Are Chinese (Industrial) Bio Companies Profitable?

It’s not entirely true that all Chinese firms survive only on subsidies, but the industry is awash in government support

Key points

• Perceptions of profitability matter. Countries whose companies achieve real profitability in emerging technologies tend to lead globally.

• For the nine profitable Chinese firms I reviewed (where subsidy data was available):

  • Subsidies booked as revenue were common, though small as a share of total revenue.

  • Because margins are thin, these subsidies often represented a meaningful (and highly varied) share of profit—ranging from 2% to 63% of profit, averaging 18% (likely an undercount).

• Significant subsidies also appear in assets and deferred revenue. This indicates big assets like factories or machinery receive substantial subsidy support.

• I have little visibility into the profitability of the thousands of smaller Chinese companies that may be driving genuine breakthroughs (potential future work).

Subsidised profitability

A list of 203 Chinse synbio companies (non-therapeutic) has been circling on the internet as evidence of China’s advancement in this space - an assessment that our team often supports. In fact, there are probably thousands of innovative small companies working across China on bioindustrial breakthroughs. (Here I use non-therapeutic synbio and industrial bio interchangeably)

There is a common corollary by thoughtful well-informed industry watchers to the list - China’s companies are also profitable. A good example is Li Jinbei who owns a Danish company but keeps abreast of the industry in China. He wrote the following after a recent trip:

“Profitability seems to be a much bigger emphasis in this ecosystem in China. There is no shortage of companies making real money rather than only selling a dream, thus they are less sensitive to capital market sentiments. A recent report collected >200 (non-therapeutics) synthetic biology companies in China. Not included are the many smaller but still profitable players.”

This is is surprising outcome for two reasons. 1) China’s industrial profitability has gone backwards over the last decade 2) Synbio and industrial bio companies elsewhere have mostly struggled to turn a profit.

So I took that list of 203 companies and asked AI to filter out the ones with easily accessible financial documents. It gave me 13 companies - all of them publicly listed. Then I went through the companies’ annual report to see the level of profitability.

Most of the companies on the list of 203 were private, so my selection of 13 companies is not representative.

11 of the 13 companies made a profit in 2024 (the two big genomics firms MGI and BGI lost money).

However, subsidies were widespread (and complex). The table below shows the level of subsidy in each company’s annual report. I have divided the subsidies into two types:

a) subsidies directly included in a company’s profit and loss calculation (like revenue from govt subsidies). To avoid potential double counting, I had to exclude some subsidies, so this is likely an undercount.

b) subsidies NOT included in a company’s P&L calculation. This would include deferred revenue and asset income (which carryover from previous or assigned to future year P/L).

Table 1: Profit and Subsidies of 13 Selected Companies in 2024 as Recorded in Their Annual Reports

Notes: There is a more detailed breakdown of the subsidies at the end of this article. I have only included one type of subsidy in the column “Subsidy directly recorded in P/L as % of profit”. They are: Govt subsidies directly recorded in “other revenue” (其他收益). I excluded subsidies booked as “government subsidies included P&L, but ‘are not part of the companies regular business’” (计入当期损益的政府补助，但与公司正常 经营业务密切相关、符合国家政策规定、 按照确定的标准享有、对公司损益产生持 续影响的政府补助除外) due to possible double counting with “other revenue”. All other types of subsidies were counted as subsidy NOT recorded in P/L. The reason for this is that items like deferred revenue will be counted as revenue in future years and so counting as directly in P/L this year double counts.

Beyond the direct subsidisation, there are a few other considerations:

1. Some of the customers and suppliers of the 13 companies would also be subsidised, meaning the whole chain is subsidised.

2. Cheap financing which is available to many of these firms is not always included as a subsidy in annual reports.

3. Many of the 13 businesses have existing work unrelated to SynBio or industrial bio. So, it is possible that the industrial bio part of their business is less profitable.

4. There is also the risk that companies underreport govt support.

What about other companies not included in the 13?

The short answer is we do not know. My gut feeling is that many of the private companies on the list would not yet be profitable. The list categorises each private company as on their a,b,c funding rounds, part of angel investments or as “strategic financing”. Those don’t usually lead to high success rates. But I could be wrong.

I do take the viewpoints of thoughtful industry watchers seriously. I will keep my eyes peeled for profitable companies and happy to be pointed to success stories.

