Fosun's Strategic Bet on a Controversial Alzheimer's Drug: A High-Risk, High-Reward Play in China's Aging Population

China's aging population is creating a seismic shift in healthcare demand, and Fosun Pharma has placed a bold wager on a drug that epitomizes both the promise and peril of this transition. The company's $200 million acquisition of Green Valley Pharmaceutical-a developer of the Alzheimer's drug sodium oligomannate (GV-971)-has reignited a contentious debate about the drug's scientific validity and regulatory prospects. For investors, the question is whether Fosun's gamble to revive a controversial therapy in a high-growth market justifies the risks.

The Drug's Scientific Potential: A Novel Mechanism with Mixed Evidence

GV-971, a marine-derived oligosaccharide, operates through a unique mechanism targeting the gut-brain axis. By modulating gut microbiota, it aims to reduce neuroinflammation and β-amyloid deposition, two hallmarks of Alzheimer's disease (AD) according to a 2019 study. Clinical trials in China showed statistically significant improvements in cognitive function, with a 2.54-point difference in ADAS-Cog12 scores compared to placebo after 36 weeks in a 2024 analysis. However, the drug's efficacy remains controversial. Critics argue that its mechanism is not fully understood, and its global Phase III trial-the "Green Memory" study-was terminated in 2022 due to funding shortages and pandemic disruptions.

Despite these uncertainties, GV-971's inclusion in China's national reimbursement list since 2022 and its $88 million in sales in 2024 suggest some level of market acceptance. Fosun's acquisition signals confidence in the drug's potential, particularly as combination therapies-such as pairing GV-971 with standard AD drugs like donepezil-are explored according to a 2025 research paper.

Regulatory Hurdles: A Rocky Road to Reapproval

The National Medical Products Administration (NMPA) denied GV-971's license renewal in 2025, citing incomplete post-marketing confirmatory trials in a 2025 regulatory update. Green Valley halted production in 2024 after the drug's conditional approval expired, leaving a regulatory void that Fosun now aims to fill. The company's strategy hinges on completing these trials and resubmitting for approval-a process that could take years and cost hundreds of millions.

The lack of transparency around the NMPA's rejection adds to the risk. While Fosun has not disclosed the regulator's feedback, the broader context of China's tightening scrutiny of drug approvals suggests that robust, reproducible data will be critical. For investors, the key question is whether Fosun can generate the evidence needed to satisfy regulators, especially given the drug's scientific controversies.

Market Dynamics: A Lucrative but Competitive Landscape

China's Alzheimer's drug market is booming. Valued at $6.97 billion in 2025, it is projected to grow at a 15.64% CAGR, reaching $16.67 billion by 2033 according to market research. This growth is driven by an aging population and rising healthcare spending, creating a fertile ground for innovative therapies. However, GV-971 faces stiff competition.

New entrants like Eisai/Biogen's Leqembi and Eli Lilly's Kisunla-both approved in 2024-have captured market share with their amyloid-targeting mechanisms. Leqembi alone is projected to generate $398 million in China by 2030 according to a 2025 industry analysis. Meanwhile, Lilly's donanemab is in Phase III trials, further intensifying the race.

Fosun's bet on GV-971's gut-brain axis approach could differentiate it, but only if the drug's efficacy is validated and its cost-effectiveness proven.

Financial Realities: Can Fosun Fund the Revival?

Fosun Pharma's 2025 financials reveal a company committed to R&D-driven growth. The firm allocated $3.998 billion to R&D in the first three quarters of 2025, with a 28.81% quarterly increase in expenses according to financial reports. This spending underscores its capacity to fund GV-971's regulatory and development needs. However, Green Valley's financials are less rosy. The company reported a $67.6 million net loss in the first nine months of 2025, partly due to GV-971's production halt.

Fosun's $200 million acquisition price-equivalent to a 53% stake-reflects a high-risk, high-reward strategy. While the company has the liquidity to support post-market trials, the integration of Green Valley's operations and the resumption of production could strain resources. Investors must weigh Fosun's R&D prowess against the uncertainty of regulatory outcomes and the drug's competitive positioning.

Conclusion: A Calculated Gamble in a High-Stakes Market

Fosun's acquisition of Green Valley is a calculated bet on a drug with a novel mechanism and a market primed for growth. The company's R&D investments and strategic focus on CNS therapies suggest a long-term vision. However, the path to success is fraught with challenges: regulatory hurdles, scientific skepticism, and fierce competition.

For investors, the key variables are the outcome of post-marketing trials, the drug's ability to secure reimbursement, and its performance against newer therapies. If Fosun can navigate these risks and prove GV-971's value, the payoff could be substantial. But this is not a bet for the faint of heart. In a market where innovation is both a necessity and a curse, Fosun's gamble on GV-971 epitomizes the high-stakes nature of China's healthcare revolution.