PharmaBlock Q3: Overseas Up 8%, Domestic Up 31% — the Building-Block Model Found a New Growth Source

PharmaBlock (300725) reported first-nine-month 2026 revenue of RMB 1.634bn (+15.16%), net profit of RMB 151m (+33.36%) and adjusted net profit of RMB 128m (+44.87%), with gross margin at 32.93% (+1.98pp) and CDMO backlog up more than 20% year on year. The split is the story: domestic customer revenue reached RMB 549m (+31.41%) while overseas revenue grew 8.07% to RMB 1.077bn. For a company built on selling building blocks to overseas pharma discovery teams, 2026's incremental growth came from China. New-modality revenue was RMB 152m; the Zhejiang Huishi peptide GMP pilot plant started up in June and is ramping, and liquid-phase peptide capability is under construction.

On the evening of 29 October PharmaBlock (300725.SZ) filed its third-quarter 2026 report. First-nine-month revenue came in at RMB 1.634bn (+15.16%), net profit attributable to shareholders at RMB 151m (+33.36%), and adjusted net profit at RMB 128m (+44.87%). Profit grew at close to three times the rate of revenue, and consolidated gross margin reached 32.93%, up about 1.98 percentage points.

For the quarter alone: revenue of RMB 575m (+15.10%), net profit of RMB 51.77m (+26.60%), adjusted net profit of RMB 43.82m (+53.57%), gross margin 33.74%. Adjusted profit outgrew reported profit by a wide margin, which means the improvement came from operations rather than non-recurring items.

A report defined by a split

The numbers that matter are geographic. Domestic customer revenue reached RMB 549m, up 31.41%. Overseas customer revenue reached RMB 1.077bn, up 8.07%. Against the interim disclosure (overseas RMB 737m or 69.54%, domestic RMB 323m or 30.46%), overseas remains the majority, but the increment has changed hands.

This is not one company's accident. Over the same period Asymchem's domestic revenue reached RMB 1.772bn (+42.83%) against 11.64% growth overseas at constant currency; Apeloa's CDMO segment posted RMB 2.05bn for the nine months (+21.38%) and grew 40.96% in Q3 alone, again driven by domestic customers and clinical-stage deliveries. Chinese CXOs traced a clear domestic-recovery-before-export-recovery curve in 2026.

For PharmaBlock the turn carries a sharper meaning. Its traditional model sells building blocks into overseas pharma discovery programmes: low unit price, high frequency, fragmented customers, monetised through SKU count and catalogue coverage. The ceiling is structural, because discovery-stage purchasing is highly sensitive to the funding environment. When biotech budgets contract, building-block orders fall first.

Is the funnel actually funnelling?

PharmaBlock has told a funnel story for years: building blocks to CMC to CDMO, capturing early molecules with blocks and discovery services, then catching late-stage programmes with CMC and GMP capacity. The nine-month data offers a test.

Discovery-stage revenue was RMB 251m (+6.75%); development and commercial revenue was RMB 1.375bn (+16.60%). Late-stage growth ran at roughly 2.5 times the early-stage rate, so the mix is shifting downstream. That is a necessary condition for the funnel thesis, not a sufficient one. The real test is whether those late-stage programmes were funnelled in from building blocks or signed from outside.

In an investor call on 30 October the company added three points: PPQ projects are progressing to plan; overall capacity utilisation has risen steadily since the start of the year, with core capacity prioritised for PPQ, late-stage and commercial work; and late-stage revenue fluctuates quarter to quarter with milestones, scheduling and customer shipment timing. The third point is honest, and it is exactly what makes this kind of P&L hard to read.

Peptides: solid-phase pilot running, liquid-phase under construction

New-modality revenue reached RMB 152m in the nine months, about 9.3% of the top line, growing faster than the group. The capacity detail is more concrete: the peptide GMP pilot plant at Zhejiang Huishi started up in June 2026 and is in project onboarding and ramp-up, having completed GMP production for several programmes; liquid-phase peptide synthesis capability is under construction, with further capacity to be planned against demand; and the Nanjing OPC R&D centre is now in use.

That combination is worth flagging. A solid-phase pilot answers whether the company can take peptide projects at all. Liquid-phase answers whether it can make money on them at tonne scale. Most Chinese CDMOs are still at step one; step two requires process development and engineering, not reactors. It is the same technical arc as Cambrex's commercial liquid-phase peptide line in Iowa, at a different point on the curve.

Three things to watch

First, cash flow. Operating cash flow was RMB 251m for the nine months, down 53.75%, yet still above net profit of RMB 151m, implying a cash conversion of roughly 166%. The decline tracks inventory build for late-stage programmes and longer receivables, which is common while the mix migrates downstream, but it needs two more quarters to confirm it is converging.

Second, the balance-sheet movement. Total assets were RMB 5.435bn at period end (-25.95% from year-end 2025) and net assets attributable to shareholders RMB 4.586bn (-27.2%), with cash of RMB 693m. Positive quarterly profit, positive operating cash flow, and a roughly one-quarter decline in both total assets and equity is a combination that requires the annual report's notes to explain, and should not be concluded on at the quarterly level.

Third, Nanjing. The operating entity for the Nanjing CDMO innovation base, Nanjing Yaoshi Qingnuo Technology, has been registered, and the project will proceed under the investment cooperation agreement. This is the step from a single commercial site at Huishi to a two-core structure of Nanjing R&D plus Huishi manufacturing. Meanwhile the West Chester, Pennsylvania site is adding process development labs and a pilot platform as front-loaded investment in localised North American service.

Put the three together: domestic demand is pulling revenue, late-stage programmes are pulling margin, and peptides plus Nanjing will determine capacity elasticity from 2027 onward. PharmaBlock's position today is that the story has begun to be validated by numbers, but the validation is not finished. For anyone tracking Chinese CXOs, it is a clean small sample of a specific question: when overseas discovery purchasing stops being the growth engine, what does a building-block company plug the growth into?