Shenzhen Hepalink Pharmaceutical Group Co., Ltd. (9989.HK): BCG Matrix [Dec-2025 Updated]

Hepalink's portfolio is a study in pragmatic capital allocation: cash-heavy, mature APIs fund aggressive investment in two clear Stars-finished-dose enoxaparin and rapidly scaling large-molecule CDMO services-while R&D-heavy Question Marks (novel oncology candidates and emerging-market expansion) need selective financing to convert high upside into market share, and underperforming Dogs (idle animal-product assets and tariff-hit US export lines) should be shed or restructured to free resources; read on to see how management can tilt the mix toward higher-margin biologics and global growth.

Shenzhen Hepalink Pharmaceutical Group Co., Ltd. (9989.HK) - BCG Matrix Analysis: Stars

Stars

The finished dose enoxaparin pharmaceutical products segment is a Star for Hepalink as of December 2025, combining high market growth with a leading relative market share. In H1 2025 this unit reported revenue of approximately RMB 1,767.9 million, up 21.6% year-on-year, and contributed about 63.3% of Group revenue (versus 56.8% in the prior fiscal year). Hepalink occupies a top-two market share position in the European enoxaparin market, which represents nearly 60% of the global enoxaparin market valued at USD 3.02 billion. Sales volume increased by over 30% in H1 2025 despite strategic price adjustments that reduced gross margin to 27.8% in mid-2025. The global enoxaparin sodium market is projected to grow at a 7.7% CAGR through 2032, underpinning continued high industry growth.

The large-molecule biologics CDMO services segment is also a Star: H1 2025 revenue reached approximately RMB 523.2 million while gross profit margin improved to 36.5% (June 2025), from 31.2% in H1 2024. The segment's performance is supported by wholly-owned subsidiaries Cytovance Biologics and SPL and exposure to a global CDMO market estimated at ~USD 200 billion with high annual growth rates. Hepalink is optimizing capacity allocation and project timelines to capture increased demand in recombinant biomacromolecule and gene therapy manufacturing, driving double-digit margin expansion and strong growth trajectory.

Group revenue share for CDMO estimated from H1 2025 reported revenues (523.2 / (1,767.9+523.2) ≈ 22.9% of the two segments; relative to total Group revenue the stated approximate share is illustrative-use company filings for exact consolidated ratio.

Key quantitative attributes that qualify these units as Stars:

• High absolute revenue contribution and robust YoY growth (enoxaparin: RMB 1,767.9m, +21.6%).
• Market dominance in a large niche: top-two position in Europe for enoxaparin within a USD 3.02bn market.
• Rapid volume expansion: enoxaparin sales volume +30% in H1 2025, offsetting price-driven margin compression.
• Improving profitability in CDMO: gross margin expansion to 36.5% (Jun 2025) from 31.2% (Jun 2024).
• Exposure to high-growth end-markets: enoxaparin CAGR 7.7% to 2032; CDMO market ≈USD 200bn with elevated growth.
• Strategic operational moves: capacity allocation and project timeline optimization to capture gene therapy and recombinant protein outsourcing demand.

Operational and financial metrics to monitor for Star conversion into sustained Cash Cows:

• Enoxaparin: sustained unit volume growth, price realization vs tender pressures, and margin recovery from current 27.8%.
• CDMO: order book utilization, capacity ramp timelines, average contract margins, and revenue mix between biologics and advanced therapy projects.
• Capital allocation: incremental investments required to expand capacity for both finished dose and biologics manufacturing and resulting ROI timelines.
• Market dynamics: regulatory approvals, tender outcomes in Europe, and competitive new entrants affecting relative market share.

Shenzhen Hepalink Pharmaceutical Group Co., Ltd. (9989.HK) - BCG Matrix Analysis: Cash Cows

Cash Cows

The standard heparin sodium API business operates as a primary Cash Cow for Hepalink, delivering stable operating cash flows driven by scale and vertical integration despite cyclical pressure on export pricing. In FY2024 the segment reported sales revenue of RMB 1,065.7 million and a gross profit margin of 38.6%. Net operating cash inflow from this and related operations reached RMB 1,295 million in late 2024, underpinning R&D investments and dividend distributions.

In H1 2025 the heparin sodium API revenue declined to RMB 444.5 million, a year-on-year decrease of 40.5% attributable to depressed export prices and short-term market oversupply; however the Group retains a dominant global supply position and one of few vertically integrated value chains capable of sourcing raw materials and producing API at scale to support downstream finished-dosage businesses.

Pancreatin API and other mature API lines act as secondary Cash Cows, delivering predictable revenues and low incremental capital requirements. These products are marketed in over 40 countries and benefit from established regulatory approvals and Hepalink's global sales network, contributing to diversified cash inflows that mitigate single-product cyclicality.

• Geographic reach: sales across >40 countries for mature API portfolio
• CAPEX intensity: low incremental CAPEX required for pancreatin and other mature APIs
• Margin contribution: supports overall Group gross margin (29.0% in H1 2025)
• Role: funds R&D, supports finished-dose expansion, cushions tariff and trade-policy risks

Key financial contributions and operational features of the Cash Cow cluster include sustained cash generation, vertical integration advantages (raw material sourcing → API production → finished-dose supply), and scale-based cost advantages that allow Hepalink to maintain market share even when export pricing is depressed. The combination of heparin sodium and mature APIs provides recurring liquidity that finances the Group's strategic moves into higher-growth formulations and innovative drug pipelines while maintaining dividend capacity.

