China CRO/CDMO: Recovery Turning into Resilience

Goldman Sachs’ latest research report on China’s CRO/CDMO sector says the industry is moving from a profit recovery phase into a phase of growth resilience, with improving early-stage innovation activity becoming the key driver supporting the next cycle.

Most Chinese CRO/CDMO companies delivered better-than-expected results in the second quarter and first half of 2026, despite foreign-exchange headwinds. WuXi AppTec reported revenue growth of 47.7% year over year and adjusted profit growth of 91.7%; WuXi Biologics and WuXi XDC also significantly beat expectations thanks to higher capacity utilization, improved operating leverage, and an optimized late-stage/commercial project mix. Growth was mainly driven by strong demand for GLP-1, ADCs, peptides, and bispecific/multispecific antibodies.

Guidance upgrades were one of the biggest highlights this quarter. WuXi AppTec raised its 2026 revenue growth guidance from 18-22% to 35-39%; WuXi Biologics from 13-17% to 15-18%; Pharmaron from 12-18% to 15-20%; and GenScript made the largest increase, sharply lifting its life sciences business revenue growth guidance from 15-18% to 25-30%, reflecting accelerating demand for AIDD. Several companies also raised capital expenditure plans at the same time. WuXi AppTec, Pharmaron, and Asymchem all significantly increased their 2026 capex guidance, with further acceleration possible in 2027. Investment is focused on peptides, oligonucleotides, ADCs, and overseas capacity expansion, underscoring management teams’ confidence in future demand visibility.

Order growth momentum remains strong, providing increasingly clear visibility into 2027 growth. WuXi AppTec’s backlog rose 25% year over year, WuXi Biologics’ total orders increased 24% (with three-year orders up 30%), WuXi XDC’s service orders grew 50%, Asymchem’s orders rose 54%, and Pharmaron’s total orders increased 30% (with CDMO orders up more than 50%). Demand continues to be driven by GLP-1, ADCs, peptides, oligonucleotides, and biologics projects, while domestic biotech activity and financing conditions are also improving.

More importantly, the recovery is no longer driven only by commercialization-stage demand. Signs of recovery in the front end of R&D—discovery, preclinical, and early clinical development—are becoming increasingly clear. WuXi AppTec’s small-molecule discovery revenue grew by about 10%; in Q2 2026 it added 167 preclinical and Phase I molecules, versus only 80 in Q1, a sharp rebound from the 2025 quarterly average of about 90 and close to the 2022-23 peak level of about 180 per quarter. WuXi Biologics added a record 169 integrated projects in the first half of 2026, with more than 70% in bispecific/multispecific antibodies and ADCs; WuXi XDC also set a record with 51 newly signed integrated projects. These indicators suggest the industry recovery is broadening, supported by domestic BD/licensing-out momentum, active global M&A, and gradually improving biotech financing conditions.

AI-driven drug discovery (AIDD) has become a real contributor to demand. GenScript generated about US$40 million in AIDD-related revenue in the first half of 2026 and expects more than US$100 million in the second half, prompting a substantial guidance increase and faster capacity expansion. Pharmaron said about 7-8% of its laboratory services revenue is linked to AI-related clients. Goldman Sachs believes AIDD could become one of the emerging drivers supporting further valuation recovery across the industry.

Positive developments in the U.S. biotech ecosystem are creating spillover benefits for China’s CRO/CDMO companies. Eli Lilly’s continued strong GLP-1 performance is supporting both near-term and long-term outsourcing demand; Moderna’s personalized neoantigen therapy INTerpath-001 produced positive Phase III data in melanoma, opening up the oncology vertical and potentially generating new project demand. A rebound in U.S. biotech financing, active M&A (US$143 billion in deal value year to date), and continued innovation momentum are all helping support the formation of global drug development projects, which in turn benefits early- and late-stage manufacturing demand for China’s CRO/CDMO industry.