Fang Tonghua Steps Down, Yan Jiujiang Takes the Helm: How Does Zhenbao Island Stabilize Its Foundation Amid Growing Pains?

After Fang Tonghua stepped down, how will the industry network continue to empower Zhenbaodao?

Produced by | Zhongfang.com

Reviewed by | Li Xiaoyan

On March 13, Heilongjiang Zhenbaodao Pharmaceutical Co., Ltd. (hereafter “Zhenbaodao,” 603567.SH) issued a significant announcement. The company’s founder, Fang Tonghua, resigned from all his positions as chairman, director, and member of all specialized committees due to health reasons. After his resignation, he no longer holds any position in the company. On the same day, the board of directors elected internal senior manager Yan Jiujiang as the new chairman and convener of the Strategy and Investment Committee, with the legal representative also updated accordingly. This seemingly smooth leadership transition not only marks the company’s formal entry into a new management phase but also carries deep expectations for industry cycle navigation and a second rise.

As the “soul figure” of Zhenbaodao, Fang Tonghua’s career is deeply intertwined with the company’s development. Born in 1963, he has dedicated nearly four decades to the traditional Chinese medicine industry. Holding a master’s degree, he has served as a graduate tutor at Heilongjiang University of Chinese Medicine, combining professional expertise with industry vision. In 1987, he entered the pharmaceutical distribution sector in Harbin, gaining solid industry experience in herbal procurement. In 1996, he founded Heilongjiang Zhenbaodao Pharmaceutical Co., Ltd., beginning his entrepreneurial journey.

Over the past thirty-plus years, Fang Tonghua has led the company with foresight and insight: in 2011, promoting the company’s shareholding reform to lay the foundation for capitalization; in 2015, helping Zhenbaodao successfully list on the Shanghai Stock Exchange main board, achieving a leap from a local pharmaceutical enterprise to a publicly traded company. During his tenure, he served as chairman for a long time and also as general manager for many years, overseeing the entire value chain from product R&D and manufacturing to market expansion. He built a diversified industrial structure covering Chinese medicine preparations, chemical formulations, pharmaceutical commerce, and herbal industry, establishing three major production bases in Harbin, Hulin, and Jixi, with 21 production workshops and 43 modern production lines, making Zhenbaodao one of the industry benchmarks.

Although he is stepping down from all management roles, Fang Tonghua has already laid a solid foundation for the company’s future development. Through direct holdings of 20 companies and indirect holdings of 47 companies, he has formed an industry network spanning pharmaceutical technology, medical investment, and herbal cultivation. His long-term industry resources and strategic experience will continue to silently empower the company’s growth. This “retreat” appears more like a transitional arrangement for the founder to step back from the spotlight, reflecting rational health considerations and long-term planning for corporate governance normalization and sustainable development, paving the way for the new leadership.

Unlike many listed companies that appoint external executives, Yan Jiujiang’s succession exemplifies “internal inheritance.” Born in 1978, he joined Zhenbaodao in 2006, starting from the grassroots workshop supervisor, and has worked in core positions such as production, operations, deputy general manager, executive general manager, and general manager assistant. Since 2019, he has served as director and general manager, participating fully in the company’s development and transformation.

This solid internal background sends a clear signal: Zhenbaodao chooses stability as its priority, ensuring strategic continuity and operational stability. Against the backdrop of industry reforms such as normalized centralized procurement, strengthened medical insurance cost control, and intensified competition in innovative drugs, an internally grown leader is more likely to sustain existing strategies and quickly implement them. Yan Jiujiang’s deep familiarity with the company’s production system, market channels, and operational management will effectively prevent volatility caused by management changes, providing a strong guarantee for stable operations and challenge response.

In fact, Yan Jiujiang has already demonstrated excellent management ability. During his tenure as general manager, he promoted deepening marketing reforms, emphasizing precise and thorough channel development, establishing scientific dealer selection mechanisms, and advocating “controllable channels and visible terminals.” He led the marketing team to work collaboratively, effectively stabilizing the market during industry pressure periods. With his promotion to chairman, he will oversee strategic planning and investment layout, leveraging his industry insight and internal management advantages to push for upgrades in traditional Chinese medicine business and breakthroughs in new growth paths.

