Zhaoyan New Drug, a leading Chinese contract research organisation (CRO), reported a striking disconnect in its 2025 outlook: revenue is set to fall by up to 22 percent while net profit is forecast to more than double. The company attributes the surge in profits chiefly to the fair‑value gains on biological assets — mainly captive laboratory monkeys whose market prices have rebounded sharply — rather than to an improvement in its core laboratory services.
The firm expects 2025 revenue of Rmb15.73bn–17.38bn, down about 13.9–22.1 percent year‑on‑year, and parent‑company net profit of Rmb233m–349m, up 214–371 percent. Adjusted profit excluding one‑offs is also forecast to climb substantially. Zhaoyan says value appreciation of its biological assets contributed roughly Rmb452m–499m to net profit, while its laboratory services and other operations together swung to an operating loss of about Rmb130m–206m.
Market sources and company disclosures make clear what Zhaoyan means by "biological assets": experimental macaques used in pre‑clinical drug development. Prices for such animals, which are a critical input for in‑vivo testing, have risen from lows after the post‑COVID correction and now trade in many cases at Rmb100,000–120,000 per head, with some scarce varieties fetching more than Rmb150,000 again.
The rise in monkey prices is partly cyclical. A frenzy of COVID‑era testing pushed prices above Rmb200,000 in 2022; the sector then retrenched, halving prices in 2023. With venture and financing activity in innovative drug R&D recovering in 2024–25, supply has tightened and prices rebounded, creating an accounting gain for companies that hold large breeding and inventory positions.
That rebound has helped top CROs with extensive resource reserves to post handsome paper gains even as their fee‑for‑service businesses suffer. Zhaoyan’s reported laboratory business, which provides the technical services that typically define a CRO’s strategic value, generated negative net profit for the year — a concrete sign of the low‑price competition and capacity overhang afflicting China’s domestic CXO (CRO/CMO) sector.
At the same time Zhaoyan has been growing a financial income stream. The board approved a plan to deploy up to Rmb2bn of idle cash for wealth‑management products in 2026; the company’s cash management already contributed more than Rmb45m to net profit in the first three quarters of the year. The combination of biological‑asset revaluation and short‑term financial returns has become a dual engine for reported profitability.
Investors are taking notice: Zhaoyan’s stock rose some 110.9 percent over 2025, lifting market capitalisation to roughly Rmb31.02bn by January 26, 2026. After the rally the company’s controlling shareholder, Zhou Zhiwen, sought to reduce his stake by up to 2 percent and has sold shares via both open‑market trades and block deals, realising proceeds in excess of Rmb370m according to exchange filings.
The results raise two intertwined questions for investors and policymakers. First, how sustainable is profitability that depends heavily on the volatile fair‑value of biological inventory and short‑term wealth management rather than on durable, high‑margin scientific capabilities? Second, does the shift toward asset accumulation and financial returns signal a misallocation of resources away from the hard‑to‑replicate technical services that underpin long‑term competitive advantage in drug development?
For global pharma companies and international investors, the episode matters because it highlights structural stresses in China’s drug R&D ecosystem. If domestic CROs increasingly subsidise operations through trading and asset‑holding strategies, western partners and outsourcing clients could find the reliability and pricing of Chinese pre‑clinical services less predictable, even as some domestic players consolidate advantages through stockpiled biological inputs.
Regulatory, ethical and supply‑chain risks also loom. Experimental primates are a sensitive input: supply bottlenecks, stricter welfare rules, biosafety concerns or export controls could sharply affect prices and, by extension, the accounting gains companies report. Investors valuing CROs primarily on headline net profit should therefore dig beneath fair‑value items to assess recurring cash generation and technical pipelines.
Zhaoyan’s story is a reminder that headline profitability can mask strategic fragility. For an industry where intellectual capital and reproducible scientific workflows should be the lodestar, a return to business models that lean on inventory revaluation and financial investments poses questions about long‑term value creation and resilience.