China CRO/CDMO: Strong order momentum supports continued earnings upgrades and re-rating

Overview

This report is Goldman Sachs' preview of 2Q/1H26 results for China's CRO/CDMO sector. It argues that the recent sector rebound has been driven not only by fund rotation from AI/Tech into Healthcare, but also by resilient fundamentals, including sustained demand for key therapeutic modalities such as GLP-1 and ADC, domestic clinical activity supporting NHP pricing, active global M&A, and increased AIDD adoption.

Core views

The core view is that the technological depth, execution track record, and global delivery capabilities of leading Chinese CDMOs are sufficient to offset, over the medium term, FX pressure from RMB appreciation and geopolitical noise. The main driver of share price returns remains earnings forecast upgrades, while valuation multiples are increasingly determined by the sustainability of earnings growth over the next 2-3 years.

Analysis framework

The report assesses earnings visibility and re-rating potential in China's CRO/CDMO sector through 2Q26 orders, backlog, commercial project conversion, GLP-1/ADC/TIDES exposure, FX impact, investor feedback, and company earnings catalysts.

Methodology notes

• Valuation and earnings forecastsEarnings forecast upgrades and target price adjustment

  Reflects order trends, project conversion, and margin resilience by adjusting FY26-28e adjusted net profit forecasts and target prices.

  Goldman Sachs raised FY26-28e adjusted net profit forecasts for selected covered companies by 5%/10%/6%, respectively, and increased target prices by 5% on average.

• Factor analysisGS Factor Profile

  Compares stock attributes versus the market and industry peers across four dimensions: Growth, Financial Returns, Multiple, and Integrated.

  Growth is based on forward sales, EBITDA, and EPS growth; Financial Returns is based on ROE, ROCE, and CROCI; Multiple is based on valuation metrics such as P/E, P/B, and EV/EBITDA; Integrated combines growth, returns, and valuation.

• Events and M&AM&A Rank

  Uses a 1 to 3 ranking to assess the probability that a covered company becomes an acquisition target.

  Rank 1 indicates high probability, Rank 2 medium probability, and Rank 3 low probability; Rank 1 or 2 may be included in target price composition.

Asset mapping & comparison

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

• WuXi AppTec Co.(H)(2359.HK) / WuXi AppTec Co.(A)(603259.SH)

  A core beneficiary; the report focuses on GLP-1/TIDES backlog conversion, growth beyond peptides, and potential guidance upgrades.

  Strengths

  Strong GLP-1 demand, TIDES sales, order execution, and multi-quarter delivery capabilities.

  Weaknesses

  Crowded positioning and strong share price performance have raised market expectations for sustained delivery.

  Comparison

  A leading performer in the CDMO rebound, with H shares up +22%/+59% on a 1M/YTD basis.

  Risks

  Geopolitical headlines, FX headwinds, margin trajectory, and insufficient growth diversification.

• Asymchem(H)(6821.HK) / Asymchem(A)(002821.SZ)

  Supported by multi-platform order momentum in GLP-1, ADC, and oligonucleotides.

  Strengths

  Improving visibility in peptide and oligonucleotide pipelines, with signs of stabilization in traditional small-molecule demand.

  Weaknesses

  Aggressive TIDES capacity expansion requires validation of utilization ramp-up and margin sustainability.

  Comparison

  H shares are up +29%/+70% on a 1M/YTD basis.

  Risks

  Order visibility, capacity utilization, and the risk that valuation already reflects the medium-term opportunity.

• Pharmaron(3759.HK / 300759.SZ)

  Improving orders are driving expectations for earnings upgrades, making it a relative laggard in the CDMO recovery trade.

  Strengths

  2Q orders beat expectations, with CDMO orders up 50% YoY; the CRDMO model and cooperation with LLY strengthen its positioning in the GLP-1 supply chain.

  Weaknesses

  RMB appreciation and clinical development competition may pressure near-term margins.

  Comparison

  H shares have rebounded about 54% over the past month, but it is still seen as a relative laggard in the CDMO recovery trade.

  Risks

  Business model disclosure, timing of China approval for orforglipron, and margin sustainability.

• WuXi XDC(2268.HK)

  The report says it is one of the clearest beneficiaries of the ADC cycle.

  Strengths

  Healthy ADC demand, with backlog and project progress supporting growth targets; Singapore capacity provides medium-term expansion opportunities.

  Weaknesses

  The ramp-up phase of the Singapore facility may bring short-term margin volatility.