The bigger picture: Why I was sceptical of profitability claims

Firstly, industrial profitability has been steadily going backwards in China (figure via FT below).

This declining profitability is due to overcapacity in China across these industries. Some of the industries have a direct impact on industrial bio (food, textiles, rubber and plastic).

The overcapacity extends to petrochemicals (which industrial bio seeks to replace). A 2025 article on Sinopec’s website states: “The global chemical industry is currently experiencing a period of low growth and overcapacity.” (全球化工行业正经历产能过剩的低景气周期)

Secondly, industrial biotech firms outside of China have mostly struggled to make a profit. The exception being those that work on long established industrial bioproducts like glutamic acid and fundamental tool providers like Illumina.

So, the argument is China, which has declining industrial profitability across most sectors, is producing profitability in a sector that globally has struggled for profits.

Why does it matter if Chinese industrial bio firms are profitable

Industrial biotech is one of the key forthcoming changes to global manufacturing. If one country’s companies are able to be profitable when others have not, it is a huge advantage. It positions that country to lead on this transformational technology.

It is also important that we get this assessment right because global companies will choose manufacturing locations on perceptions of profitability.

More detailed information from the 13 companies

1. Huaheng Biotech (华恒生物) - Amino acids and nutrition
   Net profit attributable to shareholders in 2024: RMB 190 million (pg 7 of annual report)
   Subsidies listed in annual report:

   1. Govt subsidies recorded as “deferred income tax assets”: RMB 13.1 million (pg 197)

   2. Govt subsidies recorded as “deferred revenue” RMB 87.6 million (pg 208)

   3. Govt subsidies recorded as “other revenue” RMB 30.5 million (pg 217)

   4. Govt subsidies recorded as “cash related to operating activities” RMB 29.3 million (pg 221)

   5. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 15.1 million (pg 9)

2. Bloomage Biotech (华熙生物) - Biotech, biomaterials, base chemicals and pharma intermediaries
   Net profit attributable to shareholders in 2024: RMB 174 million (pg 8 of annual report)
   Subsidies listed in annual report:

   1. Govt subsidies recorded as “deferred revenue” RMB 253.2 million (pg 261)

   2. Govt subsidies recorded as “other revenue” RMB 69.3 million (pg 268)

   3. Govt subsidies recorded as “cash related to operating activities” RMB 117.4 million (pg 270)

   4. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 66.1 million (pg 10)

3. Meihua Bio (梅花生物) - amino acids, seasonings, food additives, and pharmaceutical intermediates
   Net profit attributable to shareholders in 2024: RMB 2.74 billion (pg 9 of annual report)
   Subsidies listed in annual report:

   1. Govt subsidies recorded as “deferred income tax assets”: 48.4 million (pg 160)

   2. Govt subsidies recorded as “deferred revenue” RMB 381 million (pg 173)

   3. Govt subsidies recorded as “other revenue” RMB 203.9 million (pg 179)

   4. Govt subsidies recorded as “cash related to operating activities” RMB 202 million (pg 183)

   5. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 206 million (pg 10)
      

4. Angel Yeast (安琪酵母) - Yeast and chemical production
   Net profit attributable to shareholders in 2024: RMB 1.32 billion (pg 8 of 2024 annual report)
   Subsidies listed in annual report:

   1. Govt subsidies recorded as “other revenue” RMB 165.7 million (pg 185)

   2. Govt subsidies recorded as “cash related to operating activities” RMB 325 million (pg 189)

   3. Govt subsidies recorded as “non-operating income”: RMB 1 million (pg 187)

   4. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 169 million (pg 10)

   
   

5. Sanyuan Biotech (三元生物) - Food additives
   Net profit attributable to shareholders in 2024: RMB 105 million (pg 8 of annual report)
   Subsidies listed in annual report:

   1. Govt subsidies recorded as “deferred income tax assets”: RMB 483 thousand (pg 159)

   2. Govt subsidies recorded as “deferred revenue” RMB 3.5 million (pg 165)

   3. Govt subsidies recorded as “other revenue” RMB 1.7 million (pg 169)

   4. Govt subsidies recorded as “cash related to operating activities” RMB 600 thousand (pg 171)

   5. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 1.4 million (pg 10)
      

