How CR Sanjiu Became an Industry Leader in TCM Beyond Acquisitions

When it comes to cold medicine,most people immediately think of the 999 brandas one of China's most recognized over-the-counter (OTC) pharmaceutical brands,featuring other popular products such as Wei Tai, Pi Yan Ping and Zheng Tian Wan.These household medical staplesall come from a state-owned enterprise that worth billions,known as CR Sanjiu, an OTC leader in China.

CR Sanjiu traces its roots to 1985, when Shenzhen South Pharmaceuticals was established, initially known for its stomach medicine. In 1991, with South Pharmaceuticals as its foundation,Sanjiu Group was formed,pursuing aggressive growth through large-scale mergers and acquisitions, as well as significant marketing investments,rapidly accelerating down the fast track of development.

Unfortunately, the good times didn't last.While the aggressive acquisition strategy drove growth,it also accumulated a mountain of debt and bad assets.In 2004, Sanjiu Group faced insolvency and went into restructuring,Which China Resources took full control of the group in 2008.

Under new management, CR Sanjiu charted a fresh course.On one front, the company streamlined operations,divesting non-core businesses, including real estate, food, and retail.Meanwhile,it invested billions in strategic acquisitions,focusing on two key areas: CHC health consumer goods and prescription medicines,steering the company firmly toward pharmaceutical manufacturing.

Through a series of strategic acquisitions,CR Sanjiu successfully expanded into antifungal, antitumor and anti-infection treatments.In 2023, CR Sanjiu achieved revenues of 24.74 billion yuan,with 39 products each generating annual sales exceeding one billion yuan.

As the digital revolution gained momentum,CR Sanjiu embraced cutting-edge technologies, including IoT, artificial intelligence, and big data,to transform and upgrade its entire industrial chain.Starting from sourcing of medicinal herb,the company has established a comprehensive TCM supply chain traceability platform.Through its proprietary cloud manufacturing system for TCM,the entire process, from raw material processing to finished product delivery,has achieved near-complete automation.Traditional TCM prescriptions, notoriously inconvenient in preparation and packaging,have been transformed into modern formats like tablets, granules, and oral solutions,resulting in a 20% increase in overall production efficiency.Also, embracing new retail trends,the company tested marketing on social media,and launched buzzworthy products like lipsticks and ramen, garnering significant attention.

However, challenges have emerged,on CR Sanjiu's path to growth.In 2023, when 15 allied provinces initiated centralized procurement for TCM formula granules,average prices dropped over 50% across 200 formulas,resulting in a 12.64% year-on-year decline in CR Sanjiu's prescription medicine revenue,the segment's first decline in three years. Besides, it has been criticized for making poor decisions of acquisition,for its "999" brand still being the core revenue driver.

In response, CR Sanjiu has focused on developing its Sanqi (Panax notoginseng) business over the past two years, acquiring KPC Pharmaceuticals Inc., which boasts the world's most comprehensive range of Sanqi products,creating synergies across the supply chain,and launching the new "777" brand.In August this year, CR Sanjiu invested 6.2 billion yuan in Tasly, a leading TCM R&D firm,acquiring its star product Fufang Danshen Diwan.Joining hands with another alpha,CR Sanjiu is expected to enhance its innovative drug development capabilities, And leverage synergistic benefitsto strengthen, extend, and complete the TCM industry chain.

Having once hit rock bottom,and risen again,CR Sanjiu, through M&As and chain transformation,has re-emerged on top of the TCM industry.As it blazes new trails,more TCM enterprises are expected to embrace the wave of digital transformation.

出品：南财国际传播中心 21新媒体中心 创意互动中心

策划统筹：于晓娜 丁青云

内容统筹：谭婷 叶映橙

责任编辑：金珊

执行统筹：黄欣然

设计统筹：林军明

视频统筹：白宇航

监制：施诗

英文翻译&配音：李莹亮

海外运营监制: 黄燕淑

海外运营内容统筹: 黄子豪

运营支持：曾静娇

审校：魏雯静 张晔 黄志明