In-Depth Evaluation Report of Buchang Pharmaceutical's Sales Expenses and Marketing Efficiency

Based on the data and analysis I have collected, I now present to you an in-depth evaluation report on Buchang Pharmaceutical’s sales expenses and marketing efficiency.

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According to Buchang Pharmaceutical’s 2025 Q3 report and annual report data[0]:

Indicator	2024 Full Year	2025 First Half	2025 Q3 Report
Sales Expenses (100 million yuan)	43.23	22.39	33.41
Operating Revenue (100 million yuan)	110.04	56.64	Approx. 84.82
Sales Expense Ratio	39.28%	39.54%	39.40%

Buchang Pharmaceutical’s sales expense ratio has continued to climb from 32% in 2020 to 39.4% in 2025, an increase of 7.4 percentage points[1]. This indicates that the company’s marketing cost burden is continuously increasing.

Buchang Pharmaceutical’s sales expense structure presents the following characteristics[0]:

Expense Item	Amount (100 million yuan)	Proportion	Year-on-Year Change
Market, Academic Promotion and Consulting Fees	40.33	93.28%	Year-on-Year Decrease
Employee Compensation	2.42	5.59%	Decrease
Advertising and Promotion Fees	0.27	0.63%	Significant Decrease
Other	0.22	0.50%	Decrease

Buchang Pharmaceutical adopts a typical “academic promotion + channel expansion” marketing model, with market, academic promotion and consulting fees accounting for an absolute dominant position in sales expenses (over 93%)—this is a compliant marketing method widely adopted by Chinese pharmaceutical enterprises[2][3].

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According to 2024 annual report data of comparable peer companies[0]:

Company	Sales Expenses (100 million yuan)	Sales Expense Ratio	Revenue per 100 Million Yuan in Sales Expenses
Tibet Pharmaceuticals	15.62	55.67%	180 million yuan
Buchang Pharmaceutical	43.23	39.28%	255 million yuan
Kangyuan Pharmaceuticals	15.35	39.39%	254 million yuan
Tasly	29.88	35.16%	284 million yuan
Joincare	39.23	25.12%	398 million yuan
Hengrui Medicine	83.36	29.79%	336 million yuan
Fosun Pharma	86.80	21.14%	473 million yuan

Among the 7 comparable companies[0]:

• Revenue per 100 Million Yuan in Sales Expenses
  : Buchang Pharmaceutical ranks 5th with 255 million yuan, lower than the industry average of 312 million yuan
• Sales Expense Ratio
  : Buchang Pharmaceutical ranks 5th with 39.28%, higher than the industry average of 33.65%

Buchang Pharmaceutical’s marketing efficiency is in the mid-to-lower tier of the industry. Each 100 million yuan invested in sales expenses only generates 255 million yuan in revenue, lower than that of efficiently operated peer companies such as Fosun Pharma (473 million yuan) and Joincare (398 million yuan).

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Evaluation Dimension	Indicator	Value	Industry Evaluation
Input-Output Ratio	Revenue Generated per 100 Million Yuan in Sales Expenses	255 million yuan	Mid-to-lower tier
Cost Burden	Sales Expense Ratio	39.28%	Relatively High
Marginal Contribution	Marketing ROI (Marginal Contribution)	154.55%	Medium
Expense Growth Trend	Sales Expense Ratio Trend	Continually Rising	Negative

Year	Operating Revenue (100 million yuan)	Sales Expenses (100 million yuan)	Sales Expense Ratio	Trend
2022	149.51	57.60	38.52%	Revenue↓ Expense Ratio↑
2023	132.46	51.85	39.15%	Revenue↓ Expense Ratio↑
2024	110.04	43.23	39.28%	Revenue↓ Expense Ratio↑
2025H1	56.64	22.39	39.54%	Revenue↓ Expense Ratio↑

Buchang Pharmaceutical is facing a typical dilemma of “declining revenue, rising expense ratio”. Over the past three years, operating revenue has dropped from 14.951 billion yuan to 11.004 billion yuan, a decrease of 26.4%, while the sales expense ratio has risen from 38.52% to 39.54%. This divergence indicates:

1. Diminishing Marginal Returns
   : The revenue contribution generated per unit of sales expense continues to decline
2. Rigid Cost Characteristics
   : Academic promotion fees have strong rigidity and cannot be compressed in proportion to revenue decline
3. Pressured Market Competitiveness
   : Product sales are under great pressure, requiring more marketing investment to maintain market share

According to the company’s financial data[0]:

Profitability Indicator	Value	Industry Comparison
Net Profit Margin	0.02%	Extremely Low
ROE	0.02%	Extremely Low
Operating Profit Margin	1.87%	Relatively Low
Gross Profit Margin	59.99%	Relatively High

Although Buchang Pharmaceutical maintains a high gross profit margin (59.99%), the sales expense ratio as high as 39.28% has severely eroded profit margins, resulting in a net profit margin of only 0.02%. This indicates that the company’s marketing investment has not been effectively converted into profit growth.

