Summary of Pharmaron (300759 CH/3759 HK) Equity Research Report Company Overview - **Company**: Pharmaron - **Ticker**: 300759 CH / 3759 HK - **Industry**: Healthcare Providers & Services - **Market Cap**: HKD 53,568 million / USD 6,843 million - **Free Float**: 80% (A shares) / 17% (H shares) Key Points Strategic Partnership - Pharmaron announced a **USD 200 million collaboration** with Eli Lilly on March 11, 2026, for the ex-US drug product manufacturing of **Orforglipron**, an oral GLP-1 receptor agonist [2][19] - This partnership is the first confirmed CDMO collaboration linked to Lilly's **USD 3 billion** manufacturing expansion in China, positioning Pharmaron as a key player in the global GLP-1 supply chain [2][19] Market Reaction - Despite the strategic significance of the partnership, the market reaction has been muted, with Pharmaron A/H shares down **3.5%** and up **1.2%** YTD, compared to CSI300 (+0.4%) and HSI (-1.5%) [2] - Investors are concerned about limited near-term revenue contributions and domestic clinical trial pricing pressures [2] Revenue Projections - Near-term financial contributions from Orforglipron are expected to be limited, with revenue growth projected at **0.4%** and **0.9%** for 2027 and 2028, respectively [20] - Pharmaron is estimated to supply approximately **40%** of Orforglipron's ex-US drug product manufacturing demand, leading to incremental revenues of **RMB 74 million** in 2027 and **RMB 205 million** in 2028 [3][19] - GLP-1 revenue is projected to grow at a **CAGR of 89%** from 2026 to 2035, with overall revenue growth forecasted at **17% CAGR** from 2025 to 2027 [3] Competitive Positioning - The partnership with Eli Lilly is viewed as a strategic validation of Pharmaron's competitiveness in small-molecule CRO/CDMO manufacturing, highlighting the reliance of multinational pharma on China's advanced manufacturing ecosystem [4] - The Chinese CDMO market for GLP-1 therapeutics is highly competitive, with Pharmaron's capacity in Beijing and Shanghai being critical for its role in the global supply chain [30][31] Financial Valuation - Pharmaron maintains a **Buy** rating with target prices of **RMB 40.50** for A shares and **HKD 29.20** for H shares, implying upside potential of **45.7%** and **47.8%**, respectively [5][35] - The valuation is based on a DCF model with a WACC of **8.7%** and a terminal growth rate of **3.0%** [34] Risks and Catalysts - Key catalysts include recovery in global healthcare financing, capacity ramp-up in new facilities, and progress in major commercialization projects [39] - Downside risks involve geopolitical tensions, margin pressure from competition, and regulatory challenges [39] Financial Metrics - Revenue projections for 2026 are **RMB 16,430 million**, with net profit expected to be **RMB 2,109 million** [10] - The company is expected to maintain a gross margin of **35.9%** in 2026 [33] Conclusion - Pharmaron's strategic partnership with Eli Lilly positions it well within the growing GLP-1 market, despite short-term revenue limitations. The company's competitive advantages and projected revenue growth present a compelling investment opportunity, supported by a strong valuation outlook.

19 June 2025 Equity Research Report China Healthcare Equities Demand for innovative drug clinical trials shifting to China amid supportive policies China's clinical efficiency leap: Catching up with the world with strengthened competitiveness. The National Medical Product Administration (NMPA) published a circular in June, proposing to reduce the review and approval time of clinical trial applications for all innovative drugs to 30 days from the previous 60 days, following the pilot programme in July 2024. ...