The Zhitong Finance App learned that in the first three quarters of 2026, a number of CRO and CDMO companies deployed AI, such as Pharmaceutical and Kangde's testing business speeding up “HI+AI” integration to meet the rapidly growing dry and wet closed-loop demand from AI4S customers around the world. Zhaoyan New Drug's AI pathology reading and organoid platforms are expanding towards the front end of drug discovery, and the increase in AI candidate molecules directly drives security evaluation demand. It is expected that as the AIDD project continues to expand to the back end, it is expected to bring strong growth momentum to the sector in the medium to long term.
Strong growth continues in 2026Q3, and the demand side continues to be strong. AI4S is expected to drive continued appreciation in valuations:
1) 2026Q3 showed a continuous improvement trend: 2026Q1-Q3 CRO and CDMO's key target sector revenue +21.8%, return to mother +36.3%, deduction +53.6%. On a quarterly basis, 2026Q3 revenue was +24.9%, returned to mother +84.5%, and deducted +44.8%, showing a continuous rapid growth trend.
2) The demand side continues to be strong: in 2026, CRO and CDMO orders continued the rapid growth trend. For example, Kangming Kangde 2026Q1-Q3 continuous business orders +36.4% YoY, Kanglong Huacheng's new orders +30% YoY, Zhaoyan Pharmaceutical's cumulative new orders +109% YoY; Innosi +183.27% YoY.
3) Supply-side expansion cycle: 2026Q1-Q3 sector fixed assets +6.9% and projects under construction +12.9%. Zhongtai Securities expects the demand side to continue to recover, mainly due to the gradual tightening of production capacity in the industry.
4) AI4S: In the first three quarters of 2026, many CRO and CDMO companies deployed AI. For example, Pharmaceutical and Kangde's testing business accelerated “HI+AI” integration to meet the rapidly growing dry and wet closed-loop needs of AI4S customers around the world. Zhaoyan New Drug's AI pathology reading and organoid platforms were expanding towards the front end of drug discovery, and the increase in AI candidate molecules directly drove security assessment demand. As the AIDD project continues to expand to the back end, Zhongtai Securities is expected to bring strong growth momentum to the sector in the medium to long term.
5) Profitability: The gross profit margin and net margin are rising steadily. The overall gross margin of the 2026Q1-Q3 sector is about 43.6% (+4.2pp), and the net margin is about 25.0% (+2.7pp)
Investment advice: The industrial chain boom continues, AI4S is expected to drive a continuous increase in valuation and actively grasp the new round of R&D and production expansion cycle:
1) CRO: ① Although monthly overseas CPI data has fluctuated since 2024, investment and financing improvements are expected to improve marginally, and some company orders have already seen a recovery, compounded by AI4S demand, Zhongtai Securities anticipates that external demand CRO is expected to usher in profitable valuation, Davis double hit opportunities, and it is recommended to focus on it; ② The clinical CRO sector is encouraged by domestic innovative drug policies, the financing environment has improved, and the sector reversal trend is expected to continue; ③ As domestic innovative drugs are in full swing, domestic pre-clinical CRO orders are expected to continue to grow rapidly, and subsequent business is expected to continue to grow rapidly. Step To implement it, it is recommended to actively grasp it.
2) CDMO: Continued breakthroughs in downstream technology and superposition of chemical drugs ushered in a new commercial implementation cycle. Demand for development and production of peptides, oligonucleic acids, XDC, and dual-antibody CDMO is expected to increase rapidly, and we will continue to focus on investment opportunities in related industry chains.