We are at an inflection point where it finally feels like the Covid bulge has washed through the bioprocessing system and the entire supply chain built out in the west is repositioning to serve this recovery.
Sartorius just posted another quarter of APAC growth led by recurring consumables and guided up on margins, with no special “pandemic” contribution to call out. Samsung Biologics is running flat-out at Plant 4 with strong Q3 revenue and operating profit underlining the bullish CDMO outlook.
This week we dive into the renewed momentum shown by CDMOs & CROs across the US, Europe, and Asia while studying the forces that are redistributing the Western monopoly when it comes to building novel drug pipelines & manufacturing overseas.
Bioprocess capex is stabilising, clinical development work is shifting to where capacity and policy are friendlier, and the centre of gravity in outsourced pharma services is increasingly tilting toward Asia.
CDMOs & CROs’ asymmetric recovery
Western pharma faces a productivity crisis. After spending $2 billion per approved drug over a decade-long timeline, their internal pipelines can't fill looming patent gaps. Clinical trial costs in the US run 5-10x higher than China. Patient recruitment takes 3-6x longer.
(source: Financial Times)
Most of what is in the CDMO order books today is still being fed by companies that have no product revenues. The signals from venture are very clear. HSBC’s H1 2025 look-through showed that overall biotech startup funding and especially “first financings” weakened again in Q2 2025 after a short rebound.
GlobalData put Q1 2025 biopharma venture investments at about $6.5B, 20% lower YoY, and noted that investors preferred programmes with clinical data. That tells you the ratio inside the ecosystem is skewed toward many pre-revenue assets fighting for CDMO slots and a much smaller pool of mature, clinic-validated assets that can order bigger batches and longer campaigns.
(source: Rock Health)
The reason this pipeline feels thinner in terms of “real” drug candidates is that venture money has moved to models that promise faster compounding than classic wet-lab biotech.
In January 2025 about 22 per cent of all global VC funding went to AI, and by mid-year AI and AI-enabled health startups were taking the majority of digital health dollars, while plain biopharma venture was still below 2021–22 levels.
For CDMOs this produces an awkward mix. There is a long tail of preclinical or single-asset biotechs that can pay for tox batches or an initial DS run, but there are fewer venture-backed companies progressing cleanly into Phase 2 & 3 trials where CDMOs earn better margins and higher utilisation.
If venture keeps prioritising AI, pharma will have to become the source of a healthy drug candidate pipeline for CDMOs in 2026–27, which is what we’re seeing unfold today with the Chinese asset shopping spree.
(source: Financial Times)
What does this mean? China has chosen to fast-track biotech as part of a broader self-reliance agenda, which is why you saw 93 overseas licensing deals worth $85B in the first eight months of 2025, but that speed often comes from running large, fast local trials and exporting the asset, not from building globally translatable data packages.
US and European regulators have become more insistent on multi-regional trials and have been especially wary of China-only oncology data, so there is a real “quantity over quality” issue for Chinese programmes that want to fill Western CDMO capacity.
Europe, meanwhile, has lost share of commercial trials to China and the US since 2024, which means European CDMOs must look to Asia for growth at the very moment geopolitics is making China-linked clinical work harder to monetise.
Add the normalisation of Covid demand, and you get a sector where growth now depends on where the pipelines are being built and where regulators will actually accept the data.
That is material for German bioprocess names with high Asia exposure, for US CRO/CDMOs with China revenue caps, and for Hong Kong/Shanghai-listed biotech service providers that must prove their projects can travel.
Asian growth drivers:
China
(source: MarketScreener)
China and its domestic biotechs have moved beyond copycat products. A small but visible group of platforms is now active in biologics, antibody drug conjugates and global clinical work.
The clearest examples are WuXi XDC, WuXi AppTec and WuXi Biologics, which have become large enough that the United States Congress tried to name them in the draft Biosecure Act that would have limited US federal spending with Chinese biotech suppliers.
The growth engine is still cost and speed. China can recruit for oncology and immunology trials much faster than the United States or Europe. Domestic prices are kept very low by volume based procurement and by NRDL talks, so Chinese innovators have to licence out to the West to make money.
At the same time the FDA has rejected several Chinese oncology filings in 2024 and March 2025 because of manufacturing and data integrity problems at companies such as Jiangsu Hengrui, which shows that regulators still want multi regional data and clean quality systems before giving a US label.
So China is the fast and relatively cheap block that is trying to climb into higher value work. It can deliver very strong data, as we saw again at ESMO 2025 with HARMONi 6 for ivonescimab, but it still has to prove that this data can travel and that its plants can pass US and EU inspections.
China+1: Japan, India & Korea
(source: DiMarket, Asia-Pacific CDMO Market)
Japan was the first Asian biopharma services market to industrialise, because it already had Takeda, Astellas, Daiichi Sankyo and Chugai running large, trial-heavy pipelines that could be partly outsourced at home.
That legacy is now useful in a China+1 world. For example, CMIC Group, Japan’s original CRO, reports a hard backlog split across Japan, the US and Europe and has been pushing for more multi-regional trials so that work run out of Tokyo is acceptable to Western regulators. AGC Biologics expanded its Yokohama site for biologics & advanced therapies, while Ajinomoto Bio-Pharma and Bushu Pharma give foreign sponsors GMP options that sit outside China.
