Behind WuXi AppTec's daily 10% limit-up: After weathering three years of persistent sluggish decline, is this a true reversal now?

On August 4, 2026, the A-share share price of WuXi AppTec hit the 10% daily limit.

The reason is that WuXi AppTec's performance in the first half of the year exceeded expectations. Its semi-annual report shows that the revenue was 28.897 billion yuan, a year-on-year increase of 38.93%, and the net profit was 11.08 billion yuan, up 29.43%; the adjusted non-IFRS net profit attributable to shareholders was 11.571 billion yuan, with an increase of 83.23%.

Meanwhile, WuXi AppTec has fully raised its full-year performance guidance. The company's total revenue for 2026 is raised from the previous range of 51.3 billion yuan to 53 billion yuan to 58.5 billion yuan to 60.5 billion yuan; the year-on-year revenue growth rate of continuing operations is raised from 18%-22% to 35%-39%.

The overall pharmaceutical third-party outsourcing (CXO) sector has been picking up for more than a month. Driven by the leading firm WuXi AppTec, the relevant index rose by 8.89% in the three trading days in early August. The CRO (884142) index has risen from 2541.42 in mid-June to 3304.46 at the close of trading on August 5.

The pharmaceutical sector has been in a sustained downward trend since mid-2025 for a whole year. Why did the CXO sector show the first signs of recovery? After the strong rebound, who will be left behind by peers, and what is the future trend of this industry?

Rise of new businesses partially eases geopolitical concerns

After WuXi AppTec's semi-annual report was released, investment institutions generally believed that its performance exceeded expectations, while CITIC Securities, Everbright Securities and others described the performance as "far exceeding expectations". Its revenue and net profit growth in the first quarter were 28.8% and 26.7% respectively; based on this calculation, its revenue growth in the second quarter has reached nearly 50%.

Some analysts believe that its first-half performance has to some extent dispelled the market's concerns about geopolitical risks. At least financially, WuXi AppTec's actual business does not seem to be greatly affected, but has instead increased against the trend.

WuXi AppTec has not publicly disclosed how many of its orders in the first half of 2026 came from the United States. But by the end of 2025, WuXi AppTec's total orders on hand under all calibers amounted to 89.2 billion yuan, with overseas orders accounting for 68%; the full-year revenue from US customers was 31.25 billion yuan, a year-on-year increase of 34.3%, accounting for about 72% of the revenue from continuing operations.

From the results, external factors are difficult to shake the important position of CXO in the global industrial chain. There are two main reasons: first, global R&D investment in pharmaceuticals is increasing; second, the CXO market is highly globalized, especially the R&D and production of complex molecules, which is highly dependent on outsourcing.

According to the forecast of Frost & Sullivan, the total global pharmaceutical R&D investment is expected to maintain a compound annual growth rate of 5%-6%. Among them, the R&D outsourcing rate of the pharmaceutical industry increased from 34.8% to 51.9% in the ten years from 2015 to 2024, and is expected to further rise to 65.6% by 2034.

This is mainly because the molecular structure of innovative drugs is becoming more and more complex, putting forward higher requirements for R&D, production and quality control systems. Therefore, for many comprehensive pharmaceutical companies, it is more cost-effective to outsource than to develop on their own.

Taking antibody-drug conjugate (ADC) as an example, the linker in such drugs is the key process, which is the core structure connecting the antibody and the cytotoxin. If its performance is unstable, it will have a great impact on safety and efficacy. "Relatively speaking, it is a bit closer to the chemical industry, which poses certain challenges for some enterprises that focus on the R&D of a certain type of antibody." A pharmaceutical industry researcher told *Caijing*.

Therefore, about 70% of ADC drugs are outsourced to professional CXOs.

At present, about 15 ADC drugs have been approved for marketing around the world. Except for two products from Pfizer, other multinational pharmaceutical companies such as AstraZeneca, Gilead Sciences, and GlaxoSmithKline have all chosen outsourcing. After all, it takes three years to build an ADC plant and put it into operation, and multinational pharmaceutical companies generally started the construction of such production lines in 2024 or later.

The global ADC market is growing rapidly. Frost & Sullivan predicts that the compound annual growth rate will reach 30.6% from 2023 to 2032, and the market size is expected to exceed 115.1 billion US dollars in 2032.

Strong leading CXOs have become the beneficiaries of the outbreak of new demand. To undertake ADC orders, WuXi XDC, an enterprise under the WuXi system, acquired more than 60% of the shares of TOT BIOPHARM in early 2026 at a price of HK$3.1 billion. After the signing of the agreement, WuXi XDC provided TOT BIOPHARM with a three-year stepwise total service agreement for R&D and production outsourcing (CDMO), with a guaranteed minimum amount of 92.5 million yuan in 2026, 257 million yuan in 2027, and 425 million yuan in 2028.

Similar situations exist in other emerging business tracks, such as GLP-1 polypeptide drugs, oligonucleotide drugs and other fields. WuXi AppTec's semi-annual report shows that in the first half of 2026, WuXi AppTec's TIDES (peptide and oligonucleotide) business achieved revenue of 7.26 billion yuan, a year-on-year increase of 44.3%. The company expects the full-year revenue of this business to maintain a year-on-year growth of about 45%.

