Core Viewpoint - The recent increase in shareholding by Kelun Pharmaceutical in Shijiazhuang Yiling Pharmaceutical reflects a strategic move amidst declining profits for both companies, indicating a survival strategy rather than expansion [1][3]. Group 1: Financial Performance - Kelun Pharmaceutical's net profit for the first three quarters of 2025 plummeted by 51.41% to 1.201 billion yuan, while Shijiazhuang Yiling's net profit dropped by 58.7% to 283.5 million Hong Kong dollars [1][2]. - The total revenue for Kelun in the same period was 13.277 billion yuan, down 20.92% year-on-year [2]. - The decline in net profit for Kelun was significantly influenced by the poor performance of its joint venture with Shijiazhuang Yiling, which saw a 38.39% decrease in investment income [7]. Group 2: Strategic Moves - The increase to a 23.03% stake in Shijiazhuang Yiling allows Kelun to enhance its influence while avoiding the 30% threshold for mandatory takeover bids, showcasing a calculated approach to capital management [3]. - The long-term relationship between Kelun and Shijiazhuang Yiling has evolved from competition to cooperation, with both companies forming a "triangle alliance" to stabilize prices and avoid destructive competition [5][4]. - The collaboration includes joint procurement and sales agreements, which help mitigate the impact of price pressures in the intravenous infusion market [5]. Group 3: Market Challenges - The intravenous infusion market is facing significant challenges, including regulatory pressures and price reductions due to centralized procurement, leading to a 19.65% decline in sales revenue for Kelun's core infusion business [8][9]. - The company's traditional business is under severe pressure, while new business segments have not yet compensated for the losses, creating a transitional struggle [10]. Group 4: Marketing and Public Perception - The controversial marketing campaign led by Chairman Liu Gexin, which involved him promoting a health product, reflects the company's anxiety over declining performance and the need for innovative marketing strategies [11][12]. - Despite the backlash, the campaign generated significant revenue, indicating a potential shift towards the health product market, which is projected to be worth 12.3 trillion yuan [12][15]. - The strategic partnership with the Thailand Miracle Life Foundation aims to enhance pharmaceutical innovation and expand into the health product sector, further indicating Kelun's commitment to diversifying its business model [15].