Behind Keli's submission, an 'underrated pharmaceutical business' returns to the spotlight

Against the backdrop of slowing growth in China's pharmaceutical industry and declining investor patience for pure innovation drugs, a seemingly less glamorous but cash-flow-stable business model is regaining market favor.

Recently, Keli Limited (hereinafter referred to as "Keli") officially submitted its listing application to the Main Board of the Hong Kong Stock Exchange. Unlike most pharmaceutical companies, Keli does not bet on a single R&D pipeline but has long played a more "invisible" role in China's pharmaceutical system—a marketing, promotion, and sales service provider connecting drugmakers, channels, and end-users.

On one hand, Keli firmly controls key access points for pediatric drugs outside hospitals in China with core prescription products like "Mummy Love" and "E-Tan Jing." On the other hand, it is attempting to open a second growth curve with consumer-oriented product lines such as probiotics and maternal-infant nutritional supplements.

But challenges arise. When a company's growth heavily relies on a few core products and a single supplier, and when its stability and constraints stem almost entirely from the same source, the premium that capital markets are willing to pay for such "certainty" remains uncertain.

The Business Logic of an "Invisible Champion": An Underestimated Pediatric Pharmaceutical Infrastructure

Keli is neither a drug R&D company nor a consumer health business with strong brand recognition but a typical "middle-layer company." Yet this very layer constitutes the most authentic and complex operational fabric of China's pharmaceutical system.

The prospectus shows that Keli's core business has long focused on pharmaceutical marketing, promotion, and sales services, particularly in the out-of-hospital market for pediatric prescription drugs. By 2024 revenue, the company ranked among the top ten in China's pharmaceutical marketing, promotion, and sales market, with a 15.9% market share, making it the largest pediatric pharmaceutical marketing, promotion, and sales service provider in China.

This achievement is built on a high-density offline network. By the end of June 2025, Keli's sales network covered 31 provinces in mainland China, reaching approximately 110,000 clinics, 310,000 pharmacies, and 3,600 hospitals, including top-tier tertiary hospitals. For pediatric drugs, such high-density，下沉式 (downstream) out-of-hospital coverage is itself a scarce resource.

More importantly, Keli has captured the relatively "protected" niche of pediatrics in healthcare reform. Compared to adult drugs, pediatric medications face milder cost-control measures in centralized procurement and 医保 (medical insurance). With policies increasingly emphasizing child health 保障 (protection), pediatric drug demand exhibits stronger rigidity.

Frost & Sullivan data shows that China's pediatric pharmaceutical market is expected to expand at a 5% CAGR, reaching RMB 123.2 billion by 2029. The 配套 (supporting) pediatric pharmaceutical marketing, promotion, and sales service market is also expanding simultaneously.

Against this backdrop, Keli has chosen to build barriers through 单品 (single-product) penetration. Its current pharmaceutical marketing business heavily relies on two flagship pediatric prescription drugs—Mummy Love and E-Tan Jing.

These products are not self-developed but were created and manufactured by South Korea's Hanmi Group, with Keli serving as the long-term exclusive distributor in China's out-of-hospital 细分 (segmented) market. By deeply 铺设 (building) channels around these high-frequency, essential, and highly standardized products, Keli has achieved efficient penetration into grassroots medical 终端 (endpoints).

The advantages of this model are directly reflected in financials. Despite a 阶段性 (periodic) revenue dip in 2024, gross margins continued to rise, from 43.6% in 2022 to 56% in the first half of 2025.

This stems from enhanced channel control and service 溢价 (premiums). As outsourced pharmaceutical marketing becomes a "standard" for drugmakers, service providers offering stable coverage and execution capabilities are being 重新评估 (re-evaluated) for their pricing power.

Overall, Keli's core competitiveness lies not in "which drugs it sells" but in its position at the most critical 流量 (traffic) 入口 (entry point) for pediatric out-of-hospital 用药 (medication) in China. This is why, amid slowing industry growth, such companies exhibit stronger defensive attributes.

Under Tight Integration: Where Is Keli's Ceiling?

Like all highly structured businesses, Keli's certainty comes with clear boundaries.

First is its heavy reliance on core suppliers and products. The prospectus shows that purchases from its top five suppliers consistently account for over 60% of total procurement, with the largest supplier, Hanmi Group, exceeding 50% annually.

Meanwhile, Mummy Love and E-Tan Jing 几乎 (almost) form the foundation of its pharmaceutical marketing business. Such concentration brings efficiency and stable cash flow but also 意味着 (implies) 难以分散 (hard-to-diversify) risks.

Notably, the company's founder, executive director, and controlling shareholder, Mr. Lin, is also a shareholder in Hanmi Group. This deep integration has 商业 (commercial) rationale but also makes corporate governance and related-party transactions a focal issue. Should core partnerships change, whether Keli can swiftly restructure its product and revenue mix remains to be seen.

Hence, the company has recently begun actively seeking a second growth curve, turning to maternal-infant and nutritional supplements, particularly functional products like probiotics.

From an industry perspective, this is a vast but fiercely competitive 赛道 (space). Data shows China's probiotic supplement market is projected to grow from RMB 24.6 billion in 2024 to RMB 40 billion by 2029, with a CAGR exceeding 10%.

The problem is that this path lacks 天然 (natural) 衔接 (linkage) with Keli's existing strengths. Pharmaceutical marketing emphasizes compliance，终端 (endpoint) coverage, and professional trust, while supplements rely more on brand awareness, consumer education, and sustained marketing investment. Shifting from channel-driven to brand-driven requires not just product changes but a 重构 (restructuring) of capabilities.

This raises the question capital markets truly care about: Will Keli be priced as a stable but ceiling-capped pharmaceutical services firm, or can it craft a "pharma + digital + consumer health" narrative for higher valuation flexibility?

In today's Hong Kong market, preference for profit certainty is rebounding, but growth expectations persist. Keli's advantage lies in proving its irreplaceability in a niche; the challenge is unlocking new growth without compromising existing stability.

Conclusion

After the 降温 (cooling) of the innovative drug narrative, capital is revisiting another pharmaceutical model: unglamorous but profitable; non-disruptive yet indispensable. Keli's listing significance lies not in grand new stories but in whether the market will 重新 (re-) price such steady-state capabilities at a decent level.

If the answer is yes, what gets 重新看见 (re-seen) may not be just one company.