2025 Healthcare Capital Reshuffle: 'The Strong Get Stronger' Fails

Cai Jun from Investors' Network

As 2025 draws to a close, China's healthcare industry is undergoing a profound transformation that touches its very foundations. This transformation has not been marked by dramatic industry upheavals or disruptive policy shifts, yet it is quietly reshaping the trajectory of the industry’s development. The capital operations of listed companies serve as the most vivid and concentrated manifestation of this change.

In the past, the rules of the capital game in the healthcare sector were clear: frequent mega-deals, dominance by financial conglomerates, and the supremacy of scarce resources. The belief that 'the strong get stronger' was an underlying principle upheld by the market.But in 2025, all of this is reversing — large transaction amounts continue to shrink, and the players at the capital table have shifted from cash-rich giant conglomerates to a more diversified group of market participants. The once unshakable logic of growth is showing cracks.

At the same time, this transformation is also giving rise to new opportunities. As the industry landscape loosens, smaller and medium-sized listed companies, previously overlooked, are gradually emerging as value investment opportunities. This has attracted various types of capital, including state-owned enterprises, traditional industrial entrepreneurs, and internet newcomers, triggering a major reallocation of resources. Fundamentally, the core shift in the healthcare industry's capital transactions in 2025 lies in 'shrinking certainty and expanding uncertainty'.The profit-making strategies, expansion paths, and competitive barriers that were once visible and tangible are gradually losing effectiveness; meanwhile, future directions, competitive landscapes, and value growth points are becoming increasingly unclear.

Changing of the Guard: Shift in Leading Capital Players and Shrinking Deal Sizes

The capital transactions in the healthcare industry in 2025 can best be summarized by the phrase 'changing of the guard.' The capital stage, once dominated by giants such as the CR Group, Haier Group, and Sinopharm Group, has now ushered in new leading players. The shrinking deal sizes and diversification of transaction participants together paint a picture of profound changes in the industry's capital trends.

Looking at the ranking by transaction value, among the significant capital operations of listed companies in the healthcare industry in 2025, Shanghai RAAS, Baili Tianhe, and Kanghua Bio ranked in the top three with transaction amounts of approximately 4.2 billion, 3.76 billion, and 1.85 billion yuan respectively. Behind these seemingly substantial figures lies a notable reduction in deal sizes — a comparison with 2024 data reveals that last year's top three deals had significantly higher values.

More notably, there has been a fundamental change in the identity of the parties involved in these transactions over the two years. In 2024, the top three players were all giant enterprises with massive funds and the ability to deploy full industry chain strategies. Their transactions mainly involved large-scale acquisitions aimed at quickly securing key resources and expanding their industrial footprint.Among the top three deals in 2025, Shanghai RAAS's $4.2 billion transaction involves acquiring assets in niche markets, Baili Tianhe's $3.76 billion is a private placement primarily for innovative drug R&D investment, and Kanghua Biotech transferred control equity to bring in new capital partners. None of these companies are traditional giant conglomerates; some are even innovative pharmaceutical enterprises that have yet to achieve stable profitability.

Specifically, Shanghai RAAS’s $4.2 billion deal is the acquisition of 100% equity in Nanyue Biological Pharmaceutical Co., Ltd., a significant step in advancing its 'plasma expansion' strategy. As a core member of Haier Group’s large health industry sector, Shanghai RAAS has been pushing forward with a dual strategy of 'plasma expansion' and 'plasma divestment' since being taken over by the Haier Group in 2024. Nanyue Biological, the only blood product manufacturer in Hunan Province with a GMP license, operates nine single-donor plasma stations and collected 278 tons of plasma in 2024, with a designed capacity of up to 500 tons. This acquisition will directly increase Shanghai RAAS's plasma collection volume by more than 18%, while expanding its number of single-donor plasma stations in Hunan to 12, capturing a key share of the local market of 17 plasma stations.

Baili Tianhe is a 'dark horse' in the medical capital market in 2025. Despite not having achieved stable profitability, this innovative pharmaceutical company successfully completed a private placement financing of over $3 billion, briefly pushing its market value past the $10 billion mark. The primary use of this private placement is to fund innovative drug R&D, focusing on advancing pipelines in areas like oncology and autoimmune diseases. Meanwhile, Baili Tianhe has resubmitted its prospectus to the Hong Kong Stock Exchange and successfully passed the hearing, aiming to further broaden its financing channels through a listing in Hong Kong.

Kanghua Biotech’s $1.85 billion deal involved a transfer of controlling equity. The original controlling shareholder Wang Zhen滔 and his concert parties transferred their 21.91% stake to Shanghai Wankexin Biotechnology Partnership (Limited Partnership) and also entrusted the voting rights of the remaining 8.08% shares, allowing Wankexin Biotech to collectively hold 29.99% of the voting rights, becoming the new controlling shareholder of the company.

