Kailian 2024 Fixed Asset Depreciation Reaches 18%

A member of the 15th Five-Year Plan Expert Committee stated that the middle-to-low income class in China currently has relatively low income levels. CRO enterprises' cost structure is primarily human-led, supported by capital, and includes risk overflow, with human costs accounting for about 60%. The cost structure for CRO enterprises is primarily human-resource driven, accounting for about 60% of direct costs, with capital expenditure also a factor for some firms like Kailian, where fixed asset depreciation reached 18% in 2024. While overall industry growth is expected to slow from previous rapid doubling, certain niche areas may still maintain 20-30% high growth over the next 3-5 years. For CRO enterprises, human resources constitute about 60% of direct costs, making it the highest proportion in their cost structure. Order growth now directly determines revenue for the next one to two years, as regional CXO companies often report capacity utilization below 70% and lower gross margins. High capacity utilization in China's CXO industry signifies strong economies of scale and sustainable profitability, reflecting technology and customer stickiness. New star CXO areas exhibit high capacity utilization due to technical barriers and market demand, contrasting with traditional small molecule areas facing pressure to shift to high-value fields. Integrated CXO companies, such as WuXi AppTec, offer full-process services for more stable revenue, while regional firms often have capacity utilization below 70% and lower gross profit margins. For CROs, human resources account for approximately 60% of direct costs, and fixed asset depreciation for companies like Kalen reached about 18% in 2024. Kailian's fixed asset depreciation in 2024 reached approximately 18%.