Global CRO/CDMO landscape: Durable outsourcing demand is driving CRO/CDMO capex into the next growth cycle

Overview

This conference takeaways report argues that global CRO/CDMO demand is becoming structurally more durable rather than merely recovering. Goldman Sachs links improving order trends, early-stage innovation, emerging modalities and renewed capex to a broader multi-year outsourcing cycle.

Core views

Goldman Sachs’ central conclusion from its Asia Healthcare CDMO Day is that the sector debate has moved from the pace of recovery to the durability of the next growth cycle. Management teams cited accelerating orders, backlog growth, better commercialization visibility and improved demand in discovery, preclinical and safety assessment. The report treats the recovery in these front-end services as especially important because they are leading indicators for future clinical-development and manufacturing demand. Pharma M&A, licensing and business-development activity are also supporting demand, reducing reliance on new biotech IPOs as the sole funding source. Geopolitical concerns remain relevant, but the report finds that improving global demand visibility currently outweighs them. Indian, Taiwanese and Korean CDMOs continued to see supply-chain diversification support orders, whereas Chinese companies generally reported limited customer-demand impact from geopolitical developments. Supplier selection is increasingly determined by capability, quality, speed and available capacity. Tight European small-molecule API capacity and longer lead times are directing incremental work to Asian manufacturers, while biologics customers continue to dual-source. Drug-product formulation and fill-finish work still tends to favor near-shoring because of regulatory, logistical and customer-proximity needs. The report identifies a marked reacceleration in capex across China and India. Companies are investing more aggressively in peptides, ADCs, oligonucleotides and overseas capacity because they have greater confidence in backlog conversion and medium-term demand. Samsung Biologics’ expected Plant 6 announcement by year-end is presented as further evidence of confidence in biologics demand. The strategic model increasingly combines Asian manufacturing scale with selective Western footprints for customer access, drug-product services and specialized technologies; examples include Samsung Biologics’ Rockville acquisition and regional companies’ evaluation of US greenfield and acquisition opportunities. Emerging modalities are the main growth engine. Peptides remain central, particularly obesity-related programs, but the opportunity is broadening beyond GLP-1. WuXi AppTec raised FY26 TIDES growth guidance to about 45% year-on-year and is targeting 130kL of peptide capacity by year-end 2026. Asymchem targets 69kL by year-end 2026 from 45kL in 2025 and serves 60 peptide projects, including 25 obesity-related programs. ADC discussions have shifted from platform build-out toward commercial conversion and manufacturing scale-up; WuXi XDC is identified as a beneficiary of increasing ADC outsourcing. Oligonucleotides, drug-product capabilities and biosimilars add further avenues for higher-value and stickier outsourcing demand. Second-quarter and first-half results reinforce the report’s industry thesis. Chinese players including WuXi AppTec, WuXi Biologics and WuXi XDC delivered meaningful earnings outperformance, while WuXi AppTec, WuXi Biologics, Pharmaron and GenScript raised FY26 outlooks. Reported order or backlog growth included WuXi AppTec at 25%, WuXi Biologics at 24%, WuXi XDC at 50%, Asymchem at 54% and Pharmaron at 30%. Early-stage indicators also strengthened: WuXi AppTec added 167 preclinical and Phase I molecules in 2Q26 versus 80 in 1Q26; WuXi Biologics added a record 169 integrated projects in 1H26; WuXi XDC signed 51 integrated projects; and Pharmaron’s clinical-development order intake rose 30% year-on-year. The report views AI-driven drug discovery as shifting from a potential CRO-pricing disruption to an incremental source of demand. GenScript reported about US$40 million of AIDD-related revenue in 1H26 and guided to more than US$100 million in 2H26. Pharmaron said roughly 7-8% of Laboratory Services revenue was linked to AI-focused customers, while WuXi Biologics reported 30% growth in protein-related services. Goldman Sachs notes that some clinical-CRO services, such as medical writing and translation, may face pricing pressure, but efficiency gains have so far offset this. Over time, faster target identification, molecule design and pipeline generation could increase demand for preclinical and clinical services. Biosimilars are presented as another durable biologics-outsourcing driver. The report cites Sandoz’s expectation for the global biosimilars market to grow at about a 19% CAGR from roughly US$36 billion in 2025 to US$209 billion in 2035. FDA reforms have reduced development requirements; the report notes a typical biosimilar program could shorten from seven to eight years to four to six years and cut development costs by roughly 50%. A US$550 billion biologics loss-of-exclusivity pool through 2040 and multi-year adoption patterns underpin the thesis. WuXi Biologics had 17 active biosimilar projects as of June 2026, including two new 1H26 signings, with 20 projects committed over the following three years and 10 opportunities under negotiation. Regionally, the report highlights varied but generally constructive operating evidence. Samsung Biologics reported 2Q26 revenue of KRW1.32 trillion, up 30.2% year-on-year, and retained 15-20% FY26 revenue-growth guidance while expecting the upper end. Lonza’s 1H26 EBITDA was about 4% above company-compiled consensus and its FY26 core EBITDA-margin guidance rose to 33-34% from above 32%. Thermo Fisher expects FY26 organic growth toward the upper end of 3-4%, supported by improving pharma and biotech spending and US onshoring-linked CDMO orders. The report also notes execution exceptions, including Fujifilm Bio CDMO’s slower facility ramp and reduced FY26 guidance, and divergent Indian company results despite aggregate sales growth accelerating to 27% year-on-year in 1QFY27.

Analysis framework

The report combines management commentary from the Asia CDMO Day with recent earnings results, order and backlog trends, capacity plans, modality developments, funding conditions and regional peer comparisons. It uses front-end R&D activity and book-to-bill trends as indicators of future downstream manufacturing demand, then assesses which companies have exposure to the relevant growth areas.

