Multiple stocks of innovative drugs hit the daily limit, and the 300 billion giant earned nearly 20 billion yuan net last year

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Reporter | Han Liming Intern | Jiang Yutong

Editor | Luo Yifan Liu Xueying

On the morning of April 2, the A-share innovative drug sector fluctuated and strengthened. As of around 10:35, Tianjin Pharmaceutical’s 5-day winning streak, Peking University Medicine and Yibai Pharmaceutical (rights protection) with 2-day streaks, Chongqing Pharmaceutical Holdings hitting the daily limit, Zhizhi Pharmaceutical, Hebei Yao Ye, Xin Ganjiang, and Norsland rose over 10%, with Yu Heng Pharmaceutical, Huisheng Biological, Deyuan Pharmaceutical, Changshan Pharmaceutical, and Jinbo Biological also gaining.

CXO sector’s top-performing stocks in 2025, data as of 10:48 on April 2

In recent days, multiple CXO (contract research organization) companies have disclosed their 2025 financial reports. Unlike the industry-wide pressure and the simultaneous decline in revenue and profit for many companies in 2024, the overall performance of the CXO industry in 2025 shows a differentiated trend.

On one hand, WuXi AppTec, with a current market value exceeding 300 billion yuan, reports both revenue and profit growth. In terms of revenue, WuXi AppTec and Kelun Ying increased by 15.84% and 14.91% year-over-year, respectively; on the profit side, Tigermed’s net profit attributable to shareholders surged by 119.15% YoY, with WuXi AppTec’s net profit reaching 19.15B yuan.

On the other hand, Kanglong Chemical achieved operating income of 14.1B yuan, up 14.82% YoY, but its net profit attributable to shareholders was 1.66B yuan, down 7.22%, showing increased revenue but stagnant or declining profits; Zhaoyan New Drug reported operating income of 1.66B yuan, down 17.87% YoY, but net profit of 298 million yuan, up 302.08%, indicating profit growth without revenue growth.

In the A-share market, Wind data shows that the overall valuation of the CXO sector has significantly recovered in 2025. Looking at the range of price changes, throughout 2025, stocks like Zhaoyan New Drug, Chengda Pharmaceutical, and Haoyuan Medical saw annual gains exceeding 100%; Medisi, WuXi AppTec, Sunshine Nuohe, and Baicheng Medical also gained over 50% year-to-date.

A securities analyst told 21st Century Business Herald that, driven by multiple positive factors such as the warming of downstream innovative drug investment sentiment, continuous increase in industry order demand, and better-than-expected performance of leading companies, the CXO sector has been steadily recovering since 2025. With indicators like new orders signed and on-hand orders exceeding expectations, short-term profit forecasts for the industry still have room to rise.

High-growth tracks drive structural market trends

Currently, China’s CRO (contract research organization) industry is in a stage of industry consolidation and demand recovery. On one hand, according to the National Health Commission’s human genetic resources filing data, the number of clinical CRO companies filed in 2025 has decreased by 69% from the peak in 2021, and further industry integration is gradually making competition more benign.

On the other hand, the domestic biopharmaceutical industry is gradually recovering, boosting steady growth in clinical research outsourcing demand. Meanwhile, as Chinese pharmaceutical companies accelerate their overseas expansion and licensing-out transactions become more active, clinical CRO companies with global service capabilities are increasingly competitive.

Looking at the operational data of disclosed annual reports of CXO companies, WuXi AppTec, as the industry leader, performed particularly well, with 2025 revenue surpassing 45.46B yuan and net profit attributable to shareholders reaching 19.15B yuan, maintaining the top position in the industry. As of 10:50 on April 2, its latest market value was about 314 billion yuan.

In terms of business segments, the company’s chemical business contributes the largest revenue, with annual income of 36.47B yuan, up 25.52% YoY, accounting for over 80% of total revenue. Its growth is driven by three main factors: continuous downstream inflow from small molecule drug discovery, strong growth in small molecule process R&D and manufacturing, and rapid growth in TIDES (oligonucleotides and peptides).

WuXi AppTec explicitly states in its annual report that, as new capacity comes online each quarter in 2024, TIDES revenue in 2025 will reach 11.37 billion yuan, up 96.0%. By the end of 2025, on-hand TIDES orders increased by 20.2% YoY. TIDES D&M service clients increased by 25%, and the number of molecules served increased by 45%.

Laboratory chemistry, as the starting point and an important part of Kanglong Chemical, covers projects including small molecule drugs, oligonucleotides, peptides, antibodies, antibody-drug conjugates (ADC), and cell and gene therapies. During the reporting period, it achieved revenue of 8.16B yuan, up 15.78% from the previous year; gross margin for 2025 was 45.10%, up 0.18 percentage points from last year; new orders in this segment increased by about 12% YoY.

Zhaoyan New Drug also stated in its 2025 annual report that the company’s project signing volume for antibodies, small nucleic acids, ADCs, and peptides increased significantly YoY, and high-difficulty, long-cycle tests such as non-human primate reproductive toxicity and carcinogenicity tests remained steadily rising.

Regarding the growth logic of the industry, Xiangcai Securities’ research report pointed out that the growth of the CXO industry in 2025 is not a broad-based recovery but driven by high-growth tracks such as GLP-1 (weight-loss drugs) and ADCs, reflecting a structural market trend.

