Following a rebound to a阶段性 high of HK$2.86 in late January, VIVA BIOTECH's (01873) stock price has experienced a nearly three-month decline. It was observed that on April 27, the stock hit an intraday low of HK$1.62, representing a drop of over 40% from its peak. On March 30, VIVA BIOTECH officially disclosed its 2025 annual results. The day after the earnings release, the company's stock price fell sharply, closing down 7.04%. Consequently, VIVA BIOTECH's shares accumulated a monthly decline of 15.91% in March, and the downward trend continued into April, with the stock falling more than 5% by April 27. This performance appears out of step with the recent stabilization and rebound seen in the domestic CXO sector.
Why is it lagging behind the CXO sector's rebound? Recently, CXO companies listed in both the A-share and H-share markets have successively released their 2025 annual reports. Overall, the domestic CXO industry has largely reversed the previous pressures of declining revenue and profits coupled with contracting orders, showing a clear trend of stabilization. Accompanying this sector-wide stabilization, many stocks within the CXO板块 have begun to rebound. Wind data shows that over the past year, share prices of 30 A-share CXO companies have risen, with over half experiencing gains exceeding 50%. In the Hong Kong market, following the collective disclosure of 2025 annual reports, several leading stocks in various CXO sub-sectors saw counter-trend rallies even as the broader Hong Kong market weakened.
However, beneath the surface, the current CXO industry has merely emerged from the downturn of 2024, characterized by declining revenue and net profit, order contraction, and falling gross margins, but has not yet entered a phase of broad-based gains. The Matthew Effect is becoming increasingly evident in the secondary market. Taking VIVA BIOTECH as an example, its stock price has been continuously adjusting over the past three months. Since hitting a阶段性 high of HK$2.86 on January 29, the stock entered a correction phase lasting three months, experiencing a persistent decline. It fell to an intraday low of HK$1.62 on April 27, representing a maximum decline of 43.36%.
From an interval perspective, VIVA BIOTECH's stock price movement shows a distinct pattern of "sharp declines and slow rebounds." During the first decline phase from January 30 to March 4, the stock price fell from the upper Bollinger Band to the middle band in four trading days, and then from the middle band to the lower band in another four days. Although the stock price stabilized and moved sideways during this period, it merely oscillated around the middle Bollinger Band, with daily trading volume once dropping to less than 1.5 million shares, indicating strong观望 sentiment among external funds. Furthermore, after the stock began an oversold rebound on March 5, the market performance still indicated a price rise on low volume. This led to a situation where, despite a sharp closing gain of over 12% on March 10, weak external buying support prevented this rebound from pushing the stock price back to the upper Bollinger Band. This resulted in significant divergence in sentiment among existing shareholders, ultimately causing an 11% drop in the stock price on March 17.
It can be observed that after March 17, VIVA BIOTECH's stock price declined further and continued to fluctuate within the middle to lower range of the Bollinger Bands, reflecting低迷 market sentiment. According to the chip distribution chart, after three months of continuous decline, as of April 27, the proportion of profitable筹码 in VIVA BIOTECH had fallen to 1.75%. However, the average cost of筹码 remained high at HK$2.16. Although the筹码峰 had retreated to HK$1.93, the current proportion of profitable筹码 was only 1.75%, indicating that external cash holders have not yet entered the market to buy at lows, while a large amount of套牢筹码 above awaits an opportunity to break even.
How to respond to the CXO industry's "Matthew Effect"? Currently, within the entire CRO industry, leading companies, leveraging advantages in capital, technology, client resources, and global布局, are the first to emerge from the industry trough and achieve an earnings recovery. Meanwhile, small and medium-sized CROs face multiple challenges such as insufficient orders, tight cash flow, and talent loss, seeing their生存空间 continuously squeezed. Therefore, how to cope with the industry's Matthew Effect has become a key question for中小 CRO enterprises like VIVA BIOTECH.
The 2025 financial report shows that the company achieved revenue of RMB 1.729 billion during the reporting period, a year-on-year decrease of 12.9%. Net profit was RMB 269 million, a year-on-year increase of 21.31%. Behind this phenomenon of "increasing profit without increasing revenue," the company's gross profit reached RMB 656 million, benefiting from the optimized adjustment of the Langhua business structure, improved operational efficiency in CRO业务, and growth in new business segments. The corresponding gross margin was 37.9%, an increase of 3.3 percentage points compared to the same period last year.
Simultaneously, after years of technological accumulation, the positive impact of AI on VIVA BIOTECH is gradually reflecting in its performance and financial data. The financial report indicates that VIVA's AI capabilities now cover the entire workflow of First-in-Class drug discovery. As of December 31, 2025, the company's self-developed AIDD platform had participated in a cumulative total of 196 projects. The cumulative number of clients purchasing CADD/AIDD services reached 73. Revenue from projects empowered by AI accounted for nearly 12.0% of total CRO revenue.
However, rising geopolitical uncertainties and the ongoing restructuring of global supply chains in recent years have led multinational pharmaceutical companies to increasingly prioritize compliance consistency, stable and secure production capacity, and delivery continuity. For a small-to-medium-sized CXO enterprise, this presents significant challenges. Against the backdrop of current external environmental volatility, downstream clients are placing greater emphasis on service quality, efficiency, and production capacity location over mere service pricing. Service providers with well-established layouts and rich delivery experience in these areas can gradually accumulate brand效应, fostering a long-term industry pattern of "the strong getting stronger."
As a small-to-medium-sized CXO enterprise, its ability to withstand risks undoubtedly becomes a crucial factor affecting its stable growth under volatile external conditions. The 12% year-on-year decline in VIVA BIOTECH's total revenue for 2025 was partly due to factors affecting its subsidiary Langhua Pharmaceutical, including workshop upgrades, geopolitical fluctuations, and adjustments in client inventory stocking.
Therefore, in addition to its core CRO+CDMO businesses, VIVA BIOTECH is actively pursuing investment and incubation. This strategy differs from the traditional CXO model of passively receiving orders. By leveraging its expertise in early-stage drug研发 services—which are also critically needed by startup companies—VIVA BIOTECH exchanges these services for equity stakes in high-potential biopharma startups, aiming to achieve substantial financial returns in the later stages. During the reporting period, VIVA BIOTECH invested in and incubated 93 companies. Several of these have achieved full or partial exits, generating cumulative cash returns of nearly RMB 83.6 million. Furthermore, after the reporting period, the company received approximately RMB 205 million from the sale of incubated investment enterprises. The cumulative product pipeline from incubated companies reached 231, with 187 pipelines in the preclinical stage and 44 having entered clinical stages. Additionally, 13 invested/incubated companies completed new rounds of financing, raising a total of over USD 453 million. There are also several projects with potential exit possibilities, and the company expects to gradually receive cash returns and realize corresponding investment gains in the coming years.
However, recent merger, acquisition, and collaboration activities within the domestic CXO industry increasingly reflect a trend of "accelerated horizontal and vertical integration, with weaker players being consolidated." Leading companies in the sector are systematically using capital and strategic means to strengthen technological weaknesses, expand global networks, and deepen industrial synergy to consolidate their competitive advantages amid industry differentiation. Consequently, companies lacking distinctive technologies or global service capabilities will continue to face greater consolidation pressure.
In this context, compared to its investment and incubation capabilities, the secondary market clearly places greater emphasis on VIVA BIOTECH's ability to monetize its AI CRO services. However, judging by the current stock performance, the 12% revenue contribution from AI CRO has evidently not yet met market investors' expectations.
Comments