Refusing to Add Fuel to the Fire! Behind ST Weimai's Waiver of Preemptive Purchase Rights: Core Subsidiary Has Been "Halted" for Nearly 11 Months and Has Yet to Resume Production

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Daily Economic News Reporter | Peng Fei Daily Economic News Editor | Xu Shaohang

After its core holding subsidiary was forced to suspend production, leading the company’s stock to be under other risk warnings (ST) for over eight months, ST Weiming (rights protection) (also known as Weiming Pharmaceutical, SZ002581, stock price 7.99 yuan, market value 5.271 billion yuan) made an unexpected move.

On the evening of March 17, ST Weiming announced that it would waive its right of first refusal to purchase a 19.7174% minority stake in its controlling subsidiary, Tianjin Weiming Bio-Pharmaceutical Co., Ltd. (“Tianjin Weiming”).

Notably, Tianjin Weiming was once a core subsidiary of ST Weiming, contributing over 60% of the company’s revenue in 2024. However, in April 2025, Tianjin Weiming was subjected to production suspension and sales restrictions by the Tianjin Municipal Drug Administration due to non-compliance with GMP standards.

By July 2025, Tianjin Weiming was expected to be unable to resume normal operations within three months, triggering relevant regulations of the Shenzhen Stock Exchange, which resulted in the company being “capped” and renamed “ST Weiming.” As the production halt continued to ferment, ST Weiming faced enormous pressure on its overall performance, with an estimated loss of 55 to 90 million yuan in 2025. Meanwhile, there is no set timeline for Tianjin Weiming’s resumption of production.

On the morning of March 18, a reporter from Daily Economic News contacted ST Weiming’s investor relations, who stated that Tianjin Weiming has not yet resumed production and is still undergoing rectification.

On one side, the core subsidiary’s suspension and severe performance impact; on the other, the abandonment of core asset equity. What strategic considerations underlie ST Weiming’s series of actions? What operational difficulties and solutions does this reflect?

On March 17, 2026, ST Weiming held its 6th Board of Directors’ 11th meeting, approving the proposal to waive the right of first refusal for the minority stake in its controlling subsidiary.

This decision directly targets its important subsidiary—Tianjin Weiming. According to the announcement, ST Weiming holds 60.5653% of Tianjin Weiming’s shares, while another shareholder, Yunnan Shitai Yu Investment Partnership (Limited Partnership) (“Yunshi Taiyu Investment”), holds 19.7174%.

Recently, ST Weiming learned that Yunshi Taiyu Investment plans to entrust Fujian Dingxin Auction Co., Ltd. to publicly auction its stake. According to the Company Law of the People’s Republic of China and Tianjin Weiming’s Articles of Association, as a shareholder, ST Weiming has the right of first refusal under equal conditions.

However, facing nearly 20% of its core subsidiary’s equity, ST Weiming chose to give up. The official explanation in the announcement was: “Based on the company’s overall strategic planning and actual situation, the company intends to waive its right of first refusal for the aforementioned minority stake in Tianjin Weiming.”

Regarding the specific reasons for waiving this right, the Daily Economic News reporter sent an interview request on the morning of March 18, but had not received a reply by the time of publication.

It is noteworthy that ST Weiming emphasized in the announcement that this waiver will not change its shareholding ratio in Tianjin Weiming, nor will it alter its status as the controlling shareholder, nor affect the scope of consolidated financial statements.

If we look beyond the official statement at Tianjin Weiming’s current financial situation, we might better understand the “hidden reasons” behind ST Weiming’s decision to give up the repurchase.

Financial data shows that Tianjin Weiming’s operations sharply deteriorated in 2025. In 2024, Tianjin Weiming achieved revenue of 217 million yuan, with a net loss of 14 million yuan, but its large scale still made it the main revenue contributor for the parent company.

In contrast, from January to September 2025 (unaudited), Tianjin Weiming’s revenue plummeted to just 5.8188 million yuan, with an operating loss of 71.0564 million yuan. Its net assets shrank from 250 million yuan at the end of 2024 to 189 million yuan as of September 30, 2025.

Faced with a subsidiary experiencing revenue collapse and rapidly expanding losses, and with the parent company’s own funds not abundant, continuing to exercise the right of first refusal with real cash would be akin to “fighting fire with fire.” Therefore, abandoning this part of the equity may be a rational defensive move by ST Weiming to cut losses and control investment risks amid the crisis.

The root cause of Tianjin Weiming’s 2025 performance collapse was an unforeseen compliance storm and production suspension crisis.

On April 22, 2025, the Tianjin Municipal Drug Administration issued an announcement regarding the suspension of production and sales of Tianjin Weiming Bio-Pharmaceutical Co., Ltd. The notice stated that the agency conducted GMP compliance inspections, and after evaluation, determined that Tianjin Weiming’s drug production activities did not meet the requirements of the “Good Manufacturing Practice for Drugs” (2010 revision). To control safety risks, the agency decided to suspend production and sales.

On July 4, 2025, Weiming Pharmaceutical received internal rectification feedback indicating that current trial progress was below expectations, and Tianjin Weiming was expected to be unable to resume normal operations within three months. According to the Shenzhen Stock Exchange regulations, Weiming Pharmaceutical triggered the “serious impact on production and operations, expected to be unable to resume within three months” red line, and from July 8, it was subject to “other risk warning,” now classified as “ST Weiming.”

On March 18, the Daily Economic News reporter contacted ST Weiming, whose investor relations official confirmed that Tianjin Weiming has not yet resumed production and is still under rectification.

Tianjin Weiming mainly produces and sells interferon drugs. Its self-developed interferon alpha-2b spray was once a star product, utilizing non-contact metered spray technology, and has been on the market for nearly 20 years.

However, this cash cow was the first to be affected by the suspension. In the 2024 financial report, Weiming Pharmaceutical stated that the Shanghai Municipal Drug Administration sampled one batch of Tianjin Weiming’s interferon alpha-2b spray (batch number JB240619), and the test results showed “biological activity did not meet requirements.”

According to publicly available information, this product had previously won bids in a 29-province inter-provincial interferon centralized procurement led by the Jiangxi Provincial Medical Security Bureau in December 2023. But due to unqualified test results, before production and sales were suspended, multiple regions including Shanghai, Zhejiang, Inner Mongolia, and Tibet issued notices suspending procurement of Tianjin Weiming’s interferon alpha-2b spray.

For Weiming Pharmaceutical, interferon is a core product supporting its performance. From 2022 to 2024, revenue from interferon accounted for 79.52%, 70.56%, and 60.09% respectively; additionally, the gross profit margin of interferon products reached 79.92% in 2024, making it the highest-margin product segment. The suspension of production dealt a severe blow to ST Weiming. This means that more than half of its main business was effectively halted.

The chain reaction from the main business’s heavy blow is vividly reflected in ST Weiming’s overall financial data. The company’s 2025 performance forecast shows an estimated net loss attributable to shareholders of 55 to 90 million yuan. Although this narrows the loss compared to 137 million yuan in 2024, it still indicates deep losses and impaired core business profitability.

Regarding whether abandoning Tianjin Weiming’s equity purchase rights is related to its delayed resumption of production, the Daily Economic News reporter sent an interview request on the morning of March 18, but had not received a reply by 4 pm that day.

From the performance perspective, ST Weiming’s decision to give up the minority stake purchase right may not be impulsive but a reluctant choice under the dual pressures of core subsidiary shutdown and severe operational stress. During this painful period of losing 60% of revenue, how to quickly complete rectification and resume production, while exploring new profit channels, will be a critical test for ST Weiming’s management.

Cover image source: Daily Economic News Media Library