  Comparison

  Compared with other CDMOs, it has more direct exposure to the ADC commercialization cycle.

  Risks

  Late-stage ADC conversion, customer concentration, visibility of commercial orders, and the Singapore ramp-up.

• WuXi Biologics(2269.HK)

  Investors are focused on new order momentum, capacity utilization, and the 2026 revenue growth outlook.

  Strengths

  Included in the basket of China Healthcare/CRO-CDMO related covered companies.

  Weaknesses

  The report excerpt contains relatively limited specific positive commentary on it.

  Comparison

  The disclosed rating is Neutral.

  Risks

  New orders, capacity utilization, and revenue growth falling short of expectations.

• Tigermed(3347.HK / 300347.SZ)

  Order recovery is the core focus, driven by improving activity from domestic innovative biotech firms and multinational pharma customers.

  Strengths

  Order growth accelerated in April-May, and pricing trends have begun to stabilize.

  Weaknesses

  Recent earnings misses, AI investment spending, pricing pressure, and the CSRC investigation continue to weigh on confidence.

  Comparison

  Compared with CDMO companies, it is more exposed to CRO order recovery and clinical demand validation.

  Risks

  Momentum in MNC China-only POC trials, RFP conversion, backlog formation, CSRC investigation outcome, and margin recovery.

• Genscript Biotech Corp.(1548.HK)

  The report focuses on AIDD-related demand and full-year guidance.

  Strengths

  Increased AIDD adoption may bring incremental demand catalysts.

  Weaknesses

  The excerpt lacks detailed operating data.

  Comparison

  As a life science tools and related services name, its focus differs from traditional CDMOs.

  Risks

  AIDD demand realization and full-year guidance missing expectations.

Key data

• China CDMO performance over the past month+27.9%During the same period, Healthcare was +11.8% and MXCN was +7.6%.
• WuXi AppTec H performance over the past month / year to date+22% / +59%The report lists it as one of the leading names supported by GLP-1 exposure and earnings sustainability.
• Asymchem H performance over the past month / year to date+29% / +70%The report believes it is supported by order momentum from GLP-1, ADC, and oligonucleotide platforms.
• Pharmaron H rebound over the past monthapproximately +54%Supported by overall orders up 30% YoY and CDMO orders up 50% YoY.
• FY26-28e adjusted net profit forecast revision+5% / +10% / +6%Applies to selected covered companies.
• Target price adjustmentraised by 5% on averageExhibit 9 indicates target prices were raised by 5% on average.
• USD/CNY average YoY change in 2Q26approximately -5.9%The report believes RMB strength creates an FX headwind, but the market has largely anticipated it.
• 2Q26 peptide export growth+137% y/yThe report uses this data to support confidence in WuXi AppTec's TIDES growth.
• 2Q26 peptide export valueRmb3.3bnCorresponds to Exhibit 6.

Impact & implications

If 2Q26 results continue to show order resilience, commercial project conversion, and guidance upgrades, sector re-rating is likely to continue; however, the market will more strictly differentiate leading companies with sustainable earnings growth, GLP-1/ADC exposure, and global delivery capabilities.

Risks

• FX headwinds from RMB appreciation may pressure revenue and margin performance.
• Geopolitical headlines may still trigger share price volatility, although the report says currently visible impacts on customer demand and project execution are limited.
• If order intake, backlog conversion, or commercial project ramp-up is weaker than expected, the recent re-rating may be difficult to sustain.
• Capacity utilization and margin sustainability in high-growth areas such as GLP-1, ADC, and TIDES still need to be validated.
• Some companies face company-specific risks such as customer concentration, pricing competition, clinical development competition, AI investment spending, or regulatory investigations.

What to watch

• WuXi AppTec August 3 results: GLP-1/TIDES backlog conversion, growth beyond peptides, and potential earnings or guidance upgrades.
• Asymchem August 24 results: GLP-1, ADC, and oligonucleotide order intake, capacity utilization, and margin progress.
• Pharmaron August 20 results: whether strong CDMO orders can translate into earnings forecast upgrades, as well as GLP-1-related capacity utilization.
• WuXi XDC August 24 results: late-stage ADC order conversion, Singapore facility ramp-up, customer concentration, and pipeline progress.
• Tigermed August 28 results: order recovery from domestic innovative biotech firms and MNC customers, RFP conversion, and CSRC investigation results.
• GenScript: more disclosure on AIDD-related demand and full-year guidance.
• Whether 2Q26 peptide export data, USD/CNY trends, and industry new order YoY growth continue.