Concho Resources-related stocks staged a dramatic rally and retreat on August 10. WuXi AppTec A-shares surged over 7% intraday, hitting a record high of 166.66 yuan, with its market capitalization approaching 500 billion yuan. Morning trading volume alone exceeded the previous day's total, while Baihua Pharmaceutical extended its winning streak to five consecutive limit-up sessions. Porton Pharma Solutions, Pharmaron Beijing, and Asymchem Laboratories also joined the rally. However, by afternoon, WuXi AppTec's gains narrowed from over 7% to around 4%, dragging down many follower stocks and leaving a notable long upper shadow on the candlestick chart.
The overall market picture shows that the CXO sector's momentum remains, but short-term capital is clearly hesitating. The primary catalyst for the morning surge was the legal progress WuXi AppTec disclosed over the weekend. The U.S. District Court for the District of Columbia approved an injunction request, preventing the Department of Defense from including the company on the 1260H list during litigation. After being repeatedly targeted by this list since 2024, it marks WuXi AppTec's first legal victory. Previously, the market's biggest fear was this designation, and the temporary removal of this risk offers a short-term sentiment boost for innovative drugs and CXO companies. Nonetheless, the medium-to-long-term outlook still requires monitoring of ongoing developments.
Of course, such a significant rally wasn't solely driven by news. WuXi AppTec's recently released earnings also far exceeded expectations. First-half revenue reached 28.8 billion yuan, a 39% increase, while adjusted net profit attributable to shareholders surged 89%. The company also raised its full-year guidance, from the previously expected 51.3–53 billion yuan to 58.5–60.5 billion yuan, with the midpoint of revenue growth revised from 20% to 37%. For a company of this scale, achieving such growth underscores that global orders continue to concentrate with domestic leaders.
Looking at the broader CXO industry, fundamentals are indeed recovering. CXO demand essentially mirrors the R&D budgets of innovative drug companies. Large pharmaceutical firms maintain relatively stable spending through "revenue × R&D investment rate + cash reserves," while biotech companies depend more on external financing conditions. CITIC Securities notes that when market financing warms up, capital flows sequentially along the "R&D initiation – clinical advancement – production scaling – commercialization" chain. Demand typically emerges first in CRO, then spreads to CDMO and upstream tools. Thus, global innovative drug financing and large pharmaceutical R&D spending are key indicators for CXO orders and performance.
Current industry data confirms this transmission is underway. According to PharmaCube statistics, global innovative drug financing rebounded significantly in 2026. Q1 financing reached $8.674 billion, up 13% year-over-year, while Q2 financing hit $11.503 billion, a staggering 96% year-over-year increase and a 33% quarter-over-quarter rise. Domestic data is even stronger: Q1 financing was $2.235 billion, up 146% year-over-year, and Q2 financing reached $1.998 billion, a 254% year-over-year surge. The first half of the year saw $4.233 billion in domestic financing, already reaching 82% of 2025's full-year total. Meanwhile, the global outsourcing penetration rate for new drugs is expected to rise from 52% in 2024 to 57% in 2026. (Source: CITIC Securities report "CXO: Sector Beta Steady and Improving, AI Drug Discovery Promising.")
CITIC Securities indicates that after the adjustment from 2022 to 2024, external and internal demand is beginning to resonate. In 2026, new contract signings and performance for domestic CRO/CDMO companies are expected to accelerate, propelling the entire industry chain into a new development phase. However, it's worth noting that from early June to August 9 (June 9 to August 9), the CXO sector has rebounded over 35%, and the innovative drug concept sector has also risen by more than 15%. This suggests significant short-term profit-taking pressure, which could lead to volatility. From a longer-term perspective, sector valuations remain attractive. The transmission from financing recovery to order fulfillment and then to earnings release still has a long runway. The CXO story likely hasn't reached its conclusion yet.
Based on public fund second-quarter holdings data, we have compiled a list of CXO companies heavily held by funds for readers' reference.