Improving ADC demand and regulatory environment support the recovery thesis for Tigermed

Overview

This report is Morgan Stanley's Asia Pacific ADC conference takeaway on Hangzhou Tigermed Consulting (300347.SZ). The core messages focus on ADC R&D demand driving clinical CRO activity, improvements in China's regulatory framework for innovative drugs, and leading indicators for Tigermed's recovery in orders, trial starts, and profitability. The report also lists DCF valuation assumptions and upside/downside risks.

Core views

The report's overall view is constructive: ADC remains an important driver of clinical development demand, and Tigermed, as the leader in China CRO market share, is well positioned to benefit from new orders, higher ASP, domestic demand recovery, and increased trial starts. At the same time, the report emphasizes that cross-border trial strategies need to be more cautious, preferring either a 'U.S. first, then China' or a 'U.S. and China simultaneously' path over 'China first, then the U.S.'.

Analysis framework

The report combines feedback from conference experts, global ADC pipeline data, changes in China's regulatory policies, Tigermed's market share, order and earnings guidance, and DCF valuation assumptions to assess the sustainability of the company's revenue and margin improvement.

Methodology notes

• Financial modelMorgan Stanley ModelWare

  Metric definition

  The report states that unless otherwise specified, the relevant metrics are based on the Morgan Stanley ModelWare framework.

• Valuation methodDCF

  Base-case discounted cash flow

  Valuation uses a base-case DCF method, assuming a WACC of 9.0% and a terminal growth rate of 3%.

• Research methodConference Takeaways

  Conference takeaway

  The report is primarily based on discussions from the Asia Pacific ADC conference, distilling trends in ADC development demand, the regulatory environment, and Tigermed's business.

Asset mapping & comparison

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

• Hangzhou Tigermed Consulting (300347.SZ)

  Target company; a Chinese clinical CRO service provider highly exposed to ADC and innovative drug clinical development demand.

  Strengths

  Holds a 10.6% share of the China CRO market and ranks first; benefits from ADC demand, order growth, increased trial starts, and improving ASP.

  Weaknesses

  Sensitive to recovery in clinical CRO demand, the pricing environment, and the domestic competitive landscape; with a 1.1% global share, overseas expansion is still affected by regulatory and geopolitical factors.

  Comparison

  Compared with the global market, the company has a stronger position in the China CRO market; the conference takeaway highlights its domestic share advantage.

  Risks

  Clinical R&D outsourcing demand recovers more slowly than expected, pricing pressure rises, domestic competition worsens, geopolitical and FX risks, goodwill and intangible asset impairment, and investment losses.

Key data

• Global ADC pipeline793 projects under development; 21 approved productsThe report states that the top three antibody drug targets are HER2, EGFR, and TROP2.
• Tigermed CRO market share10.6% in China; 1.1% globallyAs of 2024, its China market share was the largest.
• 2025 backlog orders+15%Listed as one of the leading indicators for revenue and margin improvement.
• 2026 earnings guidanceRecurring earnings of Rmb700mn; implied 97.1% year-over-year growthThe report states the growth is driven by new orders and higher ASP.
• China innovative drug regulationUp to 6 years of trial data protection; IND review shortened from 60 days to 30 daysRegulatory optimization is conducive to faster initiation of clinical trials for innovative drugs.
• DCF assumptionsWACC 9.0%; terminal growth rate 3%Used for base-case valuation.
• Latest record in target price historyRmb70Target price history shows 70 as of May 7, 2026.

Impact & implications

If the number of ADC projects continues to expand and domestic demand recovers, leading to more trial starts, Tigermed's order conversion, revenue growth, and margin recovery could benefit. Regulatory data protection and faster review are favorable for the innovative drug ecosystem, but potential U.S. restrictions on Chinese pre-IND data could alter cross-border clinical strategies and increase project planning complexity.

Risks

• Clinical CRO demand recovery is slower than expected and pricing pressure increases.
• The domestic competitive landscape deteriorates, affecting market share and margins.
• U.S. restrictions on pre-IND data from China may affect cross-border clinical trial strategies.
• Geopolitical tensions and exchange-rate volatility create uncertainty.
• Goodwill and intangible assets face impairment risk.
• Investment losses may weigh on earnings performance.

What to watch

• ADC project initiation, the number of clinical trial starts, and conversion of outsourced orders.
• Whether 2025 backlog order growth can translate into 2026 revenue.
• Progress toward delivering the guidance of Rmb700mn recurring earnings and double-digit revenue growth.
• Implementation effects of policies such as China's trial data protection and faster IND review.
• The impact of relevant U.S. pre-IND data policies on the overseas expansion path of Chinese innovative drugs.
• Domestic clinical CRO price competition, market share changes, and new cooperation agreements.