US reshoring drive casts shadow over China’s contract drug makers: analyst
Strong order backlogs underpin earnings through 2027, but analysts warn longer-term demand is less certain as US firms reshore production
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.
Meridiano
