Pharmaron Beijing Co., Ltd. 康龍化成（北京）新藥技術股份有限公司 (a joint stock company incorporated in the People's Republic of China with limited liability) （於中華人民共和國註冊成立的股份有限公司） (Stock Code 股份代號：3759) NOTIFICATION LETTER 通知信函 Dear Non-registered holder(1) , Pharmaron Beijing Co., Ltd. (the "Company") – Notification of publication of 2025 Interim Report (the "Current Corporate Communication") on the website of the Company By order of the Board Pharmaron Beijing Co., Ltd. Dr. Lou Boliang Chairman The English version of the ...

Dear H Shareholder, September 26, 2025 Pharmaron Beijing Co., Ltd. 康龍化成（北京）新藥技術股份有限公司 (a joint stock company incorporated in the People's Republic of China with limited liability) （於中華人民共和國註冊成立的股份有限公司） (Stock Code 股份代號：3759) NOTIFICATION LETTER 通知信函 本公司本次公司通訊的中文版本已上載於本公司的網站 www.pharmaron.cn 和香港聯合交易所有限公司的網站 www.hkexnews.hk（「聯交所網站」）。 或 (如適用)現按 閣下要求附上本次公司通訊之印刷本。 閣下可於本公司網站或在聯交所網站瀏覽有關文件。 Pharmaron Beijing Co., Ltd. (the "Company") – Notification of publication of 2025 Interim Report (the "Current Corporate Commu ...

康 龍 化 成（ 北 京 ）新 藥 技 術 股 份 有 限 公 司 （於中華人民共和國註冊成立的股份有限公司） 股份代號：3759 2025 中期報告 生命科學行業 的領先研發服務提供商 康龍化成（股票代碼：300759.SZ/3759.HK）是國際領先的生命科 學研發服務企業。自 2004 年成立以來，康龍化成一直致力於其人 才培養和設施建設，為包括小分子、大分子和細胞與基因治療藥 物在內的多療法藥物研發打造了一個貫穿藥物發現、臨床前及臨 床開發全流程的研發生產服務體系。康龍化成在中國、美國、英 國均開展運營，擁有超過 22,000 名員工，向北美、歐洲、日本和 中國的合作夥伴提供研發解決方案並與之保持良好的合作關係。 關於 康龍化成 目 | | 2 | 公司資料 | | --- | --- | --- | | 錄 | 4 | 財務業績摘要 | | | 5 | 管理層討論與分析 | | | 38 | 補充資料 | | | 58 | 中期簡明綜合損益表 | | | 59 | 中期簡明綜合全面收益表 | | | 60 | 中期簡明綜合財務狀況表 | | | 62 | 中期簡明綜合權益變動表 | | | 64 | ...

Core Viewpoint - The announcement of a 100% tariff on patented and branded drugs by the Trump administration starting October 1, 2025, aims to pressure pharmaceutical companies to relocate production to the U.S. [1] Market Reaction - Global pharmaceutical stocks, including Pfizer and Merck, experienced declines of over 2% in the U.S. market, while related stocks in A-shares and Hong Kong also fell significantly, impacting companies like Kanglong Chemical and Kylin Pharmaceutical [3] Policy Background - The tariff policy is not sudden; it has been hinted at since April, with escalating threats of high tariffs on imported drugs. Economists warn that such high tariffs could disrupt supply chains and potentially increase drug prices for U.S. consumers [4] Impact on Chinese Pharmaceutical Companies - Chinese innovative pharmaceutical companies face both challenges and opportunities. Short-term market volatility is expected, but the established global competitiveness of Chinese firms may allow them to adapt by accelerating overseas production to avoid tariffs [5] Industry Outlook - The fundamental drivers of innovative drug development remain unchanged despite national policies. China's pharmaceutical industry is transitioning from a "big pharmaceutical country" to an "innovative pharmaceutical powerhouse," with significant advancements in cutting-edge fields like stem cell and gene therapy [6]

Core Insights - The report from Cinda Securities indicates a significant recovery in domestic innovative drug financing, with a total of $7.75 billion in financing from January to August 2025, representing a year-on-year increase of approximately 89% [1] - The secondary market financing reached $5.135 billion, showing a remarkable year-on-year growth of about 304% [1] - The CXO industry is experiencing an improvement in supply-demand dynamics, with leading companies expected to re-enter an expansion phase due to recovering market demand [2] Group 1: CXO Industry Overview - The CXO industry operates on a "water seller" business model, closely tied to the financing of the biopharmaceutical sector [1] - Domestic innovative drug financing has begun to recover, aided by a rebound in the Hong Kong stock market and business development (BD) opportunities abroad [1] - The overall supply-demand relationship in the CXO sector is improving, with leading companies like WuXi AppTec and WuXi Biologics planning significant capital expenditures for 2025, indicating confidence in market recovery [2] Group 2: CDMO Sector Insights - CDMO leaders are experiencing marginal improvements in performance since Q4 2024, driven by high overseas revenue and a recovery in overseas investment and financing demand [3] - The unique business model of CDMOs allows for project pipeline expansion, which can sustain performance growth even amid challenges in new project signings [3] - The demand for new molecules such as peptides and ADCs is robust, prompting CDMO leaders to strategically position themselves in these emerging markets [3] Group 3: CRO Sector Insights - The CRO sector shows performance divergence among leading companies, with some beginning to recover, likely due to their specific business characteristics and operational cycles [4] - Most CRO companies are seeing improvements in order volumes, which serve as a leading indicator for future performance [4] - The slight increase in the price of experimental monkeys suggests a potential recovery in preclinical CRO demand, highlighting the importance of companies that control these scarce resources [4] Group 4: Recommended Companies - Key companies to watch include WuXi AppTec, WuXi Biologics, WuXi AppTec's ADC business, and others, with their valuations falling within reasonable ranges based on their business characteristics and market trends [5][6] - Specific highlights include WuXi AppTec's TIDES business, WuXi Biologics' project reserves, and the resilience of Sunlight Nuohuo's CRO business [6]

