Breaking Down Kangmei Pharmaceutical Co., Ltd. Financial Health: Key Insights for Investors

Born in Puning, Guangdong in 1997 when entrepreneur Ma Xingtian founded Kangmei Pharmaceutical, the company quickly evolved-demutualizing in 2000 and listing on the Shanghai Stock Exchange in March 2001 under 600518-before being rocked by a major accounting scandal in 2019 that revealed overstated revenue and profits, triggered regulatory penalties, legal actions and the detention of Ma in July 2020 (he was later sentenced to 12 years in November 2021); despite these setbacks Kangmei still reported a rebound in core performance with revenue of 5.19 billion CNY in 2024 (a 6.47% increase year‑on‑year), maintains operations across Chinese herbal medicines, patent and chemical drugs, health foods, medical devices and logistics, operates GMP‑certified lines covering more than 7,000 products, sells via hospitals, smart pharmacies, OTC retail, chains, direct sales and e‑commerce, markets notable SKUs like Ganmaoling Granule and Qingkailing Capsules, pursues cancer drug R&D in partnership with universities, and as of December 2025 held a market capitalization of roughly 26.69 billion CNY while navigating ownership changes and ongoing governance reforms

Kangmei Pharmaceutical Co., Ltd. (600518.SS): Intro

• Founded: 1997 in Puning, Jieyang, Guangdong by Ma Xingtian.
• Demutualization and corporate restructure: 2000.
• IPO: Listed on Shanghai Stock Exchange in March 2001, ticker 600518.
• Core products: TCM herbal preparations, granules, injections, APIs, OTC health products.
• Primary markets: China domestic hospitals, pharmacies, distributors; some export of APIs and herbal extracts.

• Manufacturing: Owns production facilities for herbal extracts, granules, injections and APIs; follows GMP standards for pharmaceutical output.
• Product development: R&D focused on TCM formulations, quality control of herbal raw materials, and process optimization for extraction and formulation.
• Distribution: Multi-channel distribution network - direct supply to hospitals, partnerships with distributors for pharmacies, and some export sales of APIs and extracts.
• Revenue drivers: Sales volumes of finished medicines and granules, pricing of bulk extracts/APIs, contract manufacturing and distribution margins.

• 1997 - Company founded by Ma Xingtian in Puning.
• 2000 - Demutualization and corporate restructuring ahead of listing.
• March 2001 - Listed on Shanghai Stock Exchange (600518.SS).
• 2019 - Public disclosure of material accounting irregularities; restatements, fines and regulatory scrutiny.
• July 2020 - Founder Ma Xingtian detained amid investigations into fraud and accounting violations.
• November 2021 - Ma Xingtian sentenced to 12 years in prison.
• 2022-2024 - Continued operations with governance reforms and financial recovery efforts; reported 2024 revenue of 5.19 billion CNY (+6.47% vs 2023).
• December 2025 - Market capitalization ~26.69 billion CNY.

• Regulatory and compliance risk following the 2019 disclosures and ensuing investigations.
• Reputational risk affecting hospital procurement and retail trust, especially for TCM products reliant on quality perception.
• Concentration risk if revenue depends heavily on a narrow set of products or distribution channels.
• Operational risk tied to quality control of herbal raw materials and GMP compliance across facilities.

Kangmei Pharmaceutical Co., Ltd. (600518.SS): History

• Founded and developed into one of China's large integrated pharmaceutical and TCM (traditional Chinese medicine) companies, Kangmei Pharmaceutical is publicly traded on the Shanghai Stock Exchange (ticker: 600518.SS).
• The company's growth included manufacturing, distribution, retail pharmacy operations and R&D in both modern pharmaceuticals and traditional Chinese medicine products.

• Ownership structure highlights:
  • Publicly traded company with shares held primarily by public and institutional investors.
  • Founder Ma Xingtian was the largest individual shareholder until his detention in 2020; subsequent shifts in effective control have been reported but detailed percentages are not fully public.
  • Institutional investors (mutual funds, insurance companies, pension-related funds) traditionally hold significant blocks alongside retail shareholders.
  • As of late 2025, specific current ownership percentages and ultimate beneficial owner breakdowns are not comprehensively disclosed in public filings.

• How Kangmei works and generates revenue:
  • Product sales - prescription drugs, Chinese patent medicines, bulk APIs and health supplements to hospitals, pharmacies and distributors.
  • Retail operations - revenues from company-owned or affiliated retail pharmacy outlets and franchisees.
  • Distribution & logistics services - fees and margins from warehousing and distribution for third-party and in-house products.
  • R&D and licensing - income from new product approvals, technology transfers and licensing agreements (typically a smaller share vs. product sales).

• Governance and regulatory context:
  • Post-2018 regulatory actions prompted enhanced compliance, disclosure and audit scrutiny across the group.
  • Demutualization in 2000 and subsequent corporate governance reforms aimed to attract institutional capital and improve transparency.
  • Ownership and control have been shaped by regulatory investigations, management changes and market responses since 2019-2020.

Kangmei Pharmaceutical Co., Ltd. (600518.SS): Ownership Structure

• Core products: Chinese herbal medicines, Chinese patent medicines, chemical medicines, health foods, medical devices.
• Strategic focus: Integration of TCM with modern pharmaceutical R&D; innovation through university and research collaborations (notably projects in Guangdong for TCM drinks).
• Distribution footprint: medical institutions, smart pharmacies, OTC retail, chain drug stores, direct sales, medical e‑commerce, and mobile medical care.
• Vertical scope: operates Chinese medicinal materials markets and a nationwide pharmaceutical logistics system.

