Zhi Tong Cai Jing·2025-11-20 07:35Core Viewpoint - The domestic R&D demand is showing marginal improvement, driven by the overseas expansion of innovative drugs, leading to a recovery in R&D orders and stabilization of industry prices after a decline in 2023. The CRO sector is expected to see better performance growth by 2026, while the CDMO industry has also reached a bottom and is poised for continued strong growth due to robust demand for new molecules and new orders [1][2][3]. CRO Sector - The domestic R&D demand is recovering, with an increase in orders and stabilization of prices, indicating a clear upward trend for CRO companies. Clinical CROs like Tigermed, Nossan, and Prasis are expected to see revenue growth turning positive by 2025, with significant contributions from overseas business [2][3]. - The recognition of domestic CRO clinical data is improving, which is beneficial for companies like Tigermed [2]. CDMO Sector - The CDMO sector has seen a recovery in performance, with new orders continuing to improve quarterly. The global demand for innovative drug R&D is driving growth in new orders and backlog [3]. - The industry is benefiting from increased capacity utilization and profitability, with a strong certainty of performance and profit growth expected to continue into 2026 [3]. Life Sciences Sector - The life sciences upstream sector is experiencing a dual drive from domestic substitution and overseas expansion, with urgent demand for domestic alternatives in areas like cell culture media and biological reagents. Companies are expected to capture market share through new product categories and cost-effective offerings [4]. - The demand for specific segments such as drug efficacy, antibodies, and proteins is increasing, indicating a clear long-term growth logic for the industry [4]. API Sector - The raw material pharmaceutical industry is currently in a phase of price bottoming and supply surplus, with traditional product performance under pressure. However, companies are extending their business into generics, innovative drugs, and specialty APIs, which may lead to value reconstruction through business structure optimization [5]. - The valuation of raw material pharmaceutical companies is at a low point, presenting opportunities based on changes in new business layouts [5]. Investment Recommendations - For clinical and preclinical CROs, companies like Tigermed, Nossan, and Yinos are recommended due to the gradual recovery of the industry and expected improvement in order structure [6]. - In the CDMO sector, companies such as WuXi AppTec, WuXi Biologics, and others with strong fundamentals and capacity advantages are highlighted for their potential benefits from industry recovery and high demand for new molecules [6]. - In the life sciences upstream sector, companies like Baitai Biotechnology and others are recommended due to accelerated domestic substitution and strong overseas growth [6]. - Companies like Pro Pharma and Huahai Pharmaceutical are noted for their new business layouts that are expected to contribute significant value increments [6].