Entering September, the CRO/CXO sector remains one of the most resilient directions within the pharmaceutical space, with capital attention once again intensifying around the entire chain spanning innovative drug R&D, outsourced services, and commercial realisation. On September 8, China's first AI-assisted innovative drug received market approval, triggering a collective rally in CRO concept stocks, while on September 14, multiple stocks in the sector delivered robust performances, with Wanbang Pharmaceutical and Nearby Protein both locking in the 20% daily limit, and Yiqiao Shenzhou and Medicilon following suit, standing out as rare bright spots in an otherwise weak market.

The core narrative behind this CRO rally lies in the resonance between domestic and global demand, with a genuine recovery in global innovative drug financing and a substantive improvement in orders. Global healthcare financing in the first half of 2026 surged 58.5% year-on-year, while the total value of domestic innovative drug License-out deals exceeded US$100 billion, approaching the full-year 2025 level. This transmission from capital to industry has directly driven a volume-price uptick in CRO order backlogs, with leading CRO firms operating at full capacity and improving utilisation rates, signalling the industry's transition from the previous trough into a new growth cycle. Policy tailwinds are also providing support, including the introduction of a pre-submission mechanism in the medical insurance catalogue adjustment and an eight-year price protection period for innovative drugs, accelerating commercial rollout and indirectly benefiting the upstream CRO supply chain.

Looking ahead to the second half of the year, institutions broadly believe industry momentum will remain strong. CITIC Securities predicts that with surging demand for new molecules and cutting-edge technologies, China's CDMO sector is poised to enter a dual-driven era encompassing the engineer dividend and innovation-led growth, while AI-assisted drug discovery (AIDD) is transitioning from concept to practical application, opening new avenues of upside potential. In interactive platforms and institutional research, multiple listed companies with CRO operations have recently responded to market concerns, disclosing the latest progress across orders, capacity, and globalisation initiatives.

Where to Begin

Addressing the development of its cell and gene therapy (CGT) CRO, CDMO, and regenerative medicine businesses, Obio Technology (688238) stated that it remains steadfastly focused on its core CGT CRO/CDMO operations, seizing national biopharmaceutical industry support policies and aligning with expanding downstream demand for CGT drug development and industrialisation while steadily advancing forward-looking strategic positioning in regenerative medicine. On the CGT CRO front, the company continues to consolidate its core business, deepen emerging demand from downstream research and industrial clients, and drive technological iteration, service upgrades, and global expansion, steadily enhancing overall competitiveness. Obio Technology has built a comprehensive service matrix covering multi-omics analysis, gene delivery, and functional validation around the full life cycle of gene function research. Its omics platform integrates spatial and multi-omics technologies to deliver high-throughput analysis of single-cell transcriptomics, spatial transcriptomics, proteomics, and metabolomics, helping clients pinpoint key genes and molecular mechanisms. In gene delivery, it offers a full suite of gene synthesis and vector construction capabilities, producing plasmid, siRNA, AAV, adenoviral, lentiviral, and retroviral vectors to suit varied research phases. In functional research, it covers cell-based assays, animal studies, testing services, CRISPR/Cas9 library screens, exosome research, and AAV capsid directed evolution. Through a multi-pronged strategy combining academic exposure, platform development, and precision marketing, the company is accelerating the internationalisation of its CGT CRO operations. In the first half of 2026, CRO sales revenue reached RMB 45.1395 million, up 10.91% year-on-year, with the cumulative client base surpassing 16,900 R&D laboratory clients by the end of the period.

When asked about the future trajectory of gross margins in its CRO business, Sino Biological (301047) explained that its CRO services mainly encompass recombinant expression, antibody development, and biosafety testing. Gross margins have held broadly stable, with fluctuations driven by service type and project specifics.

