A research report has been published providing initial coverage of VIVA BIOTECH (01873) with a "buy" rating. The report projects net profits attributable to shareholders of 221 million yuan, 264 million yuan, and 344 million yuan for 2025-2027 respectively, representing growth rates of 32%, 20%, and 30%, with corresponding PE ratios of 24X, 20X, and 15X. Overall, the company is expected to continue benefiting from rising global innovative drug industry prosperity through synergistic development of CRO and CDMO services, AI-driven R&D efficiency improvements, and investment incubation ecosystem construction, driving steady performance growth and long-term value realization.
As a one-stop CRO+CDMO platform, the company benefits from sustained growth in global pharmaceutical R&D outsourcing demand. The CRO business represents the company's core competitive advantage, and with global biomedical investment and financing recovery, the second half of 2024 has shown both year-over-year and sequential growth trends. CRO order backlog has achieved positive year-over-year growth with monthly new contract signings maintaining high levels, suggesting continued recovery momentum ahead. The CDMO segment, leveraging Langhua's comprehensive pharmaceutical platform capabilities, continues expanding capacity and advancing commercialization processes. Currently, two important projects have entered the PPQ stage and are approaching commercial launch, bringing new growth drivers to the segment.
CRO Business Turnaround Evident, AI Empowerment Accelerates New Drug Development: The company continues focusing on FIC Discovery business within the CRO segment, forming comprehensive services from target identification to candidate compounds. CRO revenue in the second half of 2024 achieved both year-over-year and sequential growth, indicating a business inflection point. Leading overseas CXO companies like Charles River and Medpace have also raised their full-year 2025 guidance, as the biomedical investment and financing environment undergoes moderate recovery, with domestic companies' front-end businesses expected to gradually rebound. In AI-driven drug discovery, the company has established interdisciplinary composite teams with autonomous algorithm development and drug design methodology capabilities, cumulatively participating in 157 projects. Some AI-enabled projects have generated over $10 million in revenue and have formed complete solution sets in specific segments.
CDMO Commercial New Projects Enter Harvest Period with Promising Future Growth: The company entered the CDMO field through acquisitions of Langhua Pharmaceutical and Synthesis HK. Leveraging Langhua's integrated R&D, production, and trading platform advantages covering the full lifecycle, it has become a major global producer of quinolone and spironolactone APIs. In 2024, Langhua achieved total revenue of 1.176 billion yuan, with CDMO business revenue of 684.9 million yuan and stable gross margins at 38.6%. Notably, as of end-2024, the company has two key CDMO commercialization projects in PPQ stage, expected to achieve commercial launch in 2026 and 2027 respectively, injecting new growth momentum into the future CDMO segment.
Refined Group Structure with Investment Incubation Results Gradually Materializing: In the first half of 2025, the company realized exits from multiple incubated companies, accumulating nearly 76.5 million yuan in proceeds, with investment gains from fair value changes of approximately 52.6 million yuan. As of the first half of 2025, the company has cumulatively incubated 228 pipelines, with 186 in preclinical stages and 42 having entered clinical phases. Eight incubated companies completed or are near completion of new financing rounds totaling $293.6 million. Against the backdrop of this year's innovative drug bull market, the company is positioned to realize more substantial investment returns. As a batch of potential exit projects gradually enter realization phases, the company's investment incubation segment is expected to reach a harvest peak.