Investment Rating - The report maintains a "Positive" investment rating for the pharmaceutical and biotechnology industry [2] Core Insights - The CXO industry is experiencing a recovery in market conditions, driven by improvements in supply-demand dynamics and a rebound in financing activities for innovative drugs [3][4] - The CDMO sector continues to show high growth potential, with leading companies improving their performance and expanding into emerging markets [5][6] - The CRO sector is approaching a turning point, with signs of demand recovery and improved order conditions [6][7] Summary by Sections CXO Industry Overview - The CXO industry operates on a "water seller" business model, closely tied to the financing of the biopharmaceutical sector. In the first eight months of 2025, overseas innovative drug financing reached $22.6 billion, a year-on-year decline of approximately 36%, while domestic innovative drug financing amounted to $7.75 billion, a year-on-year increase of about 89% [3][31] - The leading companies in the CXO sector are expected to enter an expansion phase as demand recovers, while smaller companies may face increased competition and exit the market [4][44] CDMO Sector - CDMO leading companies have begun to see marginal improvements in performance since Q4 2024, attributed to high overseas revenue and a unique business model that supports project pipeline growth [5][46] - The order situation for CDMO companies has improved significantly, with notable increases in backlogged orders for major players like WuXi AppTec and WuXi Biologics [49][50] - The CDMO business model is characterized by strong customer retention and project scalability, allowing for sustained growth despite challenges in new project signings [52] CRO Sector - The CRO sector is witnessing a divergence in performance among leading companies, with some starting to recover. The overall order situation has shown improvement, indicating a potential demand revival [6][22] - The price increase of experimental monkeys suggests a forthcoming recovery in preclinical CRO demand, highlighting the importance of resource availability for leading CRO companies [6][24] - The integration of AI in drug development processes is expected to enhance efficiency and reduce costs, with many domestic CRO leaders already adopting AI technologies [7][18] Recommended Companies - The report suggests focusing on key players in the CXO sector, including WuXi AppTec, WuXi Biologics, WuXi AppTec, and others, which are positioned well for growth based on their business characteristics and market trends [8][10]

Investment Rating - The report gives a "Buy" rating for the company, 康龙化成, for the first time [1][9]. Core Views - 康龙化成 is positioned as a leading global drug research and development enterprise with a comprehensive, integrated, international, and multi-therapy approach. The company is expected to experience significant growth across its various service segments, including laboratory services, small molecule CDMO, clinical CRO, and large molecule and cell gene therapy services [6][8][9]. Financial Summary - Total revenue projections for 康龙化成 are as follows: - 2024: 12,276 million CNY - 2025: 13,816 million CNY - 2026: 15,688 million CNY - 2027: 17,879 million CNY - The expected growth rates are 6.4% for 2024, 12.5% for 2025, 13.5% for 2026, and 14.0% for 2027 [2]. - Net profit attributable to shareholders is projected to be: - 2024: 1,793 million CNY - 2025: 1,689 million CNY - 2026: 1,959 million CNY - 2027: 2,257 million CNY - The expected growth rates for net profit are 12.0% for 2024, -5.8% for 2025, 15.9% for 2026, and 15.2% for 2027 [2]. Business Segments Laboratory Services - Laboratory services are the most competitive segment for 康龙化成, contributing significantly to revenue and profit. In 2024, this segment is expected to generate revenue of 70.47 billion CNY, accounting for 57.4% of total revenue [23]. - The segment has shown a compound annual growth rate (CAGR) of 24.25% in revenue from 2015 to 2024 [23][26]. CMC (Small Molecule CDMO) Services - The CMC segment is entering a commercialization phase, with revenue expected to reach 29.89 billion CNY in 2024, representing 24% of total revenue [45]. - The company has established four FDA-approved production bases in China, the UK, and the US, enhancing its capacity for global clients [49][53]. Clinical CRO Services - The clinical CRO segment is expected to generate revenue of 18.26 billion CNY in 2024, accounting for 14.87% of total revenue [63]. - The company has built a comprehensive clinical CRO service platform across China, the US, and the UK, which is anticipated to enhance efficiency and profitability [66]. Large Molecule and Cell Gene Therapy Services - The company is rapidly advancing in large molecule and cell gene therapy services, with expectations of approximately 10% revenue growth over the next three years [6][20]. Valuation and Price Target - The target price for 康龙化成 is set at 47.73 CNY based on a 40x PE ratio for 2026 adjusted net profit. The corresponding target price for the Hong Kong market is 39.34 HKD based on a 30x PE ratio [2][9].

