Goldman Sachs gives Pharmaron a "Buy" rating with a target price of 30.7 yuan

Goldman Sachs published a research report indicating that Pharmaron (03759.HK) has reached a cooperation agreement with Eli Lilly (LLY.US) to support the local supply of Orforglipron in China. Eli Lilly is expected to invest $200 million in Pharmaron to support its technological capability building, with the potential to further expand the scope of cooperation as the project progresses.

At the same time, Eli Lilly plans to cumulatively invest $3 billion over the next decade to comprehensively expand its supply chain capacity in China with several local companies, aiming to establish a localized manufacturing and supply system for oral solid dosage forms, particularly focusing on building production capacity for Orforglipron. Eli Lilly China has submitted a listing application for Orforglipron for the treatment of type 2 diabetes and obesity to the National Medical Products Administration by the end of 2025. The firm believes that Eli Lilly's commitment to local capital expenditure reflects its confidence in the long-term growth potential of the obesity drug market in China.

Regarding the fundamental impact on Pharmaron, a more substantial assessment of the earnings contribution and strategic significance will depend on further disclosures. The firm expects management to provide more details in the upcoming earnings conference call, including the cooperation model, potential order scale, and the commercialization trajectory of Orforglipron after approval in China. Nevertheless, the firm anticipates that Pharmaron will receive a positive market response, as this partnership emphasizes Eli Lilly's recognition of Pharmaron as a qualified partner within the local GLP-1 supply chain.

The firm has assigned Pharmaron a "Buy" rating for its Hong Kong stock, with a target price of HKD 30.7; it has given Pharmaron (300759.SZ) a "Neutral" rating for its A shares, with a target price of RMB 38