It is not only WuXi AppTec. The aforementioned pharmaceutical industry analyst introduced to *Caijing* that since the second half of last year, the orders of domestic early-stage R&D CROs have shown significant growth, and this trend has become more obvious this year. At the same time, the small molecule drug production orders undertaken by CDMO enterprises are also continuing to increase. Coupled with the fact that the sales of GLP-1 products are still in a period of rapid expansion, the sector is expected to maintain strong momentum in the short term.

It can be seen that enterprises with cutting-edge drug R&D capabilities and complex drug production capabilities all have corresponding advantages.

Well-known investment institution GL Ventures has begun to increase its investment. On July 31, Asymchem announced that it and GL Ventures Qirui and other parties will contribute a total of 1.2397 billion yuan to increase the capital of its core biomacromolecule platform Shanghai Asymchem Biotech (Asymchem BIO), for the purpose of "further enhancing the core competitiveness of Asymchem BIO in the biomacromolecule CDMO industry". Different from the comprehensiveness of its parent company, Asymchem BIO is mainly engaged in emerging businesses such as antibody and recombinant protein drugs, antibody-drug conjugate drugs, plasmid and mRNA drugs.

K-shaped recovery, the strong get stronger

WuXi AppTec's better-than-expected performance does not mean that the entire CXO industry will benefit indiscriminately. A practitioner in the CRO (Clinical Research Outsourcing) industry believes that the more accurate description of the current industry is "K-shaped recovery".

In the view of the aforementioned CRO practitioner, in the current market environment, biotech companies tend to outsource non-core R&D and production links to large CXOs with mature platforms, rich project experience and strong global compliance capabilities.

In China's entire medical industry chain, CXO is a special sector with overseas orders accounting for more than 50%. "Orders are the most valuable." A partner of a medical investment institution pointed out that this determines the basic revenue of the company in the next two to three years.

Global leading players like WuXi AppTec have the ability to continuously obtain large overseas orders. As of the first half of 2026, WuXi AppTec's orders on hand from continuing operations reached 66.4 billion yuan.

Such order-winning capabilities are not even available to TOT BIOPHARM, the most successful pharmaceutical company that has transformed into a CXO.

In 2025, TOT BIOPHARM added 60 new CDMO projects, with the total number of accumulated projects reaching 213, and ADC-related projects accounting for 68%. However, according to its 2025 semi-annual report, the revenue of its CDMO business fell by 32% year-on-year.

This pattern of "the strong get stronger" enables leading enterprises to continue to benefit, while small service providers lacking platform advantages and sufficient project experience may be eliminated by the market in the early stage.

In fact, a number of small and medium-sized CXOs have already been eliminated. In 2024, API (Asia Pacific Pharmaceutical) announced the bankruptcy of its subsidiary Shanghai New Horizon Pharma, a CRO enterprise it acquired in 2015; in the same year, Beijing Xin Kaiyuan Pharmaceutical fell into a series of contract disputes due to debt problems, which have not been resolved to this day. These are all well-known CRO companies in the industry.

Beyond the public view, "There are too many cases where CXOs can't get orders and investors have to write off their losses." The aforementioned partner of the medical investment institution told *Caijing*.

This is mainly related to the extremely fierce internal competition in China's traditional CXO industry. From 2020 to 2023, based on the theory that "water sellers always make money", China's CXO industry experienced a wave of rapid development. In 2023, the three-year-long cold winter of pharmaceutical investment arrived, and a number of pharmaceutical companies turned to the CXO sector for survival.

The overcrowding of the entire industry made it no longer a good business in those years. "Domestic orders have high requirements, low prices and long payment periods. That's why Lonza sold one of its factories in Guangzhou, focusing on higher-profit businesses overseas." A person in charge of the pharmaceutical sector at a comprehensive investment institution told *Caijing*.

The overseas market is also facing fierce competition. Since 2023, multinational leading players such as Lonza and Thermo Fisher Scientific have been carrying out large-scale layoffs, shrinking low-profit business segments such as generic small molecules and cell therapy. "In the final analysis, traditional businesses are all facing cutthroat competition." The aforementioned partner of the medical investment institution concluded.

But it is precisely such fierce competition that has allowed the CXO industry to complete a major reshuffle in the past three years. An analysis institution predicted in 2025 that the concentration ratio of the top five leading enterprises in the CRO industry will rise from 45% in 2023 to more than 60%, and this round of clearing may reduce the number of enterprises in the industry by 30%.

In each specific sub-sector, a relatively clear competitive tier has been formed. In the small molecule CMO field, WuXi AppTec's leading position is unshakable, and the second-tier enterprises include Asymchem, Pharmaron and others; the early-stage R&D CRO field is mainly dominated by companies such as JOINN Laboratories, Medicilon and others.

After the "clearing", the inflection point has arrived.

The aforementioned pharmaceutical analyst believes that overall, the upward trend of the domestic CXO industry is relatively clear. "At least by the end of 2026, the industry prosperity will not be a problem, and CXO enterprises' orders have been improving for four consecutive quarters, which is not a short-term market sentiment."

This article is from the WeChat official account "Caijing Big Health", written by Ling Xin and Ding Ning, and published with authorization from 36Kr.