What supported third-quarter revenue growth?

  • Pharmaron’s third-quarter revenue in 2026 was 4.408 billion yuan, up 20.9% year on year and slightly above the Bloomberg consensus of 4.3 billion yuan; net profit attributable to shareholders was 497 million yuan, up 13.1% year on year.
  • Orders were delivered on schedule and new orders continued to grow, driving expansion across the three businesses. CMC revenue was 1.2 billion yuan, up 30.1% year on year, faster than the 17.5% growth in laboratory services and 18% in clinical development; revenue in the latter two businesses was 2.6 billion yuan and 590 million yuan, respectively.
  • Management said that, as of the end of the third quarter of 2026, new orders had risen 30% year on year; laboratory services, CMC and clinical development grew 25%, 40% and 25%, respectively, with CMC recording the fastest growth in new orders.

Why did profit not grow at the same pace as revenue?

  • The overall gross margin in the third quarter was 33.3%, down 1.4 percentage points year on year but recovering from 32.9% in the second quarter. Nomura attributed the year-on-year decline mainly to the adverse impact of exchange rates on laboratory services revenue; the business’s gross margin fell 4 percentage points year on year to 39%.
  • Slower growth in administrative expenses helped the third-quarter operating margin rise 0.4 percentage points year on year to 16.4%; however, finance costs rose from 41 million yuan in the prior-year period to 112 million yuan, weighing on profit growth.
  • On a recurring basis, third-quarter profit was 488 million yuan, up 22.7% year on year, faster than the 13.1% growth in net profit attributable to shareholders.

What fourth-quarter revenue does the full-year guidance imply?

  • Management maintained its guidance for full-year 2026 revenue growth of 15%–20% year on year. On that basis, Nomura estimates fourth-quarter revenue of 4.2 billion–4.9 billion yuan, up 5%–23% year on year; the Bloomberg consensus is 4.8 billion yuan, close to the upper end of that range.
  • Nomura believes the third-quarter results were broadly on track and maintained its Buy rating on the A-shares and its target price of 46.16 yuan.