Is the CRO industry recovering? BaioSaitu's net profit increased by over 400% last year! Revenue from model animals grew by nearly 60%.

Ask AI · What is the secret to Baiao Sai Tu’s antibody development business gross profit margin exceeding 85%?

This article is from Times Weekly. Author: Yan Xiaohan

On March 30, Baiao Sai Tu (688796.SH; 02315.HK) announced that it had reached a platform licensing agreement with Taisho Pharmaceutical, a Japanese pharmaceutical company. Baiao Sai Tu granted Taisho Pharmaceutical the right to use its proprietary RenNano® fully human single heavy chain antibody (HCAb) discovery platform to support Taisho Pharmaceutical’s internal new drug R&D projects.

According to the terms of the agreement, Taisho Pharmaceutical will use RenNano® fully human nanobody mice to generate and screen fully human single heavy chain antibodies in vivo, further advancing the related downstream discovery and research work. The specific financial terms of the agreement have not been disclosed.

Antibody development refers to Baiao Sai Tu’s use of its own antibody development platform to identify antibodies that may become candidate drugs, as well as licensing them out or collaborating with partners to develop potential therapeutic antibody molecules. The revenue from this business comes from providing a series of integrated services related to antibody discovery, development, and production,

In addition, Baiao Sai Tu’s other two major business models—animal models and pharmacology efficacy—saw year-over-year revenue growth of 59% and 75% respectively in 2025. Among them, animal model revenue accounted for 45% of total revenue, making it Baiao Sai Tu’s largest revenue source.

Image source: TuChong Creative

Gross profit margin exceeding 75%

Judging from Baiao Sai Tu’s overall performance, in 2025 its revenue and net profit growth rates were both higher than the previous year, especially its net profit growth rate, which was far higher than that of the past four years.

The financial report shows that in 2025, Baiao Sai Tu’s revenue was 1.379 billion yuan, up 40.63% year over year; its net profit attributable to shareholders was 173 million yuan, up 416.37% year over year. This was the second consecutive year that Baiao Sai Tu turned a profit. In 2024, its net profit attributable to shareholders was 34 million yuan.

Last year, Baiao Sai Tu’s net profit surged. On the one hand, it was driven by revenue growth; on the other hand, its gross profit margin remained at a relatively high level. In addition, “as the scale of the business expands and its capabilities in refined management continue to improve, fixed costs are effectively diluted, driving a significant improvement in the company’s overall net profit margin. The company has already entered a new stage of large-scale profitable development,” Baiao Sai Tu said in its financial report.

One of Baiao Sai Tu’s main businesses is preclinical CRO in a sub-segment of the CRO industry.

Over the past year, the CRO industry has begun to recover. According to composite data cited in the 2025 annual report of CRO company Zhaoyan New Drug (603127.SH; 06127.HK), in 2024 the market size of China’s pharmaceutical CRO market was approximately 151.6 billion yuan. In 2025, benefiting from the marked rebound in domestic innovative drug financing conditions and the “going global” wave, the industry gradually came out of its adjustment period and returned to a growth track.

Judging from the performance of WuXi AppTec and Kanglong Chemical—two one-stop R&D service CRO companies—in 2025, the revenues of both companies increased year over year by 15.84% and 14.82% respectively, both higher than their 2024 revenue growth rates.

As for the specific sub-segment of preclinical CRO, the revenue growth rates of Nanmo Biological (688265.SH) and Yaokang Biological (688046.SH) were both above 10%, also higher than their 2024 revenue growth rates.

In the preclinical CRO industry, Baiao Sai Tu’s gross profit margin is at a relatively high level.

In 2025, Baiao Sai Tu’s gross profit margin was 75.83%. In the same period, Zhaoyan New Drug (603127.SH; 06127.HK)’s gross profit margin from its main business was 20.71%. In the first half of 2025, Yaokang Biological’s gross profit margin from its main business was 64.30%; Nanmo Biological’s gross profit margin was around 52%.

This may be related to Baiao Sai Tu’s other major main business—antibody drug development. In terms of revenue structure, Baiao Sai Tu’s products include animal models, pharmacology efficacy, gene editing, and antibody development.

Among these, animal models have the highest revenue contribution and their gross profit margin is also around 80%. Meanwhile, antibody development is an important business for Baiao Sai Tu and also the business with the highest gross profit margin. In 2025, Baiao Sai Tu’s antibody development business gross profit margin was 86%.

The antibody development business has already collaborated with multiple major pharmaceutical companies

Baiao Sai Tu was founded in 2009. It started with gene editing services, and subsequently expanded its main business to providing target humanized mice and preclinical CRO services. In 2019, Baiao Sai Tu prepared RenMab mice for fully human antibodies, and then developed platforms such as RenLite and RenNano.

Relying on RenMice mice, Baiao Sai Tu launched its “Thousand Mice, Ten Thousand Antibodies” program in 2020. That is, for over a thousand innovative drug target sites, it conducts large-scale development of antibody molecules, gradually forming an antibody molecular library with diverse antigen-binding site diversity of nearly one million. By transferring/licensing promising molecules to pharmaceutical companies or collaborating with them on development, it accelerates the drug development process.

Baiao Sai Tu regards its antibody development business as a second growth curve. In a media interview in 2023, Baiao Sai Tu’s founder and chairman, Shen Yulei, said that because the gross profit is relatively low, the gene editing business segment does not plan to expand its scale for the time being. “Sales of model animal products and preclinical pharmacology efficacy evaluation services grow by around more than 30% every year. But business development always has a ceiling, so we want to find a second growth curve—antibody development.”

Baiao Sai Tu performs antibody discovery for more than a thousand targets, and pharmaceutical companies directly purchase these antibodies from Baiao Sai Tu. According to Shen Yulei, the upfront payment for antibody transfer generally can cover the early-stage investment, and the subsequent milestone payments are “100% pure profit.” “So I estimate that in the coming years, the antibody transfer business will be the company’s largest revenue source.”

The antibody development business began generating revenue externally in 2020. In 2024, the antibody development business once surpassed the pharmacology efficacy business, becoming the second largest revenue source after model animal sales. In that year, the revenue growth rate of this business reached 80.68%.

According to Baiao Sai Tu’s IPO prospectus, from 2022 to 2024, the gross profit margins of the antibody development business were 85.04%, 82.42%, and 92.83% respectively.

Among them, the gross profit margin declined in 2023, because the technical difficulty coefficient of certain dual-antibody ADC R&D milestone technologies delivered during that period was high, leading the company to incur higher costs. In 2024, the gross profit margin increased significantly, which was related to completing high-unit-price antibody development projects and the milestone nodes achieved that year. For example, two ADC molecules that Baiao Sai Tu transferred earlier were recognized as two revenue entries in that year, with no corresponding cost expenditures recorded in that year.

Baiao Sai Tu’s antibody development business has already cooperated with many multinational pharmaceutical companies. The financial report shows that, as of the end of 2025, it had cumulatively signed more than 350 drug cooperation/development/licensing/transfer agreements, and it has reached RenMice® platform licensing and development cooperation with partners including multiple multinational pharmaceutical companies. These pharmaceutical companies include German Merck, Johnson & Johnson, BeiGene, and Rongchang Biotech, among other biotechnology and pharmaceutical R&D enterprises both in China and overseas.