Recently, according to disclosures by the Hong Kong Stock Exchange, Jiangsu Dingtai Pharmaceutical Research (Group) Co., Ltd. (referred to as Dingtai Pharma) submitted its listing application to the main board of the Hong Kong Stock Exchange, with Citigroup and Haitong International serving as joint sponsors. The prospectus reveals that Dingtai Pharma, founded in 2008, is a new-generation contract research organization (CRO) dedicated to providing integrated solutions based on disease biology for global pharmaceutical companies and research institutions. The company offers comprehensive non-clinical safety, efficacy, and drug metabolism and pharmacokinetics (DMPK) studies, as well as integrated clinical trial services spanning from proof-of-concept to critical trials, thereby providing clients with full lifecycle R&D support. In the pharmaceutical R&D industry chain, CRO companies are often regarded as "water sellers," with their unique advantage being that they can generate stable business income through professional services regardless of whether drug development projects succeed or fail.
Since 2025, with the strong recovery of the innovative drug industry driving valuation rebounds in the CRO sector, many related companies have seen their stock prices reach new highs. As a direct reflection of industry prosperity, domestic innovative drug financing in the primary market surged 45% year-on-year in the first half of the year, reaching RMB 32 billion. Meanwhile, business development (BD) transactions were also highly active, exceeding 80 deals with an average upfront payment of RMB 850 million. Benefiting from this robust industry tailwind, Dingtai Pharma's IPO plan has become one of the focal points of market attention.
**Steady Revenue Growth, but Profitability Hit by Experimental Animal Price Volatility** Despite the overall industry recovery, Dingtai Pharma's internal operations present a "hot outside, cold inside" scenario. Financially, the company's revenue remained stable during the track record period, while net profit showed a declining trend. From 2022 to 2024, the company reported revenues of approximately RMB 725 million, RMB 767 million, and RMB 713 million (in RMB, same below), respectively. However, net profits were RMB 143 million, -RMB 51.946 million, and -RMB 252 million, marking two consecutive years of losses. Although revenue in the first half of 2025 grew 21.41% year-on-year to RMB 377 million, with a net profit of RMB 64.712 million, and gross margin rebounded to 38.9% from 32.54% in the same period last year, it still fell far short of the 48.44% peak level in 2022.
According to industry sources, the decline in gross margin is primarily due to the rising proportion of low-margin clinical trial services, which increased from 10.9% in 2022 to 23.9% in the first half of 2025, reflecting the profitability pressures amid the company's business transformation.
In terms of business layout, non-clinical and clinical services accounted for over 95% of total revenue during the track record period, while revenue from supplying research animals to third parties was minimal. Since 2021, the company has strategically expanded its clinical services, increasing their revenue share from 10.9% to 23.7% over three years, making it the fastest-growing segment. Meanwhile, overseas expansion has shown initial success, with international revenue rising sharply from 10.8% to 30.2% in the first half of 2025, demonstrating its efforts in globalizing operations.
With GLP certification and AAALAC international accreditation, the company has provided non-clinical research services to over 700 global clients and clinical services to more than 130 clients, helping them secure over 200 approvals from China's NMPA and over 40 approvals from overseas regulators. This diversified client base and growing international presence inject potential momentum for long-term growth.
**Financial Concerns Persist Despite Business Recovery** Despite signs of business recovery, Dingtai Pharma's financial health remains a concern. In 2023 and 2024, losses due to changes in the book value of redeemable liabilities amounted to RMB 196 million and RMB 206 million, respectively, becoming the primary reason for net losses in recent years. As of June 30, 2025, the company's total current liabilities reached RMB 3.534 billion, while current assets stood at only RMB 1.578 billion, leaving a liquidity gap of nearly RMB 2 billion. In terms of cash flow, except for a net operating cash inflow of RMB 254 million in 2022, all other reporting periods recorded net outflows, with cash and equivalents dwindling to RMB 419 million by the end of June 2025. Liquidity risks may be the core driver behind the company's IPO financing plans. If the listing process stalls or valuations fall short of expectations, funding pressures could intensify, posing a major risk for investors.
**Industry Polarization: CRO Sector's "Two Extremes"** As a CRO company focused on non-clinical research, Dingtai Pharma's core competitiveness and risks are closely tied to its non-human primate (NHP) resources. Experimental monkeys, due to their high physiological similarity to humans, are irreplaceable models for drug safety evaluations. However, their long reproductive cycles and limited supply make them a focal point of industry competition.
In China's CRO sector, NHP resources are highly concentrated, dominated by a few key players. This structure stems from the slow reproduction and limited overall supply of NHPs. According to Frost & Sullivan, Dingtai Pharma has established one of China's most comprehensive NHP disease model portfolios, supporting critical non-clinical studies across various disease areas. By revenue, the company ranked as China's third-largest CRO in efficacy studies in 2024, demonstrating a certain market-leading advantage.
Notably, the sharp volatility in experimental monkey prices has become a major factor affecting industry profitability stability. From 2020 to 2022, prices surged from RMB 42,000 to RMB 184,000 per monkey due to pandemic-related disruptions. Subsequently, from 2022 to 2024, prices dropped to RMB 84,900 as supply chains recovered, demand neared saturation, and alternative technologies emerged. From 2024 to 2025, average prices rebounded slightly to RMB 92,000 amid stable industry demand growth.
This volatility has significantly impacted companies with substantial NHP holdings. For instance, JOINN (06127) reported a net loss of RMB 114 million in 2024 due to fair value changes in biological assets, only to turn profitable in Q2 2025 as monkey prices rebounded. Dingtai Pharma's expanded net operating cash outflow in the first half of 2025 was attributed to bulk NHP purchases for its Hainan base expansion. This business characteristic ties its performance closely to the price cycles of biological assets, introducing a key uncertainty for future operations.
**Diverging Industry Performance** Currently, China's pharmaceutical CRO industry is undergoing significant polarization, presenting a "two extremes" scenario. In the first half of 2025, some leading companies delivered strong results. For example, Pharmaron Beijing Co., Ltd. (300759) reported revenue of RMB 6.441 billion, up 14.9% year-on-year, with adjusted net profit surging 36.66% to RMB 637 million. In contrast, others underperformed, such as TIGERMED (03347), which saw revenue decline 3.21% to RMB 3.25 billion and adjusted net profit plummet 67.09% to RMB 211 million.
As more established pharmaceutical companies build in-house clinical teams and biotech firms reduce reliance on clinical CROs, demand for traditional clinical CRO services is being squeezed. Against this backdrop, market competition is intensifying, and the commercial value and growth potential of clinical CROs are being reassessed by capital markets.
In terms of scale, Dingtai Pharma lags far behind industry leaders. In the first half of 2025, Pharmaron Beijing, TIGERMED, and JOINN reported revenues of RMB 6.441 billion, RMB 3.25 billion, and RMB 669 million, respectively, while Dingtai Pharma's revenue stood at only RMB 377 million. This size disadvantage leaves the company relatively vulnerable in an increasingly competitive landscape, potentially facing greater pressure in future industry consolidation.
**Conclusion** Overall, Dingtai Pharma has built a competitive edge in niche areas through its NHP resources and disease model expertise. However, challenges remain in profitability, debt structure, and liquidity. While a successful IPO could provide much-needed funding to alleviate debt pressures amid the broader CRO industry recovery, the company's long-term prospects hinge on balancing business expansion with financial stability and constructing a sustainable moat in a fiercely competitive environment.
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