India is still the obvious China+1 for small molecules, intermediates and APIs. On top of the commodity base, a CRDMO layer has emerged. Syngene grew revenue in FY2025 in spite of weak US biotech funding, kept margins close to 29 per cent and in March 2025 even bought a US biologics site to lift single-use bioreactor capacity from 20,000 to 50,000 litres, which shows Indian platforms can follow clients into large molecules rather than stopping at chemistry.
Korea fills the biologics gap. Samsung Biologics posted KRW 1.66 trillion of revenue and KRW 728.8 billion of operating profit in Q3 2025, driven by full utilisation at Plant 4, and it is still guiding to around one million litres of capacity by 2027, which makes it the largest single-site alternative if Washington or Brussels force clients to pivot away from WuXi-linked networks.
Put together, Japan gives regulatory predictability and high-mix work, India gives discovery, development and small-molecule depth at scale, and Korea gives very large, very clean biologics. That triptych is exactly what sponsors need if the US pushes the Biosecure Act through in 2025–26 and if European agencies keep taking a harder line on Chinese GxP audits.
China+1.5: Nearshoring with Australia & CEE
China 1.5 is becoming the nimble, in-between option for sponsors that want to de-risk China without fully shifting to India, Korea or Japan.
Australia has added meaningful onshore capacity since 2024–25 (CSL/Seqirus, Moderna Melbourne, IDT, Luina Bio), giving clinical to early-commercial biologics and mRNA capability that sits in a trusted, Asia-adjacent jurisdiction.
On the European side, Poland, Hungary and Slovenia are being used for fill–finish, small-molecule steps and clinical packaging because they combine EU GMP, lower labour and energy costs, and faster permitting than Western Europe. For example, Sartorius acquired BIA Separations in 2020 for €360M, Polpharma Biologics is an established player in Poland, as well as Fluart with 30+ years of operations in Hungary.
Volumes are smaller and costs are higher than China, but together these hubs create just enough clean, politically safe capacity for sponsors to split supply, keep sensitive programmes at home and comply with tighter US/EU scrutiny on China.
Companies to watch
(our top picks for stocks poised to benefit from the CDMO & CRO recovery)
Samsung Biologics (KRX:207940) – Global biologics capacity king
Samsung Biologics is the purest way to own the re-acceleration of monoclonal antibodies, ADCs and multi-specifics. It sells what biotechs and pharmas cannot build fast enough: GMP biologics capacity, regulatory credibility, and speed-to-first-patient. With multi-plant Songdo capacity, best-in-class utilisation and long-dated contracts, revenue visibility is higher than for most CDMOs.
In a recovery, order intake and slot pricing both improve, so operating leverage kicks in. It is the “picks & shovels” of the biologics upturn.
WuXi XDC (HKEX:2268) – CRDMO for ADCs & next-gen biologics
WuXi XDC is the specialist lever on the segment of biotech that is actually growing: ADCs and complex biologics. It combines WuXi’s discovery, biologics, linker/payload and fill-finish stack in one CRDMO, so clients can move from target to IND with fewer tech-transfer risks.
If biotech funding recovers, ADC pipelines tend to get greenlit first because data read-outs are clearer. That flows straight into WuXi XDC’s orderbook. It is a higher-beta complement to Samsung Biologics in the same outsourcing theme.
Halozyme Therapeutics (NasdaqGM:HALO) - Drug-delivery royalty compounder
Halozyme is a pure “volume of biotech deals” trade: the more biologics, antibodies and combinations move through the system, the more partners want subcutaneous delivery via ENHANZE. That model throws off high-margin royalty and milestone income, so EPS can grow faster than top line. With PEG well below 1 and EPS growth 27%, the stock is not priced like a platform that benefits from more partnering activity.
In a recovery, HALO lifts twice: partners launch more programmes and investors re-rate predictable, cash-generative biotech infrastructure. It is a lower-risk way to play a biotech upturn.
Smaller companies to invest in
To dig further into smaller companies bound to benefit from the CDMO recovery, create your own StockScreener like we did:
Bonus: ETF Screener
To find out more about ETFs available to index the CDMO recovery, make your own ETF Screener like we did:
Our take
This recovery is not about recreating a 2021-style, US-centred funding spike. It is about biotech learning to grow in a three-block system where discovery, trials and manufacturing sit in different places but must function as one chain.
The United States will keep setting the bar for clean clinical data, faster labelling and the first leg of the capital cycle. Europe will keep taking work where sponsors need audited, regulator-aligned, often biologics-heavy capacity. China, with Japan, India and Korea alongside it, will keep providing speed, patient access and cost discipline, and will move higher up the value curve as its quality improves.
The investable idea is to back the companies that can connect these blocks. That is why large Western CROs with East to West delivery, such as ICON or IQVIA, stay at the core, and why scaled Asian platforms already running Chinese-originated assets are better placed than single-country operators.
Policy risk, for example a tighter US Biosecure Act, could slow Chinese CDMOs from winning US-facing work. If that happens, demand will not vanish. It will shift to India for small molecules and discovery CRDMO, and to Korea for large scale biologics, because US and European sponsors still need 20 to 40 per cent cost savings on non pivotal, non regulator facing work. The services model still wins, because pricing pressure in the United States from 2026 will keep buyers focused on total trial and CMC spend. In the end this is collaborative, not separatist. That is what this CRO and CDMO cycle will reward over the cycle.
Stay invested, cautiously.
