Goldman Sachs: Increased visibility of demand for CDMOs in Asia is promising to get involved in early-stage R&D and emerging therapy companies

The Zhitong Finance App learned that Goldman Sachs released a research report saying that after communicating with over 100 institutional investors and pharmaceutical company representatives at an investor event earlier, it was observed that the focus of the industry had changed from a recovery trend to the sustainability of the next round of growth. The bank believes that improved demand for pre-clinical and safety assessments, continued improvement in order momentum, and an increase in the share of commercial production all point to a more durable demand environment.

Goldman Sachs pointed out that emerging growth drivers such as peptides, ADCs, oligonucleotides, biosimilars, and AI-driven drug discovery (AIDD) are expanding outsourcing opportunities, supporting the multi-year outsourcing growth cycle. Business executives are also shifting from arranging for recovery to investing in the next phase of structural growth. The bank believes that the increased visibility of global demand continues to overshadow investors' concerns about geopolitical impact. The second-quarter results of global CRO/CDMO companies also show that the recovery in discovery, pre-clinical and safety assessment activities is encouraging. Most executives believe that the recent US interest rate hike has had no real impact on the CDMO industry's short-term demand trend.

Prefer companies involved in early R&D and emerging therapies

In terms of stock selection, Goldman Sachs favors more companies involved in early-stage R&D activities and emerging therapies. It believes that Pharmaceuticals (02268), Kanglong Chemical (03759), and Tiger Pharmaceuticals (03347) are well-positioned because of their higher share of early innovation projects, continuous improvement in order momentum, and participation in emerging growth fields such as AIDD, ADC, and next-generation biological products.

Goldman Sachs also said that Glorient (06821) can be seen as the main beneficiary of accelerated demand for peptide outsourcing. It is optimistic that Pharmaceutical Kangde (02359) will have high leverage on global commercial GLP-1 release and broader TIDES demand. At the same time, it is expected that Kingsley Biotech (01548) can benefit from incremental AIDD demand related to gene and protein synthesis.