Goldman Sachs Maintains Positive Outlook on China's CDMO Sector, Favors WuXi AppTec and Asymchem

Goldman Sachs has released a research report on China's pharmaceutical industry, indicating that the performance of CDMO enterprises reflects the sector's sustained stability. Visibility is increasingly dependent on exposure to late-stage and commercial projects rather than early-stage financing conditions. Furthermore, AI has not caused structural disruption to order volume, backlog quality, or pricing. In contrast, the performance of medical device and medical service companies confirms an uneven recovery pace among different stocks. While headwinds from the Volume-Based Procurement (VBP) and Diagnosis-Related Group/Diagnosis-Intervention Packet (DRG/DIP) payment reforms appear largely priced in, disparities remain in volume recovery, pricing power, and earnings visibility.

Regarding specific stocks, the firm holds a more positive view on those rated "Buy," including WUXI APPTEC (02359), ASYMCHEM (06821), MEDBOT-B (02252), and EDGE MEDICAL-B (02675). Additionally, Goldman upgraded AK MEDICAL (01789) to "Buy," reflecting a restart in execution, improved profit margins, and clearer medium-term visibility. MicroTech Medical (02235) was upgraded to "Neutral" due to domestic competitive impacts being better than expected and orderly progress toward its 2026 guidance.

Conversely, the report expresses caution towards WEIGAO GROUP (01066) and TopChoice Medical (600763.SH), downgrading them to "Neutral" and "Sell" respectively. The former is affected by ongoing VBP-related profit pressures and weak short-term growth, while the latter, despite an acceleration in revenue recovery, still faces uncertainty with limited upside potential.