Global CRO/CDMO industry: CDMO demand recovery is broadening into a durable, multi-year growth cycle, driving renewed capacity investment.

Overview

This global CDMO industry update synthesizes discussions from Goldman Sachs’ Asia Healthcare CDMO Day and recent 2Q/1H26 results. The report concludes that outsourcing demand has progressed from an uneven recovery to a more durable growth cycle, with early-stage innovation, emerging modalities, capacity investment and selective international expansion reinforcing visibility.

Core views

Goldman Sachs’ central conclusion is that the CRO/CDMO discussion has shifted from the pace of recovery to the durability of the next growth cycle. Management teams across regions cited accelerating order intake, backlog growth, improving commercialization visibility and stronger discovery, preclinical and safety-assessment activity. The report treats improvement in these front-end services as especially meaningful because they typically lead future clinical-development and manufacturing demand. Continued pharmaceutical M&A, licensing and business-development activity further supports the view that the recovery is broadening beyond commercial-stage programs. Regional supply-chain dynamics remain differentiated. Indian, Taiwanese and Korean CDMOs continue to attribute part of order intake to diversification initiatives, while Chinese companies reported limited direct customer-demand impact from geopolitics. The report says supplier selection is increasingly centered on capability, quality, speed and available capacity. European small-molecule API capacity constraints and long lead times are directing incremental work toward Asian manufacturers, while biologics customers are pursuing dual sourcing. Drug-product formulation and fill-finish work remains more inclined toward near-shoring because of regulation, logistics and customer proximity. Capex was the clearest change from the prior year’s discussions. Chinese and Indian management teams sounded more aggressive on investment as confidence in backlog conversion and medium-term demand improved. Incremental spending is concentrated in peptides, ADCs, oligonucleotides and overseas expansion; several companies acknowledged that earlier capital discipline may have constrained growth. Samsung Biologics’ expected Plant 6 announcement by year-end is cited as further evidence of confidence in biologics demand. The report sees the industry evolving toward Asian manufacturing scale combined with selective Western footprints for customer engagement, drug-product services and specialized technologies. Emerging modalities are the main growth engine. Peptide demand remains anchored by obesity and GLP-1 programs, although the report distinguishes scaled commercial leaders from second-wave participants targeting earlier-stage pipelines and non-GLP-1 indications. WuXi AppTec raised FY26 TIDES growth guidance to about 45% year-on-year, with peptide capacity targeted at 130kL by year-end 2026. Asymchem targets 69kL by year-end 2026, versus 45kL in 2025, and is serving 60 peptide projects, including 25 obesity-related programs. Oral GLP-1 products are viewed as incremental demand rather than a substitute for peptide outsourcing: Goldman Sachs expects oral small-molecule manufacturing demand to rise alongside peptide demand if early launch traction persists. ADCs are moving from platform construction toward commercial conversion and manufacturing scale-up. The report identifies WuXi XDC as a clear beneficiary of rising ADC outsourcing demand and notes Samsung Biologics’ expansion toward end-to-end ADC solutions. Oligonucleotides are becoming another investment priority, particularly in China, while fill-finish and formulation capabilities are increasingly strategic because they deepen customer relationships and improve commercial stickiness. Biosimilars are presented as a longer-duration biologics outsourcing driver: Goldman Sachs cites Sandoz estimates of a global market growing at about 19% CAGR from roughly US$36 billion in 2025 to about US$209 billion in 2035, supported by simpler development pathways, a large patent-expiry cycle and rising adoption. The report notes US$550 billion of biologics sales losing exclusivity through 2040 and argues that lower development time and cost can broaden the biosimilar developer base and demand for biologics CDMO services. The report also sees AIDD shifting from a potential CRO pricing-risk narrative to a demand-creation opportunity. GenScript reported about US$40 million of AIDD-related revenue in 1H26 and guided to more than US$100 million in 2H26. Pharmaron stated that AI-focused customers represented roughly 7-8% of Laboratory Services revenue, while WuXi Biologics reported 30% growth in protein-related services. For clinical CROs, automation may still pressure pricing in services such as medical writing and translation, but management teams believe productivity gains and operating leverage have so far offset those effects. Over time, faster target identification, molecule design and pipeline generation could increase demand for preclinical and clinical development services. Recent results support the broader recovery thesis. Key Chinese CDMOs delivered earnings beats and guidance upgrades despite FX headwinds: WuXi AppTec, WuXi Biologics, WuXi XDC, Asymchem and Pharmaron reported backlog or order growth of +25%, +24%, +50%, +54% and +30%, respectively. WuXi AppTec added 167 preclinical and Phase I molecules in 2Q26, versus 80 in 1Q26 and an average of about 90 per quarter in 2025; WuXi Biologics added a record 169 integrated projects in 1H26, and WuXi XDC signed a record 51 integrated projects. These indicators support Goldman Sachs’ view that recovery now extends from commercial manufacturing into early-stage innovation. Elsewhere, Samsung Biologics reported 2Q26 revenue of W1.32 trillion, up 30.2% year-on-year, and maintained FY26 revenue-growth guidance of 15-20%, expecting the upper end; its US$21.7 billion contracted backlog was broadly stable and its opportunity pipeline was US$2.6 billion. Lonza’s 1H26 EBITDA was about 4% ahead of company-compiled consensus, and it raised its FY26 core EBITDA-margin outlook to 33-34% from above 32%, despite a weaker Integrated Biologics mix. Indian CDMOs posted aggregate 1QFY27 sales growth of 27% year-on-year, versus 13% in 4QFY26, while FY27 capex is expected to grow 50% after 38% in FY26. Thermo Fisher delivered 5% organic growth in 2Q26 and guided to the high end of its 3-4% FY26 organic-growth range, with US onshoring-related CDMO orders expected to convert over the next 9-12 months. Goldman Sachs considers a single September Fed hike unlikely to materially affect near-term sector fundamentals because 2H26 order books and revenue visibility are largely secured and execution is the near-term earnings driver. It instead emphasizes funding conditions, IPOs and follow-on financings, plus preclinical-CRO book-to-bill ratios, as leading indicators. Charles River’s 1.19x DSA book-to-bill ratio, its highest in nearly four years, is cited as evidence of resilient upstream R&D. The report favors companies with greater early-stage R&D and emerging-modality exposure, naming WuXi XDC, Pharmaron and Tigermed as well positioned; it also highlights Samsung Biologics, Asymchem, WuXi AppTec and GenScript for specific catalysts, while remaining constructive on Lonza, Divi’s Laboratories and Thermo Fisher.

