Gf Securities: Domestic R&D Investment Demand Recovery Highlights Left-Side Opportunities in Pharma Sector

Stock News11-20

Domestic R&D demand shows marginal improvement, with innovation drug outbound licensing deals revitalizing industry enthusiasm. The domestic contract research order pipeline has expanded, and industry pricing stabilized after 2023 declines, showing modest recovery in certain segments. The CRO sector is projected to achieve stronger earnings growth by 2026.

The CDMO industry has bottomed out, with new orders and novel molecule development driving robust growth prospects for 2026. Meanwhile, the API sector remains in a price trough amid oversupply adjustments, though new business transformations may create stock-specific opportunities. Key insights:

1. **CRO Sector Recovery**: Clinical CRO players (including Tigermed, Novem Group, and PULSES) demonstrate revenue turnaround in 2025, with preclinical CRO performance also improving. Overseas contributions from Tigermed highlight growing global recognition of China's clinical data.

2. **CDMO Momentum**: Quarterly order improvements continue, supported by global drug R&D recovery and novel molecule demand. Capacity utilization and profitability rise in tandem with cost optimization measures.

3. **Life Science Tools**: Geopolitical factors accelerate localization needs in cell culture media, bioreagents, and chromatography resins. Domestic players gain traction through competitive pricing and novel molecule offerings.

4. **API Sector Transition**: Traditional API businesses face pressure, but expansion into complex generics, specialty APIs, and innovative drugs may drive revaluation. Current valuations appear bottomed.

Stock recommendations: - **CRO**: Tigermed (03347), Novem Group (301333.SZ), Innostar (688710.SH) - **CDMO**: WuXi XDC (02268), WuXi AppTec (603259.SH/02359), WuXi Biologics (02269), Porton Pharma (300363.SZ), Pharmaron (300759.SZ/03759), Asymchem (002821.SZ/06821) - **Life Science Tools**: Biocytogen (02315), Proteintech (301080.SZ), Pharmaron (688046.SH) - **API Transformers**: Apeloa Pharmaceutical (000739.SZ), Huahai Pharma (600521.SH)

Risks include intensifying competition, supply chain disruptions, FX volatility, regulatory scrutiny, environmental compliance, policy shifts, and tariff changes.

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