The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that in the first three quarters of 2026, the pharmaceutical industry's overall revenue and net profit without return to mother achieved double growth. Revenue increased 2.25% year on year, net profit after deducting non-return to mother increased 10.77% year on year, and the industry entered an improvement cycle. Chemical pharmaceutical revenue decreased by 0.76% year on year and gradually stabilized. The profit side was fixed first, and net profit after deducting non-return to mother increased by 0.15%. In Q3 2026, the revenue of innovative pharmaceutical companies saw a significant increase. CXO revenue increased 26.5% year on year, and net profit after deducting non-net profit increased 59.8% year on year. Ongoing orders were strong, AIDD demand was gradually reflected, and an upward cycle was established. API revenue fell 1.26% year on year, and net profit after deducting non-net profit fell 10.7%. The decline narrowed in the first three quarters, and improvements were beginning to show.
Revenue from pharmaceutical equipment and consumables increased 9.19% year on year, and net profit after deducting non-net profit increased by 131.28% year on year. Optimization of the industry competition pattern, overseas expansion, and cost reduction and efficiency led to a significant recovery in profits. Revenue from scientific reagents increased 15.9% year on year, and net profit after deducting non-net profit increased 6.1% year on year. Growth resumed, and domestic substitution accelerated. Chemical and pharmaceutical revenue bottomed out and profits recovered first. Deducted non-net profit increased 0.15% year-on-year in the first three quarters. With the expansion of innovation, overseas delivery, transmission of orders to performance, and the increase in upstream localization, the industry is expected to begin a high-quality development cycle, and leaders will continue to benefit.
CITIC Construction Investment's main views are as follows:
Performance review: The first three quarters of 2026 saw an increase in both revenue and net profit after deduction. Overall, the overall performance of the biomedical sector is improving. Segments such as low-value consumables, CRO/CMO, and household devices are growing strongly, and the growth ranking of in vitro diagnosis and medical services is rising rapidly. Looking at the molecular sector: 1) The chemical-pharmaceutical sector's revenue bottomed out, profits were repaired first, and innovation and transformation continued to advance, but segmentation within the sector was remarkable. Some leading companies were driven by factors such as BD confirmation. Traditional pharmaceutical companies are still under pressure from collection policies; 2) Innovative pharmaceutical companies are still under pressure from collection policies; 2) Innovative pharmaceutical companies are showing particularly impressive performance, with significant revenue growth and turning profits into profits. Cash handouts and R&D investments have both increased, although There has been a correction in stock prices, but the amount of product authorization to go overseas is close to 140 billion US dollars. The international value is expected to continue to be prominent throughout the year, and there are many catalysts from the fourth quarter of 2026 to 2027; 3) The pharmaceutical outsourcing industry establishes an upward cycle under the resonance of external and domestic demand, and orders continue to grow, AI pharmaceuticals' increasing demand for CXO is gradually reflected, industry revenue is growing rapidly, and the attractiveness of valuation continues to improve; the API sector's decline in the first three quarters has narrowed, and improvements are beginning to be seen, and profit quality has been repaired; 4) Pharmaceutical and equipment consumables board Block revenue is growing steadily, the profit side continues to recover, and domestic substitution and overseas expansion continue to advance; 5) Revenue in the scientific reagent sector is growing steadily, and the trend of domestic substitution and mergers and acquisitions continues. AI pharmaceuticals are expected to drive the continued expansion of the protein reagent industry. Overall, the pharmaceutical industry chain showed a good development trend driven by multi-sector recovery and innovation in the third quarter of 2026, and the future development prospects of the industry can be expected.
Looking ahead to 2027, CITIC Construction Investment is optimistic:
Pharmaceutical sector: In recent years, revenue from innovative drugs in China has grown rapidly, leading companies have become profitable on a large scale, and the industry has developed rapidly under the three-wheel drive of technological breakthroughs, accelerated internationalization, and policy support.
In terms of internationalization, from BD to organizing overseas trips and strategic alliances. Since 2020, the license-out transaction volume and price of innovative drugs in China have risen sharply, and the initial payment and total contract amount are expected to reach new highs in 2026. Driven by global phase III clinical promotion, major data release, and competitive landscape optimization, the global value of products and corporate valuations can be re-evaluated in multiple rounds.
In terms of technological breakthroughs, small nucleic acid, IO multiple antibodies, ADC, and GLP-1 have blossomed a lot in weight reduction. Small nucleic acid drugs have achieved multi-dimensional breakthroughs in commercial dosage, expansion of indications, and extra-hepatic delivery. Chinese companies are evolving simultaneously with the world, and important clinical and approval nodes will be concentrated in the next 1 to 3 years; multiple IO antibodies such as PD-1 + will obtain breakthrough data on key indications, and subsequent clinical data readings are expected to further verify their breakthrough potential; the ADC field continues to run through potential BIC/FIC pipelines; weight loss tracks upgrade to multiple targets, long-term efficacy, and oral dosage forms.
On the policy side, health insurance negotiations+commercial insurance innovative drug catalogue are two-wheel drive, and the accessibility of innovative drugs continues to improve. The efficiency of health insurance negotiations has improved markedly, and the average decline in negotiated drugs has stabilized, maintaining a high pass rate for truly innovative varieties; the “Commercial Insurance Innovative Drug Catalogue” will be established for the first time in 2025, which is expected to expand the space for the release of innovative drugs.
International competitiveness continues to improve, new technologies drive the rapid development of the industry, national policies encourage the development of innovative drugs, and are optimistic about related innovative drugs and pharmaceutical companies. It is recommended to focus on: (1) innovative drug leaders with independent overseas ability and global clinical and BD experience; (2) platform-based companies that are deeply involved in cutting-edge tracks such as ADC, IO double antibodies, GLP-1, and small nucleic acid, and have differentiated pipeline combinations; (3) truly innovative product companies with strong competitiveness that can maintain increased profits through product upgrades and structural optimization in a fee control environment.
CXO sector: Overall overseas demand is steady, domestic demand is gradually picking up, and is more flexible. We continue to be optimistic about the CXO sector's growth space. The general overseas investment and financing environment has fluctuated between quarters. Demand for CXO services at different stages and disease fields is further divided, domestic investment and financing activities have maintained an upward trend, and we continue to be optimistic about the growth trend of the CXO sector. An initial market consensus has been reached on the impact of new technologies such as AI on long-term industry development and transformation. The impact in the early R&D stage (CRO) is diverging, and the overall production segment (D, M) is beneficial. In recent years, with the rapid development of next-generation biopharmaceuticals, ADCs, and peptide drugs, demand for related CXO has increased rapidly, and segments such as double polyantibodies, next-generation ADC/XDC, and small nucleic acids are also expected to usher in a new stage of development. In the long run, we are optimistic about the development potential and growth space of the CXO sector.
Upstream sector: Domestic market demand is gradually recovering, and domestic substitution in the industrial chain is still a trend. The pharmaceutical industry chain sector currently shows the characteristics of “profit recovery, increased localization rate, and internationalization” in parallel. The overall revenue of the pharmaceutical industry chain has stabilized, and gross and net profit margins have continued to rise. Leading companies have achieved profit side improvements through product structure optimization, cost reduction and efficiency, and international channel layout. Overall, the industry has long benefited from domestic substitution (policy-driven, cost-effective) and demand recovery, reflecting the gradual stabilization and recovery of the industry as a whole. In the future, the industry will accelerate the localization process through mergers and acquisitions, and leading companies are expected to break through technical barriers and increase market share under policy dividends.