This leadership change reflects Zhenbaodao’s proactive response to industry cycles and risk clearing. In 2024, the company maintained steady operations, with revenue of 2.707 billion yuan and net profit attributable to shareholders of 438 million yuan, also announcing a cash dividend of 1.5 yuan per 10 shares, demonstrating responsibility to shareholders. However, entering 2025, due to policy adjustments, delayed centralized procurement of Chinese patent medicines, and other factors, the company faces temporary operational pressure.

According to the company’s earnings forecast, net profit attributable to shareholders in 2025 is expected to turn loss of 1.012 to 1.173 billion yuan. The core reasons include: first, sales of key products did not meet expectations, with both prices and volumes declining, leading to about a 53% decrease in revenue and a 93% drop in gross profit; second, rising accounts receivable risks, with some customers delaying payments, resulting in an estimated credit impairment loss of about 395 million yuan; third, inventory asset impairments, with the realizable value of inventories decreasing, leading to an impairment provision of about 266 million yuan.

Despite short-term performance pressures, Zhenbaodao’s fundamentals remain stable. As of the third quarter of 2025, total assets reached 11.797 billion yuan, with shareholders’ equity of 7.287 billion yuan, providing a solid base for future adjustments. More importantly, this performance fluctuation is a phase in industry cycles, not a sign of declining core competitiveness. Facing the pressure, Zhenbaodao proactively recognized impairments and fully released risks, adopting transparent governance to respond to market changes and clearing obstacles for future lighter operations.

Currently, China’s pharmaceutical industry is transitioning from rapid growth to high-quality development. Policies such as the “High-Quality Development Plan for the Chinese Medicine Industry (2026-2030)” have created new opportunities. For Zhenbaodao, the key task for the new management is to consolidate its traditional core business while exploring new growth engines to achieve “steady growth and breakthroughs.”

Traditional Chinese medicine remains Zhenbaodao’s “stabilizer.” The company has a comprehensive production system and a rich product pipeline covering lyophilized powder injections, oral solid preparations, Chinese medicine decoctions, and more, with scalable manufacturing capacity. Going forward, Yan Jiujiang will lead the team to focus on core varieties, strengthen brand credibility through evidence-based medicine research, optimize product structure, and increase the proportion of high-end products; simultaneously, he will deepen supply chain reforms, implement strategies of “opening markets in the off-season and supplying markets in the peak season,” to reduce costs through scale effects and improve market responsiveness.

Diversification will become the company’s “new growth engine.” Relying on the industry network built during Fang Tonghua’s era, Zhenbaodao has already expanded into pharmaceutical technology and medical investment. Future plans include further promoting industry collaboration beyond “Pi Bai” (note: adjusted to pharmaceutical industry chain collaboration considering the Chinese medicine context), strengthening channel connectivity and resource sharing, and exploring new scenarios in the health industry. The company will also continue increasing R&D investment in innovative drugs, introducing promising product pipelines, and building a “traditional Chinese medicine + innovative drugs + health” diversified business model to enhance resilience through industry cycles.

Additionally, ongoing optimization of corporate governance will support development. With Yan Jiujiang’s leadership, the company will further improve decision-making mechanisms, enhance strategic execution efficiency, focus on quality and efficiency in core businesses, and strictly control operational risks. Leveraging shareholder resources and platform advantages, the company will deepen digital transformation and improve operational management, injecting internal momentum for high-quality growth.

The smooth leadership transition from Fang Tonghua to Yan Jiujiang signifies the maturity of Zhenbaodao’s governance and marks the beginning of a new chapter for the company’s cycle navigation and renewal. Fang Tonghua’s over thirty years of dedication has laid a solid industry foundation and brand base; Yan Jiujiang’s succession will bring steady management and clear strategy to help the company face challenges and seize opportunities.

Short-term performance pain is an inevitable part of industry transformation and an opportunity for asset optimization and quality improvement. The impairment of goodwill will help Zhenbaodao shed historical burdens and embrace industry recovery with a lighter footprint. As policies favoring traditional Chinese medicine continue to release benefits and corporate integration yields results, a pattern of “solidifying core business and making multiple breakthroughs in new areas” will gradually form.

As a key player in the Chinese medicine industry, Zhenbaodao’s transformation and upgrading reflect the development direction of China’s pharmaceutical industry. In the wave of high-quality development, companies must adhere to their core businesses, innovate cautiously, respond to fluctuations with cyclical thinking, and traverse downturns with long-term vision to achieve steady progress.