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

Ask AI · Does abandoning the right of first refusal reflect ST Weiming’s strategic contraction?

Everyday Economic News Reporter: Peng Fei Editor: Xu Shaohang

After its core holding subsidiary was forced to suspend production, leading to the company’s stock being under other risk warnings (ST) for over eight months, ST Weiming (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 the 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 ordered to suspend production and sales 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 from the Shenzhen Stock Exchange, which resulted in the company being “capped” and renamed “ST Weiming.” As the suspension of production 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.

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.

While the core subsidiary’s suspension and performance hit are ongoing, the decision to waive the equity of the core asset raises questions about the company’s strategic considerations. What underlying operational difficulties and solutions does this reflect?

Waiving the right of first refusal for the core subsidiary’s equity, without affecting the controlling stake

On March 17, 2026, ST Weiming held its 11th meeting of the sixth board of directors, during which it approved the proposal to waive its right of first refusal to purchase minority shares in its controlling subsidiary.

This decision primarily targets its important subsidiary—Tianjin Weiming. According to the announcement, ST Weiming holds 60.5653% of Tianjin Weiming, while another shareholder, Liling Yunshi Taiyu Investment Partnership (Limited Partnership) (“Yunshi Taiyu Investment”), owns 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 a preemptive right to purchase this stake under equal conditions.

However, despite holding nearly 20% of the core subsidiary’s equity, ST Weiming chose to waive this right. The company’s official explanation in the announcement was: “Based on the company’s overall strategic planning and actual situation, the company intends to waive its preemptive right to purchase the aforementioned minority stake in Tianjin Weiming.”

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

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

Looking beyond official statements at Tianjin Weiming’s current financial situation may offer clearer insight into the “hidden reasons” behind ST Weiming’s decision to forego repurchase.

Financial data shows that Tianjin Weiming’s operations deteriorated sharply 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 a drastic revenue decline and mounting losses, and with the parent company’s own funds not abundant, continuing to spend real money to exercise the right of first refusal would be akin to pouring fuel on the fire. Therefore, waiving this part of the equity purchase right may be a rational defensive move by ST Weiming to cut losses and control investment risks amid the crisis.

Core subsidiary suspension causes performance pressure, with no resumption timeline

The collapse of Tianjin Weiming’s performance in 2025 stems from an unforeseen compliance crisis and suspension.

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

On July 4, 2025, Weiming Pharmaceutical received internal rectification feedback indicating that the current testing 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 “significant impact on production and operations with an expected recovery 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’s investor relations, who confirmed that Tianjin Weiming has not yet resumed production and is still undergoing rectification.

Tianjin Weiming mainly produces and sells interferon drugs. Its self-developed interferon alpha-2b spray was once a star product, utilizing non-contact quantitative 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 Drug Administration conducted sampling inspection of one batch of its interferon alpha-2b spray (batch number JB240619), with results indicating “biological activity did not meet requirements.”

Further review of public information shows that this product had previously won bids in the inter-provincial interferon alliance procurement led by Jiangxi Provincial Medical Security Bureau in December 2023, covering 29 provinces. But due to unqualified inspection results, before the suspension by Tianjin drug authorities, multiple regions including Shanghai, Zhejiang, Inner Mongolia, and Tibet issued notices to suspend 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% of total revenue, respectively; additionally, the gross profit margin of interferon products reached 79.92% in 2024, making it the highest-margin segment. The suspension has dealt a severe blow to the parent company, with more than half of its main business effectively halted.

This chain reaction of core business damage is vividly reflected in ST Weiming’s overall financial data. The company’s 2025 performance forecast shows an expected 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 profitability.

Regarding whether the decision to waive Tianjin Weiming’s right of first refusal is related to its delayed resumption, 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 waiver of the right of first refusal for the minority stake may not be impulsive but a helpless choice under the dual pressures of core subsidiary suspension and severe performance stress. During this pain period of losing 60% of revenue, how to accelerate Tianjin Weiming’s rectification and recovery, and explore new profit channels, will be a critical test for the management.

Daily Economic News