Guolian Minsheng Securities: Global CXO Industry Strongly Rebounding, Expected to Continue High Prosperity in 2026.

Guolian Minsheng Securities released a research report stating that global biotechnology and pharmaceutical companies' investment and financing activities and trading demand are expected to significantly rebound by 2025, with the emergence of innovative drug technology platforms driving downstream demand for CXO industries to fully recover, and the industry's prosperity is expected to continue into 2026. The Chinese CRO market is expected to return to growth track in 2025. Regarding CDMO direction, it is recommended to pay attention to companies in the following areas: 1) leading companies in the peptide supply chain; 2) companies expected to benefit from the ADC wave; 3) companies focusing on the small nucleic acid field; and 4) companies with significant potential for margin traction from large single products. Guolian Minsheng Securities' main points are as follows: Strong global demand rebound lays the foundation for growth Global Biotech financing hit a record high in Q4 2025, and multinational pharmaceutical companies' demand recovered from the bottom. The number of INDs in the Chinese market increased by 19% year-on-year, while BD transaction amounts saw a high increase. The domestic innovative drug market is vibrant, providing continuous momentum for the CXO industry. Leading position of Pharmaron maintained, high growth driven by new businesses WuXi AppTec: Strong performance in 2025, with adjusted net profit increasing by 41.3% year-on-year, the TIDES business becoming a new growth engine with revenue growth exceeding 90%, leading in GLP-1 pipeline layout with a global market share of nearly 25%. The small molecule CDMO commercialization projects continue to contribute stable income. WUXI BIO: Total projects reached 945, reaching a historical high, with double-digit growth in bispecific antibodies and ADC projects by 30%, the new technology platform taking over the baton from the big molecule wave to contribute to medium and long-term growth, laying a solid foundation for future commercial production (M) income acceleration. WUXI XDC: Focus on the ADC / XDC track, revenue growth exceeding 40% in 2025, global market share exceeding 24%, clear global capacity expansion plan to support the company's long-term development, expected to benefit continuously from the industry trends in ADC new drug commercialization. Domestic clinical CRO reaches a turning point, Hangzhou Tigermed Consulting benefits from industry recovery The Chinese CRO market returned to growth track in 2025. Price orders for Hangzhou Tigermed Consulting stabilized and recovered in 2025 after continuous decline, benefiting from the growth in the number of domestic clinical pipelines and improved financing environment, with the trend of simultaneous increase in quantity and price downstream demand expected to continue in the future. Global CDMO giants accelerate expansion, confirming high industry prosperity Lonza/FujiFilm: Optimistic performance guidance, with Fujifilm securing $8 billion in new orders in 2025, overseas CDMO leading companies actively expanding large-scale production capacity, showcasing confidence in company development and strong demand for global big molecule CDMOs. Charles River: Order trends improve from H2 2025, with the company expecting the revenue of the safety evaluation business to return to growth track in H2 2026, serving as an early indicator of industry R&D demand, further verifying the trend of the overall industry recovery of CXO industries. Investment recommendations For CRO direction: it is recommended to focus on the platform-type leaders in the clinical CRO direction that are expected to continue to benefit from the innovative wave, such as Hangzhou Tigermed Consulting and leading companies in segmented areas like SMO Clinplus; pay attention to front-end CRO companies with shorter realization cycles and greater marginal elasticity of downstream order changes: PharmaResources, Joinn Laboratories, Shanghai Medicilon Inc., Shanghai InnoStar Bio-tech, and the integrated leader Pharmaron Beijing. For CDMO direction: it is recommended to pay attention to companies in the following areas: 1) leading companies in the peptide supply chain: WuXi AppTec, Novotech; 2) companies expected to benefit from the ADC wave: WUXI XDC, Shanghai Haoyuan Chemexpress; 3) companies focusing on the small nucleic acid field: Novotech, Chengda Pharmaceuticals, Aurisco Pharmaceutical; and 4) companies with significant potential for margin traction from large single products: Asymchem Laboratories, VIVA BIOTECH, Porton Pharma Solutions, and others. Risk warning: 1) Medical insurance and centralized procurement policies lead to lower than expected prices; 2) Clinical progress or listing time is not as expected; 3) Uncertainty in industry competition patterns; 4) Geopolitical risks; 5) Downstream investment and financing and demand recovery are not as expected.