Group 1 - Kanglong Chemical fell by 3.18% [1] - Kelaiying decreased by 3.17% [1] - Zhaoyan New Drug dropped by 2.9% [1] - WuXi AppTec and Medisi both declined over 3% [1]

Core Viewpoint - The article emphasizes that Kanglong Chemical has established itself as a leading global drug research and development service enterprise, with significant growth potential across its various service segments, including laboratory services, small molecule CDMO, clinical CRO, and large molecule and cell gene therapy services [3][4][5]. Group 1: Laboratory Services - The laboratory services segment is the most competitive and currently the primary source of revenue and profit for the company, with expectations for rapid growth driven by competitive advantages in compound design and synthesis [3]. - The biological science services are anticipated to leverage the existing customer base from laboratory chemistry services, leading to sustained high growth in both customer numbers and performance [3]. Group 2: CMC (Small Molecule CDMO) Services - The CMC services are expected to experience rapid growth due to a burgeoning client base and the successful conversion of commercial orders, with a significant increase in the proportion of process validation and commercial orders expected by the first half of 2025 [4]. - The company has established four FDA-approved API commercial production bases across China, the UK, and the US, enabling it to provide innovative drug raw material production solutions globally [4]. Group 3: Clinical CRO Services - The company has completed the establishment of an integrated global clinical CRO service platform, which is expected to enhance efficiency and profitability as industry conditions improve [4]. - The synergy between clinical CRO, preclinical CRO, and CDMO services is anticipated to strengthen further, contributing to accelerated performance [4]. Group 4: Large Molecule and Cell Gene Therapy Services - The company is rapidly advancing its capabilities in large molecule and cell gene therapy services through external resource integration and personnel recruitment, with projected revenue growth of around 10% over the next three years [5]. - This segment is expected to gradually reduce losses, opening up greater long-term growth opportunities for the company [5]. Group 5: Investment Recommendations - The projected net profits for the company from 2025 to 2027 are estimated at 1.689 billion, 1.959 billion, and 2.257 billion yuan, with adjusted net profits of 1.750 billion, 2.122 billion, and 2.438 billion yuan, reflecting year-on-year growth rates of 8.9%, 21.2%, and 14.9% respectively [5]. - The current stock price corresponds to PE ratios of 36, 31, and 27 for 2025-2027, with a recommendation for a higher valuation level based on the company's growth prospects and competitive advantages in the CXO industry [5].

Summary of the Conference Call on China's CRO Industry Industry Overview - The conference call focuses on the **China CRO (Contract Research Organization) industry** and its global competitiveness from short-term, medium-term, and long-term perspectives [1][2]. Key Insights and Arguments - **Strong Performance in 2024-2025**: The Chinese CRO industry is expected to perform strongly in 2024-2025, driven by policy support, AI technology applications, and robust performance from companies like WuXi AppTec, which has seen significant stock price increases [1]. - **Geopolitical Risks**: Despite challenges from geopolitical factors such as India's PLI scheme and the US Biodefense Act, the risks are considered manageable due to China's comprehensive advantages in chemical capabilities, compliance capacity, and intellectual property protection [1][5]. - **Supply and Demand Dynamics**: The small molecule supply peak has passed, while the large molecule sector remains in a high investment phase. The global pharmaceutical pipeline and R&D investments continue to grow, with a strong demand side indicated by the increasing number of clinical trial registrations in China [1][6]. - **Investment Trends**: Overall R&D investment is on the rise, although growth rates may slow. In the large molecule CDMO sector, WuXi Biologics' revenue growth is slower than that of Samsung Biologics, with guidance for 2025 set at 14%-16% for WuXi and 25%-30% for Samsung [7]. - **Order Growth**: In the large molecule CDMO sector, WuXi Biologics has $4.2 billion in unfulfilled orders, a 15.3% year-on-year increase, while Samsung has $18.7 billion, up 43.8%. WuXi AppTec's new contract amounts have also shown significant growth [8]. Additional Important Content - **Emerging Business Layouts**: Several CRO companies are venturing into emerging fields such as peptides and oligonucleotides. Investment recommendations suggest favoring companies with strong valuations and competitive positions in the small molecule sector, with WuXi AppTec highlighted as a key player [12][13]. - **Capital Expenditure**: Capital expenditures remain high in the large molecule sector, with companies like Samsung and WuXi maintaining significant investments. WuXi AppTec plans to invest at least 7-8 billion yuan in 2025, reflecting confidence in future growth [11]. - **Clinical CRO Performance**: Clinical CROs are currently experiencing performance fluctuations, but order growth indicates potential recovery. Companies like Tigermed and PPD have reported double-digit order growth, suggesting a positive outlook for future performance [9][10]. This summary encapsulates the key points discussed in the conference call regarding the current state and future outlook of the Chinese CRO industry, highlighting both opportunities and challenges.