Overview - The CRO industry in China has developed rapidly in recent years, particularly due to clear national pharmaceutical policies, accelerated medical reforms, and the expansion of the medical insurance market [1][9] - By 2024, the CRO market in China is expected to reach 89.22 billion yuan, with a year-on-year growth of 5.19%, and the clinical CRO market is projected to reach 46.31 billion yuan, growing by 4.68% [1][9] Industry Development - The CRO industry in China began in 1996 with the establishment of the first CRO company by MDS Pharmaceutical Services [5] - The industry has undergone significant changes, including a major reshuffle in 2015 due to quality concerns, leading to the elimination of many low-level CROs [5][10] - Major players like WuXi AppTec and Tigermed have gained competitive advantages through capital strength and project experience [5][10] Market Policies - The Chinese government has issued various policies to support the pharmaceutical manufacturing industry, encouraging new drug research and optimizing approval processes [6][7] Industry Chain - The CRO industry chain includes upstream components like experimental animals and biological reagents, midstream CRO companies, and downstream clients such as pharmaceutical companies and research institutions [8] - The pharmaceutical industry is the primary client for CROs, outsourcing clinical research to reduce costs and improve efficiency [8] Current Market Status - The global CRO market is projected to reach 90.03 billion USD in 2024, with a year-on-year growth of 9.65%, and the clinical CRO market is expected to reach 62.57 billion USD, growing by 8.35% [9] - The demand for high-quality medical resources is increasing, particularly in areas like rare diseases and public health events, driving the growth of the CRO market [9] Competitive Landscape - The CRO market in China is becoming increasingly competitive, with a notable shift towards Asia due to cost advantages and a large patient population [10] - Leading companies such as Tigermed and Kanglongda are recognized for their comprehensive clinical research services and have significant market shares [10][12] Future Trends - The quality management standards for drug development are expected to improve, leading to increased concentration in the industry as smaller CROs face challenges [13][14] - There will be a rise in specialized CROs focusing on specific disease areas, providing differentiated services to pharmaceutical companies [13][14]

Core Viewpoint - The performance of Tigermed Pharmaceutical has declined in the first half of the year, with revenue and net profit both showing significant decreases, attributed to fewer orders, lower order prices, and the termination of high-risk orders [1][3][11]. Financial Performance - Tigermed reported a revenue of 3.25 billion yuan in the first half of the year, a year-on-year decrease of 3.21% [1]. - The net profit attributable to shareholders was 383 million yuan, down 22.22%, while the net profit after deducting non-recurring items was 211 million yuan, a decline of 67.09% [1]. - The company's market capitalization as of August 29 was 54.684 billion yuan, with A-shares closing at 63.51 yuan per share, down 0.36% [2]. Business Segments - The clinical trial technical services segment generated 1.47 billion yuan, down 10.2% from 1.64 billion yuan in the same period last year [2]. - The clinical trial-related and laboratory services segment achieved revenue of 1.71 billion yuan, a year-on-year increase of 3.1% [5]. - The ongoing clinical research projects decreased from 800 at the end of June 2024 to 646 as of June 30, 2025 [2][4]. Reasons for Performance Decline - The decline in performance is attributed to three main factors: a decrease in the number of orders, a drop in average order prices, and the proactive termination of high-risk orders primarily from biotech startups reliant on external financing [3][11]. Industry Context - The domestic innovative drug industry is currently in an adjustment phase following a period of rapid growth, impacting the performance of CRO companies like Tigermed [2][8]. - Despite the current challenges, the company expects gradual improvement in its domestic innovative drug clinical operations as industry demand recovers [5][11]. Long-term Outlook - Over the long term, Tigermed's revenue has shown significant growth, increasing from 200 million yuan in 2012 to over 6 billion yuan in recent years, with a peak in 2023 [6][8]. - The company’s cash flow has improved significantly, indicating a stable order situation despite temporary profit compression [11][12].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 68.05, indicating a potential upside of 34% from the current price of RMB 50.61 [1][8][15]. Core Insights - The company is experiencing a recovery in new orders within the clinical CRO industry, with a significant increase in new contract amounts in Q1 2025, reflecting a 20% year-on-year growth [6][7]. - Despite facing challenges in 2024 due to non-recurring factors, the core business remains stable, with a net cash flow from operating activities showing a 37.26% year-on-year increase [6][7]. - The company is expanding its international presence and investing in digitalization and AI, which are expected to enhance operational efficiency and customer retention [7][8]. Financial Performance Summary - The company reported a revenue of RMB 6,603 million in 2024, a decline of 10.58% year-on-year, with a net profit of RMB 405 million, down 79.99% due to fair value losses on financial assets [6][9]. - For 2025, the revenue is projected to be RMB 7,310 million, with an estimated EPS of RMB 1.56, reflecting a significant downward adjustment from previous estimates [2][11][12]. - The company’s financial metrics indicate a recovery trajectory, with expected revenues growing at rates of 9.64%, 13.68%, and 16.87% from 2025 to 2027 [7][12]. Valuation and Market Comparison - The target price corresponds to a P/E ratio of 44x for 2025, which is above the industry average of 24x, suggesting a premium valuation due to the company's leading position in the clinical CRO sector [8][15]. - The report highlights the company's competitive edge and potential for valuation recovery as the industry improves [15][17].

