Goldman Sachs: Visibility into Asian CDMO Demand Improves; Bullish on Companies Involved in Early-Stage R&D and Emerging Therapies

Goldman Sachs released a research report stating that after earlier exchanges with over a hundred institutional investors and pharmaceutical company representatives at investor events, it observed that industry focus has shifted from the recovery trend to the durability of the next growth cycle. The bank believes that improving demand for preclinical and safety assessment, continued positive order momentum, and a rising share of commercial manufacturing all point to a more durable demand environment. Goldman Sachs pointed out that emerging growth drivers such as peptides, ADCs, oligonucleotides, biosimilars, and AI-driven drug discovery (AIDD) are expanding outsourcing opportunities, supporting a multi-year outsourcing growth cycle. Corporate executives have also shifted from positioning for recovery to investing in the next phase of structural growth. The bank believes that improving global demand visibility continues to outweigh investors' concerns about geopolitical impact, and the second-quarter results of global CRO/CDMO companies also show encouraging recovery in discovery, preclinical, and safety assessment activities. Most executives believe that recent U.S. interest rate hikes have had no material impact on short-term demand trends in the CDMO industry. Preference for companies involved in early-stage R&D and emerging therapies In terms of stock selection, Goldman Sachs prefers companies with greater exposure to early-stage R&D activities and emerging therapies, and believes that WUXI XDC (02268), Pharmaron Beijing (03759), and Hangzhou Tigermed Consulting (03347) are well positioned due to their higher proportion of early-stage innovative projects, continuously improving order momentum, and participation in emerging growth areas such as AIDD, ADCs, and next-generation biologics. Goldman Sachs also stated that Asymchem Laboratories (06821) can be regarded as a major beneficiary of accelerating peptide outsourcing demand, is bullish on WuXi AppTec (02359) for its higher leverage to global GLP-1 commercialization ramp-up and broader TIDES demand, and expects GENSCRIPT BIO (01548) to benefit from incremental AIDD demand related to gene and protein synthesis.