• Business model: manufacture and sale of finished TCM products and chemical medicines; trading and processing of herbal raw materials; operation of medicinal-materials markets; logistics and supply-chain services; medical devices and health product sales.
• How it makes money: product sales (domestic hospitals & clinics + retail), distribution/logistics fees, market operation fees, direct-to-patient channels including e‑commerce and mobile services, and licensing/R&D collaborations for novel TCM formulations (including oncology-related projects).
• Strategic partnerships: active research alliances with universities and provincial research institutes (notably Guangdong) to develop TCM beverage formulations and oncology-related treatments.

Kangmei Pharmaceutical Co., Ltd. (600518.SS): Mission and Values

• Mission: Modernize and scale Chinese medicine while ensuring patient safety and healthcare accessibility.
• Values: Quality-first (GMP compliance), R&D-driven product development, collaboration with academia, and multi-channel distribution.

• Business segments: production of Chinese herbal medicines, Chinese patent medicines, chemical medicines, and health-food products.
• Supply chain & sourcing: management of Chinese medicinal materials markets (raw herb procurement, grading and warehousing) to secure upstream inputs and control quality.
• Manufacturing: modern production bases for both Chinese medicine drinks and chemical drugs (core production facilities dedicated to TCM formulations and synthetic APIs/intermediate production).
• Regulatory & quality systems: extensive GMP-certified product portfolio ensuring compliance across manufacturing lines.
• Distribution & logistics: own pharmaceutical logistics systems to ensure cold-chain and regulated distribution into hospitals, pharmacies, and e-commerce platforms.
• Channels to market:
  • Medical institutions (hospitals, clinics)
  • Smart pharmacies and OTC retail
  • Chain drug stores and franchise retail
  • Direct sales and institutional procurement
  • Medical e-commerce and mobile medical care platforms
• R&D collaboration: partnerships with multiple colleges and universities; leads provincial/national projects for Chinese medicine drinks and formulation research in Guangdong and other regions.

• GMP certifications: more than 7,000 kinds of medicines, Chinese herbal medicines and medical equipment have passed national drug GMP certification.
• Production footprint: dedicated modern production bases for TCM drink products and chemical drug manufacturing (multiple sites covering formulation, filling, and packaging operations).
• Product breadth: portfolio spans thousands of SKU across TCM decoctions, patent medicines, chemical APIs/finished drugs, and health supplements.

• Manufacturing margin: revenue from production and sale of finished medicines (TCM & chemical drugs) to hospitals, pharmacies and distributors.
• Raw-material market operations: trading and processing of Chinese medicinal materials, generating procurement/trading margins and ensuring supply security.
• Logistics & distribution services: third-party and internal logistics revenue via pharmaceutical distribution networks and smart-pharmacy systems.
• Direct-to-consumer & e-commerce: sales through medical e-commerce platforms and mobile medical channels capturing retail margin and data-driven repeat purchases.
• R&D-driven new products: licensing and commercializing newly developed formulas and national-new-drug projects (contributes via product launches and lifecycle revenue).

• Integration of upstream raw-material markets with manufacturing to lower input volatility and improve margin control.
• Investment in smart pharmacy and e-commerce channels to capture retail growth and digital health trends.
• Participation in national new drug development projects - leveraging chemical drug production capabilities to scale novel products to market.

Kangmei Pharmaceutical Co., Ltd. (600518.SS): How It Works

• Primary revenue sources: production and sale of Chinese herbal medicines, Chinese patent medicines, chemical medicines, and health food products.
• Market operations: operation of Chinese medicinal materials markets (wholesale/retail), pharmaceutical logistics systems and distribution networks.
• Supplementary income: manufacturing and sale of medical devices; property leasing and occasional property sales; service income from logistics and wholesale platforms.
• R&D and pipeline: investment in drug development (notably cancer treatment research) to drive future drug approvals and commercial products.

• Manufacturing and branded product sales - mass-produced patent TCMs (OTC and prescription) sold through pharmacies, hospitals and e-commerce.
• Bulk medicinal materials and market operation - wholesale/retail trading of raw Chinese medicinal herbs via company-run marketplaces and supply chains.
• Distribution & logistics - revenue from third-party logistics services, in-house cold-chain and pharmaceutical distribution networks.
• Medical devices and equipment - production and sale of devices for clinical and retail use, adding higher-margin product lines.
• Property income - leasing and occasional disposal of real estate assets owned by the group, providing non-operational cash flow.
• R&D-led pipeline - clinical development (including oncology-focused candidates) aiming to convert R&D expense into future product royalties and sales.

• Popular OTC brands such as Ganmaoling Granule and Qingkailing Capsules drive steady retail sales and brand recognition.
• Vertical integration reduces procurement cost volatility for raw herbs and increases margin control across manufacturing and distribution.
• Expansion into medical equipment and property leasing provides counter-cyclical revenue when pharmaceutical sales fluctuate.

Kangmei Pharmaceutical Co., Ltd. (600518.SS): How It Makes Money

• Core product lines: TCM injections, proprietary Chinese medicines, bulk herbal ingredients, OTC health supplements and nutraceuticals.
• Sales channels: hospital procurement, drug distribution networks, retail pharmacies, e-commerce and export markets.
• Value drivers: branded legacy TCM products, manufacturing scale, and expanding R&D pipeline (notably oncology candidates).

• Near-term revenue stability supported by diversified product mix and domestic demand for TCM/health products.
• Medium- to long-term upside tied to successful commercialization of oncology and other high-value therapeutics from R&D.
• Key risks: regulatory sanctions, slower-than-expected R&D milestones, and competition from generics and alternative therapy providers.