Lyon: The global pharmaceutical supply chain enters a decade of reorganization, with WuXi AppTec (02359) and other platform leaders as the top choices.

Lyon has released a global outlook report on the healthcare industry, stating that the global pharmaceutical supply chain is entering a ten-year restructuring phase. Sales of branded drugs exceeding $500 billion are facing a patent cliff, expanding drug demand, and accelerated manufacturing localization, driving a new round of R&D investment, capacity expansion, and outsourcing demand. The report suggests that value creation will increasingly concentrate on platform leaders that possess scale, technology, and a global-localization layout, such as Thermo Fisher (TMO.US), Switzerland's Lonza, and China's WuXi AppTec (02359), which represent structural advantages in the U.S., Europe, and China, respectively, making them the preferred beneficiaries of this round of industry restructuring. Lyon points out that from 2026 to 2032, sales of over $500 billion in branded drugs will face patent expiration, with the proportion of sales affected by patent expirations expected to rise from 6.5% in 2028 to over 8% in 2032. Large pharmaceutical companies will be compelled to increase R&D spending, engage in licensing activities, and pursue targeted acquisitions to replenish their pipelines, stimulating R&D activities, technology transfers, and commercialization, which will benefit life science tools, Contract Research Organizations (CROs), and Contract Development and Manufacturing Organizations (CDMOs). At the same time, global biopharmaceutical growth is no longer dominated solely by oncology, as the importance of obesity, diabetes, immunology, and other chronic diseases is rising. Drug forms are also expanding from small molecules to more complex therapies like Antibody-Drug Conjugates (ADCs), bispecific/multispecific antibodies, and peptides. Governments and large pharmaceutical companies are increasingly prioritizing manufacturing safety and geographic diversification as strategic focuses, expecting to selectively promote the repatriation of high-value pharmaceutical manufacturing to the U.S. while maintaining a global supply network. In terms of individual stocks, Lyon has initiated coverage of Thermo Fisher with an "Outperform" rating and a target price of $748, optimistic about its position as a leading life sciences tool platform, which has broad exposure to the recovery of biopharmaceutical investment and the repatriation of U.S. manufacturing. The firm maintains an "Outperform" rating on Switzerland's Lonza, raising its target price from 667 Swiss francs to 759 Swiss francs, believing that its scarce biopharmaceutical capacity will help capture localization and outsourcing growth. Regarding WuXi AppTec, Lyon continues to maintain its "Outperform" rating, raising its H-shares target price from HK$214.1 to HK$262 and elevating WuXi AppTec's (603259.SH) A-shares target price from RMB 187.8 to RMB 230. The firm believes that, despite concerns regarding geopolitical factors for GEO Group Inc, the company's leading technology position will still benefit from the rising demand for advanced pharmaceutical outsourcing. Samsung Biologics (207940.KS) also retains its "Outperform" rating, with a target price of 1.8 million won, anticipated to benefit from themes such as peptide demand driven by the patent cliff, dual sourcing of biopharmaceuticals, and the repatriation of U.S. manufacturing.