Apart from the top three deals, there were three other capital operations involving medical listed companies in 2025 with transaction values exceeding $1 billion: Dizhe Medicine raised approximately $1.796 billion through a private placement to focus on clinical R&D of innovative drugs in the oncology field; Fosun Pharma acquired part of Luye Pharma’s equity for $1.412 billion to bolster its product line in neurodegenerative diseases; and Shiyao Innovation acquired Jushi Biologics for $1.1 billion to strengthen its biopharmaceutical R&D and production capabilities. These six transactions, each exceeding $1 billion, totaled approximately $13.118 billion, compared to $25.45 billion in the same period in 2024, representing a contraction of more than half.

This reduction in transaction values and change in players at the table completely contradicts the long-standing perception of capital operations in the healthcare industry. In the past, large groups rapidly integrated industry resources, seized technological high ground, and expanded production capacity through a dual approach of 'acquisitions + private placements,' intending to build insurmountable industry barriers. Smaller enterprises mainly focused on private placements to raise funds for breakthroughs in niche technologies, rarely participating in large-scale capital games.However, in 2025, this pattern was completely disrupted: large groups entered a dormant phase, while small and medium-sized enterprises, especially innovative pharmaceutical companies, gained more attention and support in the capital market.

On a deeper level, the dormancy of large groups was not an active choice but rather stemmed from the 'aftereffects' of previous large-scale cross-industry acquisitions—requiring time and capital to digest goodwill pressures brought by those acquisitions, sort out non-core assets, and optimize industrial structure.

In stark contrast to the 'contraction' of large groups, small and medium-sized enterprises, particularly innovative pharmaceutical companies, managed to leverage capital scale in the new industry cycle. With the continuous deepening of the strategic buyer role within the healthcare insurance system, the market value of innovative drugs has been further recognized, and capital began shifting from traditional mature pharmaceutical firms to smaller enterprises with core technologies and innovative pipelines.

The belief in 'the strong getting stronger' collapsed: fundamental logic loosened, and the dilemma of 'big but not strong' emerged.

The shifts in the healthcare industry's capital markets in 2025 go beyond changes in transaction amounts and parties; more profoundly, they have significantly challenged the entrenched perceptions of all market participants—The once widely held belief in the 'the strong get stronger' logic collapsed entirely this year. Giant companies that relied on capital acquisitions for rapid expansion found themselves trapped in an awkward situation of being 'large but not strong.'

For many years, the healthcare industry's capital operations revolved around a core underlying principle: scarcity is king. Whether in blood products, vaccines, or high-end medical equipment sectors, all were under strict regulation, with core licenses, production qualifications, and clinical resources having extreme scarcity. The market generally believed that large, well-funded conglomerates could quickly acquire these scarce resources through massive acquisitions, further increasing industry concentration, ultimately creating a 'the strong get stronger' industry landscape.

The blood products industry is a quintessential example of this logic. Since 2021, major conglomerates such as CR Pharma, Haier Group, and Sinopharm Group have intensified their investments in the blood products sector, acquiring controlling stakes in leading companies like Boya Bio-pharmaceutical, Shanghai RAAS, and Pailin Biotech for substantial sums.

This 'scarcity equals stability equals the strong getting stronger' logic applied not only to the blood products sector but also to the vaccine sector.

But in 2025, this once sacrosanct underlying logic underwent a fundamental mutation. Those giant enterprises that had previously seized scarce resources through large-scale acquisitions not only failed to build a 'the strong get stronger' moat but instead fell into the embarrassing situation of being 'large but not strong'—with expanding scale but no corresponding increase in profitability or core competitiveness, and even showing signs of decline.

Data provides the most straightforward evidence. In the first three quarters of 2025, several leading listed companies in the blood products industry reported varying degrees of performance declines: Shanghai RAAS’s revenue reached 6.091 billion yuan, a year-on-year decrease of 3.54%; Hualan Biological’s revenue was 3.38 billion yuan, down 3.2% year-on-year; Pailin Biotech’s revenue stood at 1.618 billion yuan, decreasing by 14.4%, the sharpest drop; Boya Bio-pharmaceutical’s non-GAAP net profit attributable to shareholders was merely 210 million yuan, down 37.55% year-on-year, with profitability significantly shrinking. Notably, behind these listed companies, one can mostly find the presence of major conglomerates: Shanghai RAAS belongs to the Haier Group, Boya Bio-pharmaceutical to CR Pharma, and Pailin Biotech has deep ties with Sinopharm. The once highly anticipated combination of 'giants plus scarce resources' now delivered disappointing results, causing the belief in 'the strong get stronger' to lose its foundation.