Methodology notes

• Industry AnalysisSupply-demand framework

  Assessment of outsourcing demand, backlog conversion, capacity additions and regional supply constraints.

  Goldman Sachs links improving orders and early-stage activity to future service demand, while evaluating capex and available capacity as the supply-side response.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Use of discovery, preclinical, clinical-development and commercial-manufacturing activity as connected stages of the CRO/CDMO value chain.

  The report treats recovery in early-stage services as a lead indicator that can flow through to later development and manufacturing revenues.

• Valuation methodsP/E and PEG Valuation

  Forward P/E and PEG comparison for selected CDMO companies.

  The report compares selected Chinese companies with Samsung Biologics and Lonza and notes that WuXi shares trade at a discount despite a similar growth profile.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• WuXi XDC (2268.HK)

  Identified as a beneficiary of accelerating ADC outsourcing demand and early-stage innovation recovery.

  Strengths

  Record 51 newly signed integrated projects; strong ADC and bioconjugate exposure.

  Comparison

  Greater early-stage R&D leverage than commercial-stage-focused peers.

  Risks

  Weak biotech funding, competition, geopolitical uncertainty, client or late-stage-project losses, delayed capacity expansion and ADC clinical-development risk.

• Pharmaron (3759.HK)

  Highlighted as well positioned for early-stage innovation activity, AIDD and emerging modalities.

  Strengths

  Clinical Development order intake rose 30% year-on-year; approximately 7-8% of Laboratory Services revenue linked to AI-focused customers.

  Comparison

  More aggressive early-stage R&D exposure relative to commercial-stage-focused names.

  Risks

  US-China trade tensions, labor and talent challenges, and weaker global pharma R&D or venture/IPO funding.

• Samsung Biologics (207940.KS)

  A key biologics and multi-modality capacity-expansion name to watch.

  Strengths

  Plant 5 ramp, US-site contribution, US$2.6bn opportunity pipeline and PolyPeptide acquisition support growth strategy.

  Weaknesses

  Backlog was broadly stable at US$21.7bn and gross margin was softer than expected.

  Comparison

  Global-scale biologics manufacturer expanding toward end-to-end ADC and peptide capabilities.

  Risks

  Competition, slower capacity ramp-up, regulatory risks and corporate-governance risks.

• Lonza (LONN.S)

  Highlighted for earnings resilience and broad portfolio exposure.

  Strengths

  1H26 EBITDA about 4% above consensus; strong Advanced Synthesis and Specialized Modalities performance.

  Weaknesses

  Integrated Biologics missed expectations because of weaker base-business portfolio mix.

  Comparison

  Portfolio diversity, including ADCs, was viewed as offsetting the Integrated Biologics weakness.

  Risks

  Slower EBITDA-margin progression, slower Vacaville utilization, delayed biotech-funding improvement and long-term single-use continuous-manufacturing risk.

• Thermo Fisher Scientific (TMO)

  Potential beneficiary of US onshoring, CDMO share gains and improving clinical-stage biotech funding.

  Strengths

  Broad-based end-market acceleration and increasing US-manufacturing-linked CDMO orders.

  Weaknesses

  Return to long-term growth is expected to be gradual.

  Comparison

  Its Patheon platform is positioned for US reshoring, especially among smaller biopharma customers without dedicated manufacturing capacity.

  Risks

  Early-stage R&D weakness, softer large-pharma spending, uncertainty around long-range growth recovery and continued weakness in USA&G.

Key data

• WuXi AppTec FY26 TIDES growth guidancec.45% y/ySecond increase in 2026, from 30% at the start of the year and 40% after 1Q26.
• Samsung Biologics 2Q26 revenueKRW1.32tn (+30.2% y/y)Management reiterated FY26 revenue-growth guidance of 15-20% and expects the upper end.
• Lonza FY26 core EBITDA margin guidance33-34%Raised from previously above 32%.
• GenScript AIDD-related revenuec.US$40mn in 1H26; >US$100mn guided for 2H26AIDD demand supported a guidance upgrade and additional capacity expansion.
• Global biosimilars market forecastc.US$36bn in 2025 to c.US$209bn in 2035Sandoz forecast of about 19% CAGR.
• US healthcare equity fundingUS$36bn YTD as of August 2026Reported as the highest level since 2021.

Impact & implications

Goldman Sachs believes the combination of commercial-stage demand, recovering early-stage innovation, new modalities and capacity investment supports a broader and more durable outsourcing cycle. It favors companies with early-stage R&D and emerging-modality exposure alongside commercial manufacturing beneficiaries, while distinguishing more defensive commercial-stage exposure from greater leverage to an early-stage recovery.

Risks

• Product-specific stocking and destocking remain a key risk for Indian CDMO growth.
• Geopolitical uncertainty and possible US-China trade tensions remain risks for several Chinese CRO/CDMO companies.
• Slower-than-expected capacity ramp-up, regulatory inspections or execution issues can delay revenue conversion.
• Weak biotech funding, lower pharma R&D spending and customer or product concentration could weaken order demand.
• AI productivity gains may create pricing pressure in certain clinical-CRO services, including medical writing and translation.

What to watch

• Third-quarter book-to-bill trends at preclinical CRO leaders such as Charles River as a leading indicator for R&D demand.
• IPO and follow-on financing activity, which the report identifies as more relevant than an isolated rate move for sector funding conditions.
• Samsung Biologics large-order announcements, Plant 6 formalization, Plant 5 execution and opportunity-pipeline conversion.
• Conversion of new RFPs and orders into revenue as new capacities and acquisitions ramp.
• The durability of oral GLP-1 adoption, ADC commercialization, AIDD demand and biosimilar project conversion.