SFPM(SZ:002737) Hua Xia Shi Bao·2025-07-19 14:00Core Viewpoint - The recent performance forecast from Kew Flower Pharmaceutical for the first half of 2025 indicates a significant decline in net profit, expected to be between 70 million to 85 million yuan, representing a year-on-year drop of 82.52% to 85.61% [2][5]. Financial Performance - In 2024, Kew Flower Pharmaceutical's total revenue decreased by 40.76% to 3.377 billion yuan, while net profit fell by 56.03% to 492 million yuan, returning to levels seen seven years prior [3][4]. - The company's core businesses, traditional Chinese medicine and chemical drugs, saw revenue declines of 40.55% and 47.59% respectively in 2024, with significant drops in gross margins [3][4]. - The first half of 2025 is projected to continue this downward trend, with net profit expected to shrink dramatically compared to previous years [2][5]. Market and Inventory Challenges - The pharmaceutical industry is undergoing structural adjustments, with Kew Flower Pharmaceutical facing challenges from excess inventory in the supply chain and rising production costs due to high raw material prices [5][12]. - The company's stock price has dropped over 20% in 2025, contrasting with a 3.36% increase in the broader traditional Chinese medicine sector [6][7]. Management Changes and Strategic Shift - Kew Flower Pharmaceutical is undergoing a significant management transition, with several senior executives leaving and new hires with strong marketing backgrounds joining the team [8][9]. - The company is shifting its marketing strategy from traditional advertising to a more refined, professional marketing and digital operation approach, aiming to adapt to current market conditions [8][9][10]. Marketing and Cost Management - The company has drastically reduced its sales expenses, which fell to 431 million yuan in 2024, a decrease of 68.46% year-on-year, but this has not improved overall performance [10][12]. - The marketing model transformation is facing uncertainties, with declining gross margins and challenges in the core OTC business due to various industry pressures [12][10].