Shenzhen Hepalink Pharmaceutical Group Co., Ltd. (9989.HK) - BCG Matrix Analysis: Question Marks

Question Marks (classified under Dogs in this chapter) represent Hepalink's high-growth but low-share assets that require substantial investment to realize market potential. Key examples include early-stage innovative therapeutics and expansion efforts into non-traditional geographic markets. These assets occupy high-growth therapeutic or regional markets yet currently contribute minimally to revenue and require targeted capital allocation and commercial strategy to shift toward higher market share.

Innovative drug pipeline candidates such as H1710 illustrate the Question Mark profile. In July 2025 the Group completed first subject enrollment and dosing for the Phase I clinical trial of H1710, a novel heparanase inhibitor that demonstrated significant anti‑tumor activity in preclinical models. H1710 currently generates no commercial revenue and will require continued R&D funding through clinical development and regulatory submission phases. Oregovomab, with exclusive Greater China rights and a completed Phase II program in advanced primary ovarian cancer, similarly awaits further registration strategy and potential partnering or Phase III investment to convert into a revenue-generating asset.

At group level, Hepalink's innovative portfolio comprises over 20 first‑in‑class candidates, with 4 assets in global Phase III studies as of late 2025. These statistics underscore the scale of the Question Mark exposure: a large number of candidates in high-growth oncology and specialty biologics markets but limited current market share and immediate cash flows.

Expansion into emerging markets such as Thailand and New Zealand exemplifies geographic Question Marks. Hepalink secured market access for sodium heparin injections in these regions in 2024 and 2025 to diversify reliance on European and US markets. Sales volume in non‑European and American overseas markets doubled in early 2024 versus prior comparable periods, yet these markets still constitute a minor portion of the Group's RMB 2.79 billion half‑year revenue (H1 2025 context). Success in Asia‑Pacific and Latin America requires demonstration of local clinical data, regulatory harmonization, and material marketing and distribution investment.

• Risk factors:
  • High R&D burn with no near‑term revenue for novel candidates;
  • Regulatory uncertainty and long timelines for oncology approvals;
  • Competitive pressure from established generics and local incumbents in new markets;
  • Potential need for partnering or out‑licensing to fund late‑stage trials.
• Required actions:
  • Prioritize pipeline candidates by probability of technical and commercial success;
  • Pursue selective partnerships or co‑development to share late‑stage costs (target IRR thresholds);
  • Allocate targeted marketing budgets and clinical bridging studies for Thailand/New Zealand and similar markets;
  • Deploy agile local partnerships and distribution agreements to accelerate uptake while minimizing fixed cost exposure.

Quantitative sensitivity analysis shows that converting a single Phase II asset to Phase III and securing approval could materially shift group economics: a successful oncology approval with peak global sales of RMB 1.0-2.5 billion would transform that asset from a Question Mark into a Star, improving average group revenue growth by an estimated 10-25% over a five‑year horizon, assuming effective commercialization. Conversely, prolonged clinical delays across multiple candidates would increase cumulative R&D spend, worsening cash flow ratios and keeping these assets in the low‑share quadrant.

Key metrics for monitoring Question Mark conversions include: pipeline attrition rate (target <60% through Phase II), average cost per clinical stage (benchmarked RMB per trial phase), time‑to‑market estimates (months to approval), regional market penetration rates post‑launch (target 5-15% in first 24 months in new markets), and return on invested capital for partnered versus self‑funded programs.

Shenzhen Hepalink Pharmaceutical Group Co., Ltd. (9989.HK) - BCG Matrix Analysis: Dogs

Dogs

Idle fixed assets at Chengdu Sunrace Animal Products Co., Ltd. constitute a non-core segment with declining utility. During 2024 the Group performed an impairment assessment on these assets and identified significant underperformance and partial non-operation. This subsidiary operates outside the core heparin industrial chain and CDMO businesses that generate approximately 90% of the Group's enterprise value, contributing negligible revenue to projected 2025 performance and consuming management bandwidth.

The Group's financial treatment and strategic intent toward this Dog are reflected in impairment write-downs and active divestment consideration to optimize capital allocation. Key metrics and dispositions under consideration are summarized below.

Specific regional product-market combinations exposed to the high 2025 US tariff regime have also moved into the Dog quadrant. The United States imposed a set of elevated tariffs in early 2025-characterized internally as the highest barrier levels for certain pharmaceutical imports since the 1930s-raising landed costs and compressing margins for low-end API export lines.

Quantified effects on Group performance and specific product lines are summarized below.

Management assessment classifies these US-facing low-margin API exports as Dogs due to low relative market share against domestic US producers and minimal growth prospects under the new tariff regime. Tactical responses being coordinated include project timeline adjustments, channel repricing, and market reallocation toward higher-margin European and domestic Chinese channels.

• Immediate actions: suspension of new capital expenditure for affected SKUs; freeze on capacity expansion.
• Medium-term actions: re-route SKU registrations and sales focus toward EU and China markets; renegotiate supplier/logistics contracts to reduce landed cost by targeted 6-9%.
• Long-term actions: decommission unprofitable lines; explore contract manufacturing or licensing to local partners in high-tariff jurisdictions.

Composite dashboard for Dog candidates (Chengdu Sunrace + US-exposed API lines):