Pricing pressure easing

Since 2023, due to intensified competition in China’s CXO industry, the average unit price of new clinical operation orders has declined, which has become a major challenge constraining industry profitability. However, looking at industry performance in 2025, the impact of declining order prices appears to be gradually easing.

WuXi AppTec explicitly states in its annual report that during the reporting period, WuXi Testing achieved a gross profit of 1.18B yuan, with a gross margin down 6.32 percentage points from last year, mainly affected by market factors and price effects reflected in order conversion; WuXi Biology achieved a gross profit of 928 million yuan, with a gross margin down 3.04 percentage points, also mainly due to market price factors.

Tigermed said that during the reporting period, revenue from clinical trial technical services was 3.27B yuan, a slight increase of 2.79% YoY. The domestic innovative drug clinical operation revenue declined slightly due to industry cycle and structural changes, with on-hand orders at the end of 2024 decreasing compared to previous years, leading to a reduction in overall clinical trial workload for domestic innovative drugs in 2025. However, the average unit price of new domestic clinical trial orders has stabilized in 2025.

Wanlian Securities’ research report also pointed out that, with the clearance of excess capacity and the concentration of orders toward leading companies, the previous vicious price war has eased. Leading companies, leveraging technological barriers and service quality, can maintain or even raise prices, driving profit margin recovery and “value return.”

Order reserves remain strong, with many CXO companies showing impressive on-hand and new orders in 2025, providing solid support for performance growth in 2026 and beyond.

By the end of December 2025, WuXi AppTec’s ongoing business orders reached 58 billion yuan, up 28.8% YoY. Based on current order status, the company forecasts total revenue for 2026 to be between 51.3 billion and 53 billion yuan, with ongoing business revenue growing 18%–22% YoY.

Tigermed stated in its annual report that the average unit price of new orders in 2025 has stabilized and is expected to return to growth in 2026; as of the end of the reporting period, the company’s total pending contract amount was 18.2 billion yuan, up 15.3% YoY.

Kanglong Chemical’s new order amount in 2025 increased by over 14% YoY; considering new order volume and business trends, the company expects full-year 2026 revenue to grow by 12%–18%. Kelun Ying’s on-hand orders totaled 1.39B USD, up 31.65% YoY, with rapid growth in chemical and biological macromolecule orders, laying a solid foundation for further performance acceleration.

Where is the future headed?

From a long-term industry perspective, the sustained growth in global pharmaceutical R&D investment provides a broad market space for the CXO industry. According to Frost & Sullivan, global R&D spending in the pharmaceutical industry is projected to grow from $277.6 billion in 2024 to $476.1 billion in 2034. The global CDMO market is expected to reach $231 billion by 2030.

Against this backdrop, despite geopolitical risks remaining a concern, internationalization continues to be a key focus for domestic CXO companies. During the reporting period, many leading companies saw steady growth in overseas revenue.

In 2025, WuXi AppTec’s ongoing business revenue reached 43.42 billion yuan, with $31.25 billion from U.S. clients (up 34.3%), €4.82 billion from European clients (down 4.0%), Kanglong Chemical’s North American client revenue was 8.71B yuan (up 10.97%), accounting for 61.82% of total revenue; European (including UK) client revenue was 2.9B yuan (up 27.42%), accounting for 20.54%.

Additionally, Tigermed’s overseas main business revenue was 3.11B yuan, up 2.75%, mainly driven by overseas clinical services; Kelun Ying’s overseas client revenue was 4.92B yuan, up 14.85%.

Alongside international expansion, breakthroughs in AI technology have made technological innovation a key driver for the transformation and upgrading of the CXO industry and enhancing core competitiveness. The application of AI in drug R&D is gradually moving from concept to value realization.

For example, Medisi recently stated during investor visits that it has built an integrated “human cell model—AI prediction—organoid” innovative technology service platform, improved a one-stop preclinical R&D platform based on AI, and developed AI ADMET prediction models to improve drug development efficiency and success rates.

Currently, many AI pharmaceutical companies are partnering with innovative drug firms to promote the application of AI technology in drug R&D. For instance, this year, Yingxi Intelligent and Jingtai Technology have signed R&D collaborations with multiple domestic and international pharmaceutical companies, gradually revealing the commercial value of AI drug development.

Yingxi Intelligent explicitly mentioned in its annual report that, with the Pharma.AI platform, the average time from target discovery to preclinical candidate confirmation is only 12 to 18 months, significantly shorter than the traditional 4.5 years, demonstrating a clear efficiency advantage. As more AI pharma companies enter the field, the competitive landscape of the CXO industry will also undergo new changes.

Currently, the CXO industry, driven by stable global outsourcing demand and high-growth tracks like GLP-1 drugs, is poised to become a leader in the healthcare sector’s turnaround. However, Xiangcai Securities’ research report also notes that the industry is experiencing intense differentiation, with resources and orders increasingly concentrated in giants like WuXi AppTec, forming a pattern of “CDMO outperforming CRO, large firms outperforming small and medium.” In this process, M&A activity is accelerating, with leading companies acquiring smaller firms to expand their footprint. Looking ahead, the sector’s performance may continue to diverge between overseas business certainty and domestic demand recovery, and the innovative drug sub-sector.

（Disclaimer: The content of this article is for reference only and does not constitute investment advice. Investors operate at their own risk.）