Core Viewpoint - The Hong Kong innovative drug sector has recently gained global attention, with the Wind Hong Kong Biotechnology III Index rising over 60% in the past two months, while individual stocks have seen significant gains [1] Group 1: CXO Sector Performance - CXO companies are expected to show a performance turnaround starting in Q1 2025, with a projected revenue growth of 12.2% and a net profit increase of 75.6% [1] - In 2024, the revenue for the CXO sector is expected to decline by 4.9%, with a net profit drop of 25.4%, primarily due to the completion of large COVID-19 orders and a decrease in R&D demand due to a global decline in pharmaceutical investment [1][2] - The construction of new projects in the CXO sector is expected to decrease by 7.7% in 2024, marking the first decline in recent years, while Q1 2025 will see a 7.4% increase in total construction projects compared to 2024 [2][3] Group 2: Institutional Holdings and Market Sentiment - Institutional holdings in CXO have decreased from 60.8% in Q3 2021 to 14.4% in Q1 2024, but have gradually increased to 23.2% by Q1 2025, indicating a shift in market perception towards CXO companies [4] - The increase in holdings is attributed to market recognition of large orders and expectations for future growth in new business areas such as peptide and oligonucleotide CDMO [4] Group 3: Order Growth and Financial Guidance - Major CXO companies have shown strong order growth, with new signed orders for 2024 expected to increase by approximately 20% for companies like Kelaiying and over 20% for Kanglong Huacheng, while WuXi AppTec anticipates a 47% increase in orders [5] - Financial guidance for 2025 indicates continued revenue growth for major CXO firms, with WuXi AppTec projecting a 10%-15% increase in operating income [5] Group 4: Economic and Policy Environment - The expectation of interest rate cuts by the Federal Reserve is increasing, with traders anticipating potential rate cuts before the end of the year, which could positively impact the CXO sector [7] - Recent developments in US-China tariff negotiations have led to a framework agreement, which may alleviate pressures on the CXO sector and facilitate valuation recovery [7] Group 5: Company-Specific Highlights - Tigermed has shown strong new order growth and improved gross margins, with a total of over 2,800 global clients and extensive clinical project experience [8] - Despite a decline in revenue and net profit for 2024, Tigermed's new contract amount increased by 7.3%, indicating a recovery in demand [9][11] - The company is actively enhancing its integrated service capabilities and has implemented targeted measures to improve contract signing success rates, which may lead to significant future order growth [10][11]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內 容 概 不 負 責，對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明，並 明 確 表 示，概 不對因本公告全部或任何部分內容而產生或因倚賴該等內容而引致的 任 何 損 失 承 擔 任 何 責 任。 HANGZHOU TIGERMED CONSULTING CO., LTD. 杭州泰格醫藥科技股份有限公司 （於 中 華 人 民 共 和 國 註 冊 成 立 的 股 份 有 限 公 司） （股 份 代 號：3347） 海外監管公告 本 公 告 乃 杭 州 泰 格 醫 藥 科 技 股 份 有 限 公 司（「本公司」）根 據 香 港 聯 合 交 易 所有限公司證券上市規則第13.10B條 而 作 出。 茲 載 列 本 公 司 於 深 圳 證 券 交 易 所 網 站 刊 登 公 告 如 下，僅 供 參 閱。 承董事會命 杭州泰格醫藥科技股份有限公司 董事長 葉小平 香 港，2025年3月27日 於 本 公 告 日 期，執 行 董 事 為 葉 小 平 博 士、曹 曉 春 女 士、吳 灝 先 生 及 聞增玉先生；獨立非執行董事為廖啟宇先生、袁華剛 ...