Stocks in the Contract Research Organization (CRO) sector saw broad gains today. At the time of writing, ASYMCHEM (06821) was up 6.57% to HK$129.7, JOINN (06127) rose 6.5% to HK$21.96, PHARMARON (03759) advanced 6.04% to HK$23.54, and WUXI APPTEC (02359) increased by 5.41% to HK$159.8.

Catalysts for the Sector's Strength

The positive momentum is supported by several factors. The first half of this year saw domestic innovative drug out-licensing deals reach a record high for the period. This coincides with a significant recovery in overseas biopharmaceutical financing, with multiple leading indicators pointing to a simultaneous improvement in both domestic and international demand. On the evening of July 13, PHARMARON released its first-half performance forecast, revealing that the company's new contract orders grew by over 30% year-on-year. Within this, new orders for laboratory services increased by more than 20%, while new orders for small molecule CDMO services surged by over 50%. Notably, heightened new drug development activity has driven up the price of laboratory monkeys once again, with reports indicating the current price for a cynomolgus monkey has exceeded 200,000 yuan.

Analyst Perspective on the Recovery

Analysis from Huaxin Securities suggests that since early June, the CXO sector has led the rebound in the biotech space, supported by its fundamentals in earnings and order books. From June 8 to July 10, the CRO index has already rebounded by 21.72%. Looking ahead to the second half of the year, continued growth in innovative drug financing is expected to support the sustained positive momentum for CXO companies. Currently, leading CRO firm WUXI APPTEC is trading at a forward 2027 P/E ratio of 17.58x, while ASYMCHEM is at 33.19x. As the interim earnings season approaches and second-quarter order trends become clearer, the ongoing recovery in the CXO sector is anticipated to be backed by solid financial performance.