The market had assumed that well-funded conglomerates would leverage ample financial resources and comprehensive industrial chain layouts to further solidify the advantages of scarce resources, achieving dual improvements in scale and profitability. However, reality showed that after completing these acquisitions, these giants failed to effectively integrate resources. Instead, they faced multiple challenges such as goodwill impairment, rising management costs, and intensifying market competition, resulting in continuously declining profitability. More importantly, the external environment of the industry underwent profound changes, with the former advantage of 'scarcity' gradually eroded by imported products and technological innovations.

Ultimately, the collapse of the belief in 'the strong get stronger' reflects a fundamental shift in the industry's development logic. In the past, the healthcare industry's growth mainly relied on resource-driven and scale-driven strategies, with capital acquisitions serving as the core path for corporate expansion. However, in 2025, the industry is transitioning towards innovation-driven and quality-driven growth. Simply relying on capital acquisitions to seize scarce resources can no longer sustain development. Those giant enterprises that focus solely on scale expansion while neglecting core technology R&D and internal management optimization are inevitably falling into the predicament of being 'large but not strong,' and the belief in 'the strong get stronger' will inevitably collapse along with the shift in industry logic.

Certainty turns into uncertainty: value opportunities emerge and capital reallocates.

When the market's faith collapses, those listed companies experiencing declining performance and operational pressures inevitably find themselves on the capital trading table.

The change in control of Kanghua Bio is a typical example of this trend. In November 2025, Kanghua Bio announced that the original controlling shareholder, Wang Zhen滔, and his acting-in-concert parties transferred 21.91% of their shares to Shanghai Wan Kexin Biotechnology Partnership (Limited Partnership) and also entrusted the voting rights of the remaining 8.08% shares, making Wan Kexin Bio the new controlling shareholder.

Kanghua Bio’s case is not an isolated one. In 2025, an increasing number of underperforming medical listed companies became value troughs targeted by capital, with changes in control becoming a common industry phenomenon. According to statistics, throughout 2025, there were more than 10 cases of control transfers among medical industry listed companies, including Asia-Pacific Pharmaceuticals, Duorui Pharmaceuticals, Mankind Pharma, and Talon Pharmaceuticals, with combined transaction amounts exceeding 4 billion yuan. These companies generally face issues such as declining performance, insufficient R&D capabilities, and funding shortages, but they also possess certain core technologies, production qualifications, or advantages in niche markets, categorizing them as “short-term pressure, long-term value” opportunities.

The essence of these changes in control reflects both the survival choices of small and medium-sized pharmaceutical enterprises under dual pressures of policy and market, and the inevitable result of industrial capital reallocating resources. Small and medium-sized pharmaceutical enterprises face greater operational pressures: insufficient R&D investment, weak product competitiveness, shrinking market share, and difficulty in coping with challenges brought by industry transformations. For these enterprises, transferring control to bring in new capital and management teams, securing support in terms of funds, technology, and channels, has become a crucial path for sustaining business life and achieving transformational development.

For acquirers, investing in these value troughs represents optimism about the long-term development prospects of the medical industry while aiming to obtain core resources at low costs to achieve cost-effective expansion. The background of the acquiring parties in 2025 shows diverse characteristics, covering state-owned asset platforms, traditional industry companies, and new internet players, breaking the previous pattern where only companies within the medical industry participated.

The entry of new internet players has injected fresh vitality into the medical industry. Xinghao Holdings, which took over Asia-Pacific Pharmaceuticals, is controlled by Qiu Zhongxun, the founder and CEO of Yaodou.com, specializing in pharmaceutical digital industries. This acquisition aims to achieve synergistic development between 'pharmaceutical digital industry + physical pharmaceutical enterprises', optimizing various aspects of enterprise R&D, production, and sales through digital technology, improving operational efficiency and market competitiveness. The participation of new internet players not only diversifies the capital entities in the medical industry but also promotes its digital transformation, accelerating the integration of 'internet + healthcare'.

In essence, the 2025 capital landscape of the medical industry has been thoroughly reshuffled: participants have shifted from single large conglomerates to diversified capital entities; the underlying logic has evolved from 'scarce resources rule, the strong get stronger' to 'innovation-driven, value-oriented'; and the market structure has transitioned from 'dominated by certainty' to 'highlighting uncertainty'. This reshuffle did not happen overnight but is an inevitable outcome of the industry’s development reaching a certain stage, and also a necessary step for the medical industry to transform towards high-quality development. (Produced by Think Finance)

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