Analysis framework

The report combines management commentary from the Asia CDMO Day with regional 2Q/1H26 earnings results, order and backlog data, guidance changes, capacity plans and cross-regional comparisons. It evaluates whether demand is broadening across discovery, clinical development and commercial manufacturing, then links modality trends, funding conditions, supply-chain decisions and capex to future outsourcing demand.

Methodology notes

• Industry AnalysisSupply-demand framework

  Assessment of outsourcing demand, order backlogs, capacity additions and utilization across CRO/CDMO markets.

  Goldman Sachs uses order momentum, backlog conversion, capacity constraints and new capex to judge whether demand can support a sustained outsourcing cycle.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Use of discovery, preclinical and safety-assessment demand as leading indicators for later clinical-development and manufacturing demand.

  The report argues that improving front-end R&D activity should flow through to downstream development and commercial manufacturing revenue.

• Valuation methodsP/E and PEG Valuation

  Forward P/E and PEG comparisons across selected CDMO companies.

  The report compares Chinese CDMO valuations with peers such as Lonza and Samsung Biologics and notes that WuXi shares trade at a discount despite similar projected growth profiles.

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; service backlog of about US$2.0bn, up 50.4% y/y; substantial exposure to emerging modalities.

  Comparison

  Goldman Sachs identifies it as one of the clearer ADC outsourcing beneficiaries.

  Risks

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

• Pharmaron (3759.HK)

  Highlighted as well positioned for early-stage R&D activity and emerging growth themes including AIDD, ADCs and biologics.

  Strengths

  Clinical Development Services new project orders grew 30% y/y; FY26 revenue-growth outlook was raised to 15-20%.

  Comparison

  Classified as more aggressive than commercial-stage-focused names because of greater leverage to early-stage R&D.

  Risks

  US-China trade tensions, labor and talent costs, and slowing global pharma R&D or venture-capital/IPO financing.

• Tigermed (3347.HK)

  Highlighted as a beneficiary of improving early-stage innovation and CRO demand.

  Strengths

  Net new orders grew more than 30% y/y in 1H26; continued AI investment plan of about Rmb200mn for FY26.

  Comparison

  Grouped with WuXi XDC and Pharmaron as having greater early-stage recovery leverage.

  Risks

  Geopolitical and regulatory risk, order impairment, weak front-end demand or investment, slower global expansion and lagging consolidation.

• Samsung Biologics (207940.KS)

  A key catalyst-driven biologics and multi-modality name to watch.

  Strengths

  2Q26 revenue grew 30.2% y/y; management expects the upper end of 15-20% FY26 revenue growth; Plant 5 ramp-up, US facilities, PolyPeptide acquisition and potential Plant 6 are growth drivers.

  Weaknesses

  Gross margin was softer than expected because of Plant 5 and US-facility start-up costs.

  Comparison

  A global biologics peer used in valuation comparisons with Chinese CDMOs and Lonza.