6. Baolingbao Biology (保龄宝)
   Net profit attributable to shareholders in 2024: RMB 111 million (pg 8 of annual report)
   Subsidies listed in annual report:

   1. Govt subsidies recorded as “other revenue” RMB 7.4 million (pg 192)

   2. Govt subsidies recorded as “deferred revenue” RMB 43.7 million (pg 184)

   3. Govt subsidies recorded as “cash related to operating activities” RMB 2 million (pg 194)

   4. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 7.4 million (pg 9)
      

7. Jindan Technology (金丹科技) - Lactic acid and other chemicals
   Net profit attributable to shareholders in 2024: RMB 37.5 million (pg 8 of annual report)
   Subsidies listed in annual report:

   1. Govt subsidies recorded as “deferred income tax assets”: 8.2 million (pg 184)

   2. Govt subsidies recorded as “deferred revenue” RMB 73.7 million (pg 193)

   3. Govt subsidies recorded as “other revenue” RMB 23.7 million (pg 199)

   4. Govt subsidies recorded as “non-operating income” RMB 200,000 (pg 200)

   5. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 26.5 million (pg 9)
      

8. Cathay Biotech (凯赛生物) - Bio-based materials
   Net profit attributable to shareholders in 2024: RMB 489 million (pg 12 of annual report)
   Subsidies listed in annual report:

   1. Govt subsidies recorded as “deferred revenue”: RMB 389.3 million (pg 222)

   2. Govt subsidies recorded as “other revenue”: RMB 45.6 million (pg 231) // I got this number by combing the government subsidies “related to assets” and “related to revenue” in the table under “other revenue”

   3. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 32.2 million (pg 14)
      

9. WuXi AppTec (药明康德) - Contract research and manufacturing (most of this is for medicine. So it is not purely industrial bio)
   Net profit attributable to shareholders in 2024: RMB 9.35 billion (pg 5 of the 2024 annual report)
   Subsidies listed in annual report:

   1. Other income: RMB 500 million (pg 184). I’ve summed “assets” and “income” under title: “R&D grants and others related to”

   2. Deferred income RMB 985 million (pg 224 as listed at bottom pg / pg 226 if you enter into PDF page finder of the 2024 annual report).

   3. There are other references to grants/R&D on pg 130/131 of the report. They show income from investment or interest derived from R&D grants. I have not included this in the count because it is not money directly from the govt. The amounts are relatively small compared to overall revenue and thus would not overly change the calculation.
      

10. ChuanNing Biotech (川宁生物) - Advanced APIs and pharmaceutical intermediates
    Net profit attributable to shareholders: RMB 1.40 billion (pg 6 of this doc) // I only have access to a summary of the annual report which does not give details on subsidies.
    

11. Ketuo Biotech (科拓生物) - Edible probiotic products, microecological preparations for animals and plants, and compound food additives
    Net profit attributable to shareholders: RMB 94 million (pg 4 of 2024 annual report summary) / I only have access to a summary of the annual report which does not give details on subsidies.

12. MGI Tech (华大智造) - Life science tools like sequencing and synthesisers
    Net LOSS attributable to shareholders in 2024: RMB 601 million (pg 11 of 2024 annual report)
    Subsidies listed in annual report:

    1. Govt subsidies recorded as “related to deferred income tax assets”: 76.9 million (pg 311)

    2. Govt subsidies recorded as “related to deferred revenue” RMB 64.9 million (pg 311)

    3. Govt subsidies recorded as “other revenue” RMB 82.3 million (pg 321)

    4. Govt subsidies recorded as “cash related to operating activities” RMB 118.2 million (pg 325)

    5. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 47.4 million (pg 13)
       

13. BGI Genomics (华大基因) - Genomics
    Net LOSS attributable to shareholders in 2024: RMB 903 million (pg 12 of 2024 annual report)
    Subsidies listed in annual report:

    1. Govt subsidies recorded as “other revenue” RMB 28.3 million (pg 254)

    2. Govt subsidies recorded as “cash related to operating activities” RMB 27.6 million (pg 257)

    3. Not included in table 1 earlier in article (due to concerns of double counting with “other revenue”): Govt subsidies directly recorded in P&L, but “are not part of the company’s regular business” (this is an an accounting tool to ensure these one-off subsidies are separated from recurring ones - I assume the recurring ones are in “other revenue”): RMB 29.5 million (pg 14)