China’s pharmaceutical R&D demand recovers, while diagnostics and surgical robots remain constrained by pricing
Nomura sees a continued recovery in China’s upstream life sciences demand in multinational healthcare companies’ third-quarter results. However, the operating performance of innovative drugs, diagnostics and surgical robots diverges, and pricing reforms continue to affect revenue realization.
Original source：Nomura International (Hong Kong) Ltd.First published on Unhidea：Original source date：
Key takeaway
Nomura believes strong demand for upstream suppliers reflects active R&D in China, but diagnostic price cuts and pressure on revenue per surgical robotic procedure make the recovery uneven across segments.
What data supports the recovery in China’s R&D demand?
In the third quarter of 2026, Thermo Fisher’s China sales maintained low-double-digit year-on-year growth. Management described this as a continuation of the recovery, driven primarily by pharmaceutical, biotechnology, and industrial and applied markets. Nomura therefore concludes that strong upstream life sciences demand reflects active R&D in China.
Danaher’s China core revenue maintained high-single-digit growth over the same period, with all three operating segments performing positively. Its biotechnology and life sciences businesses benefited from healthier funding and investment levels: improved financing conditions are supporting upstream suppliers’ businesses.
Why are innovative drugs growing while diagnostics decline?
Roche’s third-quarter pharmaceutical revenue in China rose 22% year on year to 860 million Swiss francs, driven by continued growth in sales volumes of newer drugs including Phesgo, Vabysmo and Alecensa. In the same market, growth from rising product volumes coexists with pressure from pricing reforms.
Roche’s China diagnostics revenue fell 9% year on year to 379 million Swiss francs, a narrower decline than the 15% recorded in the second quarter. Management nevertheless said healthcare pricing reforms continued to weigh on China sales. Danaher, meanwhile, said its diagnostics business was gradually emerging from the period of greatest impact from changes in China’s healthcare policy; the two companies are recovering at different rates.
Roche management expects the diagnostics division to return to its long-term target of mid-to-high-single-digit sales growth in fiscal 2027. This outlook applies to the diagnostics division as a whole; its China business remains in year-on-year decline.
Why does revenue realization remain under pressure as procedure volumes rise?
Intuitive Surgical’s global da Vinci procedure volume rose approximately 14% year on year in the third quarter, driving instruments and accessories revenue up 18.3% to 1.8 billion US dollars. Total revenue rose 22% to 3.05 billion US dollars, while profit fell 25.8% to 522.8 million US dollars, showing a divergence between revenue growth and profit performance.
The China market also faces challenges from tendering activity and local competition. Management expects changes to billing code policy to begin in November 2026, with related pricing implementation advancing further in 2027. Assuming an unchanged product mix, instruments and accessories revenue per da Vinci procedure will fall by approximately 3%–5%, reducing the revenue contribution from growth in procedure volumes.
Which capacity underpins Samsung Biologics’ raised guidance?
Samsung Biologics’ third-quarter revenue rose 18.5% year on year to 1.49 trillion South Korean won, supported by full utilization of Plants 1–4 and a growing contribution from the ramp-up of Plant 5. Management raised its 2026 revenue growth guidance from 15%–20% to above 20%, also citing process performance qualification batches at Plant 5 and increasingly stable commercial production at the Rockville plant.
The release of capacity has yet to bring a corresponding increase in profit: quarterly profit fell 21.1% year on year to 391 billion South Korean won. Cumulative orders on hand stood at 21.9 billion US dollars, up 200 million US dollars from the previous quarter; the improvement in revenue guidance centers mainly on utilization of existing capacity and contributions from new capacity.
