China Healthcare: Improved 2025 earnings, with overseas expansion and out-licensing still the main themes in 2026
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China Healthcare: Improved 2025 earnings, with overseas expansion and out-licensing still the main themes in 2026
Nomura believes China healthcare companies improved overall in FY25 and should do better in FY26; CRO fundamentals are the most stable, while out-licensing revenue for innovative drugs and pharma, commercialization delivery, and overseas expansion for medical devices will determine sector performance.
- FY25 out-licensing collaboration revenue for pharma and biotech materially boosted financial performance and helped biopharma financing recover, supporting the resilience of China's CRDMO performance in 2025.
- Nomura's sub-sector ranking is CRO > Biotech > Pharma > other sub-sectors, with top picks Wuxi Apptec, Wuxi XDC, Innovent and BeOne.
- The CRO sector outlook for 2026E remains positive, but FX pressure may be a headwind; Wuxi Apptec, Asymchem and Pharmaron all gave strong FY26E guidance.
- For pharma companies, the key in 2026 is not only whether out-licensing transactions happen, but also when and at what amount the revenue is recognized in the P&L.
- Domestic demand for medical devices remains weak, but overseas growth in high-end equipment and surgical robots is an important 2026 theme.
Report interpretation
Overview
This report reviews the FY25 performance of Chinese healthcare companies and looks ahead to FY26. Nomura believes the past year’s sector financial performance benefited from innovative-drug out-licensing collaboration revenue, improved biotech financing, and CRDMO resilience, while related domestic businesses still face weak demand. Looking into 2026, out-licensing revenue, CRO order visibility, innovative-drug commercialization and clinical catalysts, and medical device overseas expansion will be the core variables.
Core views
The core views are: first, the CRO industry in FY26F is more stable and predictable than Biotech and Pharma, and also has greater growth potential than other sub-sectors that have yet to recover; second, large Biopharma names such as BeOne and Innovent have delivered strong commercialization performance, but investors are demanding higher financial quality; third, the floor for pharma valuations is that 2026 needs to deliver no fewer out-licensing deals and no less total deal value than in 2025, with the revenue ultimately confirmed in the income statement; fourth, the domestic environment for medical device companies remains under pressure, and overseas expansion remains the main investment thesis.
Analysis framework
The report uses fundamental comparisons across sub-sectors and company earnings tracking, focusing on FY25 actual results, FY26E management guidance, out-licensing revenue recognition, commercialization progress, clinical catalysts, FX, and domestic demand to compare the relative attractiveness of CRO, Biotech, Pharma and medical device/equipment.
Methodology notes
Split by CRO, Biotech, Pharma and medical device/equipment to compare growth visibility, earnings quality and 2026 catalysts.
Nomura ranks CRO first because the industry is more stable and predictable, and is supported by the global R&D value chain and GLP-1 demand; Biotech and Pharma depend more on commercialization delivery, clinical events and out-licensing revenue recognition.
Observe not only whether licensing deals occur, but also when and at what amount deal revenue is booked into the P&L.
The report notes that product sales are relatively easier to predict, while the timing and amount of collaboration revenue recognition create more uncertainty in 2026 earnings estimates, and investors are no longer looking only at deal announcements themselves.
Upgrade from low-end consumable exports to overseas volume growth in high-end medical devices and surgical robots.
The report argues that domestic medical device demand remains weak, but the strong 2025 growth of United Imaging's CT/MRI equipment and Microport's surgical robots shows that overseas expansion of Chinese medical device companies remains a key theme in 2026.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- CRO/CRDMONomura's most preferred sub-sector
- Strengths
- An important position in the global R&D value chain, resilient in FY25 despite weak biopharma financing and geopolitical uncertainty, with generally strong FY26E guidance.
- Weaknesses
- Guidance for some companies may be affected by FX pressure, and global biopharma financing could remain volatile.
- Comparison
- More stable and predictable than Biotech, Pharma and other sub-sectors.
- Risks
- FX pressure, geopolitical uncertainty, and another downturn in global biopharma financing.
- BiotechSecond most preferred sub-sector
- Strengths
- Large Biopharma names such as BeOne and Innovent have delivered strong commercialization performance, and some companies have key clinical catalysts in 2026.
- Weaknesses
- Investors are demanding higher financial quality from large Biopharma names, and the progress of Kelun Bio and Akeso has been slower than expected.
- Comparison
- Growth is stronger than traditional pharma, but earnings and commercialization delivery are less certain than CRO.
- Risks
- Clinical catalysts falling short of expectations, weak commercialization capabilities, and product revenue growth below market expectations.
- PharmaThird most preferred sub-sector
- Strengths
- Out-licensing deals may still contribute meaningful financial income, and Hansoh beat expectations on the back of collaboration revenue recognition.
- Weaknesses
- Hengrui and CSPC reported weaker-than-expected 4Q25/FY25 results, and the timing and amount of collaboration revenue recognition are hard to predict.
- Comparison
- Compared with CRO and Biotech, pharma is more dependent in the near term on deal execution and revenue recognition than on pure product sales.
