According to recent performance reports released by some pharmaceutical CXO companies for the first half of 2024, multiple companies have shown signs of recovery. Rudongyao Pharmaceutical achieved a revenue of 521 million yuan in the first half of the year, a year-on-year increase of 59%; The net profit was 31.559 million yuan, achieving the first profit. Kanglong Chemical expects to achieve a net profit attributable to 1.055 billion yuan to 1.143 billion yuan in the first half of the year, a year-on-year increase of 34% to 45%. WuXi AppTec estimates that the company's revenue in the second quarter reached 9.259 billion yuan, an increase of 16% compared to the previous quarter; Non IFRS net profit attributable to shareholders was 2.46 billion yuan, an increase of 28.5% compared to the previous period; Zhaoyan New Drug turned a loss in the second quarter of this year. According to the estimated net profit loss of 136 million to 184 million yuan in the first half of the year, the company's profit in the second quarter exceeded 80 million yuan. Kingsray Biotechnology had a total revenue of 561 million US dollars in the first half of 2024, a year-on-year increase of 43.5%; The net loss narrowed to $216 million, with an adjusted net loss of $69 million.

 

 

 

Analysts point out that the flourishing development of the biopharmaceutical market, represented by ADC, has given rise to a considerable demand for outsourcing services in the industry. The rapid growth of CDMO business in Rudongyao Pharmaceutical is closely related to its development of ADC (antibody drug conjugates) as a characteristic and advantageous field. In the first half of the year, the ADC project revenue of Dongyao Pharmaceutical accounted for 88% of CDMO/CMO revenue, and among the 20 newly added projects, 17 were ADC projects. It is reported that in order to meet the development needs of CDMO business, Dongyao Pharmaceutical's CDMO personnel increased by 29% year-on-year to 492 in the first half of the year, accounting for 86% of the total number of the group. Among them, the ADC CDMO team grew by 27% year-on-year.

 

 

 

It is reported that ADC is booming, driving the high prosperity of CDMO business, and Dongyao Pharmaceutical is not the only one to receive the cake. According to statistics, more than ten domestic enterprises have entered the ADC CDMO track, including WuXi AppTec, MabThera, and Haoyuan Pharmaceutical.

 

 

 

In addition, the diversification of peptide business and "going global" destinations may also become a new growth path for CXO. In the first half of this year, WuXi AppTec's TIDES business (mainly oligonucleotides and peptides) generated revenue of 2.08 billion yuan, a year-on-year increase of 57.2%. In January of this year, the total volume of its peptide solid-phase synthesis reactor increased to 32000L. According to industry insiders, with the continued hot sales of GLP-1 drugs worldwide and the impact of the expiration of the domestic patent for semaglutide in 2026, the demand for the production of raw peptides in the industry will continue to rise, and WuXi AppTec will still enjoy a period of dividends.

 

 

 

In its performance forecast for the first half of 2024, Kailaiying specifically pointed out that the company will accelerate its overseas layout and peptide production capacity construction, continue to increase business development efforts, and new orders will increase by more than 20% year-on-year, with a significant increase in the second quarter compared to the first quarter,

 

 

 

However, analysts also point out that CXO companies still face a lot of pressure at present. The demand for ADC, peptides and other fields in the future is predictable, but actively entering overseas markets and building diversified layouts are also the choices of many enterprises.

 

 

 

In May of this year, Kailaiying acquired a Pfizer UK factory and completed the layout of its first European research and development production base. In addition to the European market, domestic CXO companies are also expanding into the Asian market through acquisitions or self construction. In July, Taige Pharmaceuticals announced the completion of its acquisition of Medical Edge, a Japanese CRO company; In March, WuXi Biologics announced the groundbreaking of its integrated CRDMO center located in Singapore; In January, Kunling acquired CSI, a regional CRO company headquartered in Singapore

 

 

 

The industry has stated that although the competitive situation of CXO has changed, the underlying development logic of CXO has not changed. The rise of CXO is an inevitable development of the biopharmaceutical industry. For CXO enterprises, learning resilience may wait until the next wave of wind rises. The growth rate of WuXi AppTec's performance in 2024 is expected to slow down, but with the improvement of global biopharmaceutical industry financing and strong support for innovative drugs in domestic policies, the company's performance is expected to return to a steady growth track from 2025 to 2026.