During the course of both my CA and MBA, we were taught the concept of Balanced Scorecard - a framework that balances traditional financial measures with non-financial metrics to provide a more 'balanced' view of organizational performance.

In the Balanced Scorecard framework there are two category of indicators which organizations need to track - lag indicators which are outcome-based metrics that reflect past performance—like revenue, profit margins, or market share. They tell you what has already happened. In contrast, lead indicators are predictive metrics that influence future outcomes—like R&D spend, new product development, or customer pipeline. These signal what is likely to happen.

Identifying lead indicators is crucial in investing because they offer a glimpse into a company's future trajectory, not just its past performance. While lag indicators confirm what has already happened, lead indicators help investors anticipate inflection points, allocate capital earlier, and stay ahead of the market narrative

In the CDMO industry, commonly tracked lag indicators include EBITDA margin expansion (cases of operating leverage playing out) , capacity utilization, and revenue growth—metrics that reflect outcomes from past decisions. In contrast, lead indicators offer a forward-looking lens and include factors such as recent capex activity, the number and stage of active molecules in development, onboarding of new clients, regulatory approvals (like USFDA or EMA), and expansion into high-value areas like biologics, peptides, or cell and gene therapy. These signals often precede financial performance and help investors assess long-term growth potential

One of the most strategic lead indicators in the CDMO space is the quality of molecules a company is working on. If a CDMO is actively engaged with innovators developing complex, high-growth molecules, it signals not only technical capability but also long-term revenue visibility. The more clinically significant and commercially promising the molecule, the stronger the future potential of that CDMO.

Here in this write-up I have tried to list down probable molecules wherein if a CDMO is present , then it can be a good bet . Again this is just indicative and not exhaustive and not something set in stone.

To determine which molecules a CDMO is focusing on, its crucial to read multiple sources of information and learn to join the dots and figure out where a CDMO player is focusing on. Start with the Management Discussion & Analysis (MD&A) section of annual reports—many CDMOs highlight disease focus areas (e.g., oncology, metabolic, or rare diseases) and the complexity of molecules they are building capacity for. Then, listen closely to quarterly earnings calls or analyst meets, where CDMO executives often respond to questions about inbound enquiries, therapeutic area momentum, and phase-wise project mix. This is where early traction around GLP-1s, ADCs, or cell therapies is often first disclosed. Additionally, industry sources like PharmaCompass and Contract Pharma frequently publish partnership announcements, manufacturing site expansions, and client linkages for late-stage and commercial-scale molecules. Cross-referencing these sources gives investors a high-resolution view of which CDMOs are quietly embedding themselves into tomorrow’s most valuable supply chains.

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