  Risks

  Intensifying competition, slower capacity ramp-up, regulatory risk and corporate-governance issues.

• WuXi AppTec (2359.HK)

  A major beneficiary of GLP-1 commercialization and broader TIDES outsourcing demand.

  Strengths

  FY26 TIDES growth guidance raised to about 45% y/y; backlog rose 25.2% y/y; peptide capacity is expanding.

  Weaknesses

  GLP-1 concentration increases exposure to a single demand theme.

  Comparison

  Viewed as relatively defensive because of higher commercial-stage project exposure.

  Risks

  GLP-1 concentration, pricing pressure, geopolitical uncertainty, uncertainty in the success-based discovery model and slower new-business ramp-up.

• Lonza (LONN.S)

  Goldman Sachs remains constructive based on earnings resilience and diversified commercial capabilities.

  Strengths

  1H26 EBITDA was about 4% ahead of consensus; raised FY26 core EBITDA-margin outlook to 33-34%; strong Advanced Synthesis and Specialized Modalities performance.

  Weaknesses

  Integrated Biologics missed expectations because of weaker portfolio mix.

  Comparison

  Its diversification, including ADCs, is viewed as offsetting weakness in Integrated Biologics.

  Risks

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

• Thermo Fisher (TMO)

  Positioned to benefit from US onshoring, CDMO/CRO share gains and improving clinical-stage biotech funding.

  Strengths

  5% organic growth in 2Q26; FY26 organic-growth expectations moved toward the high end of 3-4%; CDMO orders tied to US manufacturing investment may convert within 9-12 months.

  Weaknesses

  Recovery toward its long-term growth framework is expected to be gradual.

  Comparison

  Its Patheon platform is highlighted as well positioned for US reshoring, particularly for smaller biopharma customers.

  Risks

  Weak early-stage R&D demand, lower large-pharma spending, uncertainty in the recovery path and continued US academic-and-government-market weakness.

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.
• Chinese CDMO backlog/order growthWuXi AppTec +25%; WuXi Biologics +24%; WuXi XDC +50%; Asymchem +54%; Pharmaron +30%Year-on-year figures cited as evidence of improving medium-term visibility.
• Samsung Biologics 2Q26 revenueW1.32tn, +30.2% y/yFY26 revenue growth guidance of 15-20% was reiterated, with management expecting the upper end.
• Lonza 1H26 EBITDAc.4% above company-compiled consensusFY26 core EBITDA-margin guidance was raised to 33-34% from above 32%.
• Indian CDMO aggregate sales growth27% y/y in 1QFY27Accelerated from +13% y/y in 4QFY26; street capex expectations are +50% in FY27 after +38% in FY26.
• GenScript AIDD-related revenuec.US$40mn in 1H26; >US$100mn expected in 2H26The report cites this as tangible evidence of AIDD-related outsourcing demand.
• Global biosimilars marketc.US$36bn in 2025 to c.US$209bn in 2035ESandoz forecast cited by Goldman Sachs, implying c.19% CAGR.
• US healthcare equity fundingUS$36bn YTD as of August 2026The report says this is the highest level since 2021.

Impact & implications

Goldman Sachs believes the sector is supported by both near-term execution and structural innovation drivers. Companies with exposure to early-stage R&D, AIDD, ADCs and next-generation biologics may have greater leverage to the recovery, while companies with commercial-stage manufacturing exposure may offer more defensiveness. Renewed capacity investment signals management confidence but makes backlog conversion, project execution and utilization increasingly important.

Risks

• Biotech funding weakness, including slower IPO and follow-on financing activity, could reduce early-stage outsourcing demand.
• Geopolitical uncertainty and US-China trade tensions remain risks for Asian CDMO providers.
• Higher domestic and global competition may create pricing pressure and affect client retention.
• Delayed capacity ramp-ups, lower utilization or execution problems at new facilities could constrain earnings conversion.
• Regulatory inspections, compliance requirements and clinical-development risk can delay manufacturing programs or project revenue.
• Product-specific stocking or destocking remains a risk for Indian CDMOs.

What to watch

• IPO and follow-on financing activity, along with 3Q book-to-bill trends at preclinical CROs such as Charles River, as leading indicators for R&D demand.
• Conversion of Samsung Biologics’ US$2.6bn opportunity pipeline, Plant 5 execution and a potential Plant 6 announcement by year-end.
• Order intake, backlog conversion and utilization across Chinese CDMOs as capex accelerates.
• Demand progression for peptides, oral GLP-1s, ADCs, oligonucleotides, AIDD services and biosimilar programs.
• The pace of US onshoring-related CDMO order conversion, which Thermo Fisher expects over the next 9-12 months.
• The terminal-rate outlook and funding conditions rather than the impact of any single Fed rate move.