- Risks
- 2026 out-licensing deal count or total value falling short of 2025, or collaboration revenue not being recognized in time in the P&L.
- Medical device/equipmentAsset related to the overseas-expansion theme
- Strengths
- China's medical device overseas expansion started earlier than in other sub-sectors, and the overseas growth trend for high-end equipment and surgical robots is clear.
- Weaknesses
- Domestic demand remains weak, and limited fiscal support plus volume-based procurement pressure affect performance.
- Comparison
- The domestic recovery is less clear than in CRO and innovative drugs, but the overseas expansion theme is prominent.
- Risks
- Continued weak domestic demand, slower-than-expected overseas expansion, pricing pressure and policy pressure.
- Wuxi ApptecTop pick, newly added as a Top Pick
- Strengths
- Continues to deliver resilient growth off a high base, with FY26E revenue guidance of CNY51.3-53.0bn.
- Weaknesses
- As a CRO leader, it remains exposed to FX, geopolitics and fluctuations in global R&D budgets.
- Comparison
- Viewed by Nomura as one of the core recommended names in the CRO sector.
- Risks
- FX, geopolitics, customer orders and changes in the global financing environment.
- Wuxi XDCTop pick
- Strengths
- Maintains strong growth momentum, with late-stage projects the key focus in FY26.
- Weaknesses
- High growth expectations may also bring greater delivery pressure.
- Comparison
- Together with Wuxi Apptec, it represents one of Nomura's preferred CRO/CRDMO directions.
- Risks
- Project execution falling short of expectations, order conversion below expectations, and FX volatility.
- InnoventTop pick
- Strengths
- Strong commercialization and clinical capabilities; mazdutide and IBI363 are key focus areas in 2026.
- Weaknesses
- Investors are demanding higher financial quality and commercialization delivery from large Biopharma names.
- Comparison
- Along with BeOne, it is one of Nomura's preferred large Biopharma names.
- Risks
- Core product commercialization, clinical progress or financial performance falling short of expectations.
- BeOneTop pick
- Strengths
- Strong commercialization and clinical capabilities, with a more mature biopharma profile at the operating level.
- Weaknesses
- As a large Biopharma name, the market requires stronger financial performance.
- Comparison
- Along with Innovent, it is one of Nomura's preferred large Biopharma names.
- Risks
- Commercialization growth, clinical events and cost control falling short of expectations.
Key data
- Sub-sector rankingCRO > Biotech > Pharma > other sub-sectorsNomura's preferred order based on FY26F fundamentals, predictability and growth potential.
- Top picksWuxi Apptec, Wuxi XDC, Innovent, BeOneWuxi Apptec was newly added as a top pick; Hengrui was removed from the top-pick list.
- Wuxi Apptec FY26E revenue guidanceCNY51.3-53.0bnMentioned in the report-related list as Wuxi Apptec FY26E revenue guidance.
- Pharmaron FY26 revenue guidance12-18% y-y top-line growthMentioned in the report-related list as Pharmaron management guidance.
- Nomura Group rating distributionBuy 57%, Neutral 41%, Reduce 2%Disclosure data as of March 31, 2026, and this is the overall Nomura Group rating distribution.
Impact & implications
For investors, the 2026 investment cues in China healthcare will shift from simply waiting for demand recovery to identifying more predictable CRO growth, innovative-drug commercialization that can truly monetize, out-licensing revenue that can be confirmed in the income statement, and medical device companies that already have the ability to scale overseas. Sector risks include slow domestic demand recovery, FX pressure, geopolitical uncertainty, volatility in collaboration revenue recognition, and weaker-than-expected clinical or commercialization progress.
Risks
- Domestic demand for healthcare-related products remains weak, and limited fiscal support plus volume-based procurement pressure may continue to affect pharma and medical device names.
- FX pressure may drag on FY26 guidance and earnings for CRO companies.
- Geopolitical uncertainty and volatility in global biopharma financing may affect orders for Chinese CRO/CRDMO companies.
- The timing and amount of out-licensing collaboration revenue are hard to predict, which may cause earnings estimate volatility.
- If key clinical catalysts and commercialization progress for Biotech fall short of expectations, valuations may not rerate.
- If overseas expansion for medical devices slows, the core 2026 investment theme may weaken.
- Macro and market volatility may hinder target-price or valuation realization.
What to watch
- Whether the number and total value of out-licensing deals by Chinese pharma companies in 2026 are no lower than in 2025.
- When and at what amount collaboration revenue is recognized in the P&L.
- Execution versus FY26E guidance for Wuxi Apptec, Asymchem and Pharmaron, and the impact of FX pressure.
- Commercialization revenue and pipeline progress for large Biopharma names such as Innovent and BeOne.
- Whether Kelun Bio and Akeso can turn key clinical catalysts into successful commercialization in 2026.
- Akeso's ivonecismab clinical events.
- Overseas market volume growth for medical device companies, especially high-end imaging equipment and surgical robots.