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In 2024-2025, the pharmaceutical industry is facing increasingly strict compliance supervision[2][3]:

• Impact of the “Two-Invoice System”
  : Since the implementation of the “Two-Invoice System”, pharmaceutical enterprises have shifted from resolving sales expenses through “invoice passing” to compliant academic promotion models
• Normalized Anti-Corruption
  : 14 departments including the National Health Commission jointly issued the “2025 Work Points for Correcting Unhealthy Trends in Pharmaceutical Purchase and Sales and Medical Services”, emphasizing “penetrating supervision”[3]
• Measures for the Administration of Pharmaceutical Representatives
  : The National Medical Products Administration released a draft for comments, strictly limiting the functions of pharmaceutical representatives to pharmaceutical academic promotion
• Compliance Guidelines
  : In January 2025, the State Administration for Market Regulation released the “Compliance Guidelines for Pharmaceutical Enterprises to Prevent Commercial Bribery Risks”, the first national-level compliance guidance document[3]

Expense Type	Characteristics	Proportion Trend
Market/Academic Promotion Fees	Conferences, academic activities, consulting, etc.	Dominant (>80%)
Employee Compensation	Labor costs of sales teams	Stable
Advertising and Promotion Fees	Brand promotion	Shrinking Trend
Other	Channels, business trips, etc.	Shrinking Trend

The 93.28% proportion of market and academic promotion fees of Buchang Pharmaceutical reflects the typical characteristics of the industry after compliance transformation[2].

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Evaluation Item	Rating	Description
Input-Output Efficiency	⭐⭐☆	Mid-to-lower tier, 255 million yuan in revenue per 100 million yuan in sales expenses, lower than the industry average
Expense Control Capability	⭐⭐☆	Weak, sales expense ratio has continued to climb to 39.4%
Reasonableness of Expense Structure	⭐⭐⭐⭐	Good, 93% is academic promotion fees, in line with industry compliance trends
Revenue Matching Degree	⭐⭐☆	Poor, revenue dropped 26% while expense ratio rose 7.4 percentage points
Contribution to Profitability	⭐☆☆☆	Extremely poor, high expense ratio severely erodes profits, net profit margin is only 0.02%

: Buchang Pharmaceutical’s marketing efficiency is in the mid-to-lower tier of the industry. Although its expense structure is in line with industry compliance trends, its input-output efficiency is low, and the continuous climb in sales expense ratio forms a divergence from declining revenue, posing significant pressure on the company’s profitability.

1. Diminishing Marginal Returns
   : Although the academic promotion model is compliant, the revenue contribution generated per unit of investment continues to decline
2. Expense Rigidity
   : 93% of academic promotion fees are difficult to adjust with business scale, forming a fixed cost burden
3. Product Competitiveness
   : Sustained revenue decline may reflect that products are facing substitution competition or market shrinkage
4. Fragile Profit Model
   : At the current expense ratio level, even if revenue stabilizes, profit space is extremely limited

Direction	Specific Measures
Improve Efficiency	Optimize the input-output evaluation of academic promotion activities to improve precision marketing level
Product Upgrade	Increase R&D investment, enhance product competitiveness, and reduce reliance on marketing
Expense Optimization	Optimize expense structure within the compliance framework to improve expense utilization efficiency
Digital Transformation	Use digital tools to improve marketing efficiency and reduce marginal costs

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[0] Gilin API Data - Buchang Pharmaceutical Financial Analysis and Market Data

[1] Gilin AI Financial Analysis - “Analysis of Reasons for Continuous Decline in Buchang Pharmaceutical’s Performance in the First Half of November 2025” (https://www.gilin.com.cn/essence1107088.html)

[2] Hwuason Tax Firm - “2024 Pharmaceutical Industry Tax Compliance Report” (http://www.hwuason.com/images/uploads/2024/01/12/2024_F6LuJKC.pdf)

[3] Global Law Office - “2024 Year-End Review of Life Sciences and Healthcare Industry Development and Compliance Supervision” (https://www.glo.com.cn/Content/2025/02-05/0917115213.html)

[4] Shandong Buchang Pharmaceutical Co., Ltd. 2024 Annual Report (http://static.cninfo.com.cn/finalpage/2025-04-26/1223325841.PDF)

[5] Shandong Buchang Pharmaceutical Co., Ltd. 2025 Semi-Annual Report (https://stockmc.xueqiu.com/202508/603858_20250828_YYBD.pdf)

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: January 16, 2026
: Gilin AI