Driving Factors Behind the Surge in CRO Concept Stocks and Analysis of the Sustainability of Joinn Laboratories' Performance

According to the latest data analysis, leading CRO companies like Joinn Laboratories and Wuxi AppTec have performed prominently over the past 6 months:

• Joinn Laboratories: Total return rate of 85.96%, stock price rose from $19.09 to $35.50 [0]
• Wuxi AppTec: Total return rate of 41.48%, stock price rose from $64.47 to $91.21 [0]

According to Precedence Research forecasts, the global biologics CDMO market size will grow from $25.35 billion in 2025 to $92.37 billion in 2034, with a compound annual growth rate (CAGR) of 15.45% [1]. This provides huge growth space for the CRO industry.

As global pharmaceutical R&D costs continue to rise, pharmaceutical companies are increasingly relying on CRO/CDMO services to reduce costs and improve efficiency. Chinese CRO enterprises have competitive advantages in cost and professional technical capabilities.

The Chinese government continues to support innovative drug R&D, creating a favorable policy environment for the CRO industry. According to online search results, the Chinese CRO industry is steadily moving towards its 2025 goals with policy support [2].

According to financial analysis data, Joinn Laboratories shows the following characteristics:

• Financial Attitude: Conservative accounting treatment, high depreciation/capital expenditure ratio; as investments mature, there is room for improvement in profitability [0]
• Debt Risk: Low risk rating, relatively stable financial structure [0]
• Cash Flow: Latest free cash flow is $113 million [0]

• Price-to-Earnings Ratio: 115.76 times, at a relatively high level [0]
• Price-to-Book Ratio: 3.21 times [0]
• Return on Equity: 2.78%, relatively low [0]

• Net Profit Margin:13.49% [0]
• Operating Profit Margin:10.99% [0]

The U.S. Congress is brewing restrictive measures against Chinese biotech companies, which may affect the international business of some CRO enterprises [3]. In particular, the ‘Biosafety Act’ may restrict some Chinese biotech companies from obtaining contracts funded by the U.S. government.

Joinn Laboratories’ current P/E ratio exceeds 115 times, far higher than the industry average, so there is a risk of valuation correction.

From the perspective of stock price trends, Joinn Laboratories’ annualized volatility reaches 62.05%, with a maximum drawdown of 35.07%, showing high volatility [0].

The surge in CRO concept stocks reflects the improvement in industry fundamentals and market expectations for future growth. However, in the short term, attention needs to be paid to:

• Overvaluation risk
• Geopolitical uncertainty
• Market sentiment fluctuations

• Positive Factors: Rapid growth of the global biologics CDMO market; Chinese CRO enterprises have cost and technical advantages
• Key Focus Areas: Enterprise internationalization capabilities, technological innovation capabilities, risk management and control capabilities
• Investment Strategy: It is recommended to focus on leading enterprises with more certain performance and relatively reasonable valuations

CRO concept stocks’ surge is mainly driven by factors such as improved industry fundamentals, market growth expectations, and policy support. The performance growth of leading enterprises like Joinn Laboratories has certain sustainability, but attention needs to be paid to:

1. Valuation Risk: The current valuation level is relatively high and needs sustained performance growth to support it
2. External Environment: Geopolitical factors may affect international development
3. Internal Management: Need to improve operational efficiency and profitability

Investors should balance short-term volatility and long-term growth potential, and pay attention to the core competitiveness and risk management capabilities of enterprises.

[0] Gilin API Data - Joinn Laboratories (603127.SS), Wuxi AppTec (603259.SS) stock price and financial data
[1] Yahoo Finance - “Biologics CDMO Market Size Expected to Hit USD 92.37 Billion” (https://finance.yahoo.com/news/biologics-cdmo-market-size-expected-151400535.html)
[2] Online Search Results - Policy Support and Development Trends of China’s CRO Industry
[3] Bloomberg - “Chinese Biotech, Investments Are on Track to Face New US Curbs” (https://www.bloomberg.com/news/articles/2025-12-08/chinese-biotech-investments-are-on-track-to-face-new-us-curbs)