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Julie Zhang

Chinese contract drug makers – including WuXi AppTec, WuXi Biologics and WuXi XDC – face a less certain long-term revenue outlook as US pharmaceutical companies bring production in-house and reconfigure supply chains amid rising US-China tensions.
While near-term earnings remained largely locked in, visibility beyond that was limited, according to Cui Cui, head of healthcare research for Asia at Jefferies.
“Earnings visibility for 2026 and 2027 is still very strong – revenue momentum is largely predetermined by orders placed over the past two years,” she said at the firm’s Asia forum in Hong Kong on Tuesday. “But we lack clarity on longer-term order growth.”
Large US pharmaceutical companies are expected to bring their own manufacturing capacity online around 2028 or 2029. In the interim, they were increasingly working with contract development and manufacturing organisations in markets such as India and Singapore, Cui added.
Washington has stepped up scrutiny of Chinese biotech firms it deems national security risks since US President Donald Trump signed the Biosecure Act into law in December.
Although the final version did not name WuXi AppTec – unlike an earlier 2024 draft – uncertainty has persisted. In February, the Pentagon briefly included the company, alongside Alibaba Group Holding and Baidu, on a list before withdrawing it without explanation. Alibaba owns the South China Morning Post.
Despite these headwinds, Cui pointed to growing interest from multinational pharmaceutical companies in partnering with Chinese biotech firms.
“For the very first time, we saw increasing interest from multinational companies; they are more than willing to do deals with Chinese biotech companies,” she said, citing cost and speed advantages.
“The reason multinational companies are buying from China is that they are cheaper and faster – speed and efficiency matter more,” Cui said. “[Companies] are trying to do more deals or pursue M&As to replenish their pipelines.”
She said a looming wave of patent expiries was also expected to drive demand.
“Starting from 2027 and 2028, many blockbuster drugs will face patent cliffs,” Cui said, adding that Chinese clinical trial data – including China-only studies – was gaining broader acceptance internationally.
Geopolitical risks nevertheless remain in focus. Eli Lilly, for example, plans to invest US$3 billion in China over the next decade, including building a local manufacturing and supply network for oral solid dosage medicines.
Exposure to the US market remains significant for Chinese contract drug makers. In the first nine months of last year, American clients accounted for about 67 per cent of WuXi AppTec’s revenue, while North America contributed roughly 60 per cent of WuXi Biologics’ revenue and 52 per cent of WuXi XDC’s revenue in the first half.
Even so, WuXi AppTec has signalled solid near-term performance. In a profit alert filed with the Hong Kong stock exchange on January 12, it forecast net profit attributable to shareholders would rise 41.3 per cent year on year to 14.96 billion yuan (US$2.17 billion), with revenue expected to increase 15.8 per cent to about 45.46 billion yuan.
The Shanghai-based company is scheduled to hold a board meeting on March 23 to approve its full-year 2025 results.


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Strong order backlogs underpin earnings through 2027, but analysts warn longer-term demand is less certain as US firms reshore production


Strong order backlogs underpin earnings through 2027, but analysts warn longer-term demand is less certain as US firms reshore production.


US reshoring drive casts shadow over China’s contract drug makers: analyst

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Strong order backlogs underpin earnings through 2027, but analysts warn longer-term demand is less certain as US firms reshore production

Strong order backlogs underpin earnings through 2027, but analysts warn longer-term demand is less certain as US firms reshore production