The Shanghai Stock Exchange issued a regulatory inquiry regarding Xiaofang Pharmaceutical's 2025 annual report, focusing on the reasonableness of selling expense growth far outpacing revenue growth. The company's revenue last year was 525 million yuan, up 10.68%, with net profit attributable to the parent at 207 million yuan, up 1.08%, but selling expenses reached 59 million yuan, a sharp increase of 42.14%. Xiaofang Pharmaceutical responded that it has no self-operated e-commerce stores; brand flagship stores on Tmall, JD.com, and others are all operated by chain pharmacies. In 2025, online channel revenue was 20.0943 million yuan, a year-on-year surge of 217.69%, with a gross margin of 60.88%, slightly lower than offline. Online marketing and promotion expenses reached 10.1565 million yuan, mainly due to increased traffic investment on platforms such as Meituan, JD.com, and Xiaohongshu, while offline expenses were pushed up by sales staff expansion, equity incentives, and industry exhibition participation. The company disclosed that its market share for glycerin enema and calamine lotion has ranked first in the industry for two consecutive years. Leveraging automated production and brand premium, its gross margin is higher than that of similar product lines at Fuyuan Pharmaceutical, and it has tiered procurement rebates, with cash rebates offsetting revenue and in-kind rebates recorded as contract liabilities.
XIAO FANG ORD A (SHH) EQSW Exp:SSE inquiry into selling expense surge raises regulatory scrutiny and governance concerns.