To The Moon

Recent months have seen intensified M&A activity in the CRO sector. Following Hillhouse Capital's 2.8 billion yuan acquisition of WuXi AppTec's clinical CRO business, independent clinical laboratory (ICL) player ADICON HOLDINGS (09860) has now entered the fray. On November 13, ADICON announced plans to acquire 100% of Crown Bioscience, a global oncology-focused CRO leader, for approximately $204 million, with completion expected by mid-2026. Founded in 2006, Crown Bioscience is the world's largest specialized oncology CRO, boasting industry-leading patient-derived xenograft (PDX) model libraries, organoid technologies, and over 5,000 high-quality in vivo/in vitro tumor models. The company has also built a "data + AI" technological ecosystem, developing innovative digital tools like SynAI and CrownLink while advancing AI applications in drug discovery and efficacy prediction. Notably, the deal values Crown Bioscience at just 7x EV/EBITDA—a significant discount compared to the 50+ P/E multiples typical among preclinical CRO peers like BioMap and GemPharmatech. This acquisition marks ADICON's strategic pivot from pure-play ICL services to a dual-track "clinical testing + drug R&D services" model, potentially reshaping the global pharmaceutical R&D services landscape. Industrial Securities views the deal as injecting new growth drivers into ADICON, with stable cash flows from its ICL business complementing Crown's high-margin CRO services to create a more balanced, scalable business model. The brokerage forecasts ADICON's 2025-2027 net profits at 56 million, 67 million, and 94 million yuan respectively, representing y/y growth of 19.79%, 18.59%, and 41.47%, initiating coverage with an "Overweight" rating.