Positioning for the Long Term

Regarding medium- and long-term targets for its ADC CDMO business, ChemPartner (688131) detailed its Shanghai-Ma'anshan-Chongqing "trinity" XDC platform, which leverages extensive Payload-Linker resources and integrated CRO & CDMO capabilities to build a diversified technology library spanning payload-linker-vehicle components. The company maintains a diverse finished payload-linker inventory with proven toxin-linker synthesis, quality research, and high-potency operational expertise, enabling custom antibody formats and flexible conjugation project execution. Its full-process services cover payload-linker development, antibody discovery, conjugation process optimisation, and commercial manufacturing, creating a closed-loop system that efficiently transitions projects from research to clinical and commercial stages while cementing leadership in this niche. Order intake has risen steadily, with a healthy backlog trend. Notably, in August 2026, the Chongqing ADC CDMO base launched an antibody formulation expansion project to add commercial-scale production lines for antibody drug substance, ADC conjugate drug substance, and antibody formulation filling, further strengthening the large-molecule ADC growth foundation. The base will work in tandem with the Shanghai headquarters innovation centre and the Ma'anshan high-potency line to accelerate global partners' journey from preclinical to commercial production.

On future gross and net margin expectations for its CRO business, Bojay Pharmaceuticals (300404) noted that prices for newly signed preclinical orders in the first half of 2026 recovered year-on-year, while clinical order pricing remained stable. As internal personnel efficiency rises, revenue growth drives economies of scale, and expense ratios decline, gross and net margins are expected to improve going forward.

In response to questions about client structure, Pharmaceutical Research Associates (301257), as one of the earliest entrants in the SMO industry, highlighted its deep project management experience and nationwide network of clinical trial institutions covering all disease areas. Recognised as a qualified supplier to multinational pharmaceutical giants, domestic innovative drug developers, and CRO firms (predominantly multinational CROs), the company collaborates with the global top 10 pharmaceutical companies. Its client mix broadly mirrors the overall trend of domestic new drug trial sponsors, with domestic pharmaceutical companies accounting for a growing share of new order value, driven by policy support, overseas BD activity, and technological breakthroughs. The company aims to balance its client portfolio by expanding foreign-sponsored projects and CRO resources while consolidating its domestic and biotech market share.

Technology's Expanding Role

Regarding its AI-NMR intelligent spectrum analysis platform SpinMind, Guoyi Instruments (688828) stated that the platform is tailored for structure confirmation of small-molecule pure compounds, integrating structure validation, spectrum analysis, and NMR literature retrieval into a unified workflow. It serves innovative drug development, chemical drug R&D, and CRO analytical scenarios, offering users more efficient and easily verifiable tools for spectrum interpretation and structure confirmation.

On CRO expansion plans, Pharmablock (300725) said it will leverage its longstanding molecular building block platform and intelligent R&D technology to broaden research chemistry services and explore new business models. The company is building high-throughput rapid synthesis capabilities to generate diverse compound libraries from its building block inventory, while continuously enhancing fragment libraries, DNA-encoded libraries, and molecular glue libraries. Emphasising an innovation-driven approach, the value of novel and specialised building blocks is becoming increasingly apparent, and the company will sharpen its differentiation through unique building blocks, intelligent design, and efficient delivery.

When asked how many CADD/AIDD-enabled projects translated into actual contracts by end-2025 and the first quarter of 2026, and the premium range for AI-enabled projects versus traditional ones, Hongbo Medical (301230) disclosed that as of end-December 2025, its CADD/AIDD platform had supported 104 new drug projects, with eight entering clinical trials. The platform serves 53 clients, including domestic and international innovative drug developers and biotech companies. As a core enabling tool for early-stage drug R&D (CRO), it is deeply embedded in the company's existing service system. However, specific contract values and pricing cannot be disclosed due to commercial confidentiality and strict non-disclosure agreements with clients.

