but whether it can achieve higher valuation in the future still depends on the conversion of innovative products into actual performance.