Regarding its microbiome and innovative drug pipeline, RuiZhi Medicine (300149) explained that its microbiome and innovative drug R&D and production services (CRO/CDMO) are two distinct business segments. The innovative drug segment covers chemical drugs, biologics, and novel modalities, spanning chemical drug R&D, biologic development, XDC research, pharmacology, pharmacokinetics, early toxicology, large-molecule process development and production, with a comprehensive turnkey service strategy. The microbiome & health segment includes microbiome nutrition, precision faecal microbiota transplantation (FMT), microbiome testing, and healthcare services. In March 2026, the company completed the acquisition of Shanghai Mubo Biomedical Technology, further strengthening its microbiome research capabilities.

Building Future Advantages

Asked whether its long-standing biopharmaceutical expertise extends to brain-computer interface strategy, Tigermed Consulting (300347) noted that as a leading clinical CRO with over two decades of experience, it has accumulated extensive capabilities in innovative drug and medical device development services for multinational and domestic pharmaceutical companies as well as small and mid-sized innovators. Its coverage spans chemical drugs, biologics, vaccines, devices, and nearly all therapeutic areas including oncology, respiratory, infectious diseases, endocrinology, haematology, neurology, cardiovascular, dermatology, immunology, digestive, metabolic, and rare diseases. The company continues to enhance its capabilities in frontier drug mechanisms, targets, and therapeutic areas while expanding into real-world studies and risk-based monitoring.

Addressing intensifying competition and its medium- and long-term growth blueprint, Hite Biological (300683) stated it has established CRO services for small-molecule formulations and CDMO services for APIs, delivering a one-stop drug development offering spanning R&D, clinical, and production, with full value-chain coverage from pharmaceutical research, clinical services, and bioassay to new drug development and manufacturing. The current strategic direction is to convert CRO orders into CDMO orders.

Responding to questions about transitioning from high growth to near-term pressure and enhancing profitability stability, Baihua Pharmaceutical (600721) outlined six strategic priorities: focusing on high-end, hard-to-copy complex formulations and advancing each business segment up the value chain; cultivating testing services as a new growth driver and accelerating MAH commercialisation capabilities; building a specialised clinical brand through a comprehensive clinical CRO service system to strengthen pharmaceutical-clinical-regulatory synergies; enhancing business development capabilities to expand market share and deepen strategic client partnerships; reinforcing highly specialised R&D talent as the foundation for technological breakthroughs; and improving operational efficiency through strengthened project management and streamlined internal processes.

On its pharmaceutical business, new client development, and growth strategy, Lianhe Chemical Technology (002250) said it is steadily expanding its pharmaceutical segment based on deep expertise in chemical synthesis. Over more than a decade, it has forged stable partnerships with leading global pharmaceutical companies and become a notable player in domestic CDMO. Building on CDMO, the company is extending into CRO to create a synergistic business structure. Commercial product revenue is growing steadily, with over five products each generating more than RMB 100 million in annual revenue across client portfolios in oncology, autoimmune, and neurology. The company focuses on European, US, and Japanese markets, assigning dedicated teams to multinational pharmaceutical giants, offering customised technology roadmaps and capacity reservation services, and deepening relationships from supplier status to global strategic partnership. Technologically, it possesses capabilities in continuous flow reaction, enzyme catalysis, peptide synthesis, and frontier areas including oligonucleotide synthesis and delivery systems, polysaccharide synthesis, and PEG compound process development, with several new technologies already applied in new projects. Ongoing investments in oligonucleotide R&D, production platforms, and related equipment are expected to become a major new growth engine.

Finally, regarding its collaboration with Shenzhen Third People's Hospital to establish a joint CGT laboratory, China Resources Sanjiu (000999) highlighted that both parties have maintained close cooperation in CGT technology development. This strategic partnership focuses on building a high-level CGT technology platform through a joint laboratory, accumulating technical capabilities, and gradually achieving medical-enterprise-research integration in CRO/CDMO services and innovative product development. Concurrently, the company is actively pursuing cell therapy through a joint development agreement with Ellpe for HiCM-188, a Phase II clinical candidate that is the world's first induced pluripotent stem cell-based heart failure regenerative therapy to receive clinical trial approval in both China and the US, representing a significant step in expanding its cell therapy footprint to address end-stage heart failure clinical needs.