Evotec's operations are struggling under the weight of low market demand - Declining Demand Affects Evotec's Performance
Evotec, a leading pharmaceutical drug developer, has reported a decline in revenue for the first half of the year. The company's overall revenue for the first six months fell by 5% to approximately 371 million euros, compared to the same period in the previous year.
This decline is primarily due to a soft demand for preclinical research services, particularly in the Discovery & Preclinical Development (D&PD) segment. The segment, which includes activities from target identification to IND (Investigational New Drug) enabling, experienced an 11% revenue decline in H1 2025 to €269 million.
Despite this, Evotec continues to invest in advanced technologies such as multi-omics and disease profiling to foster novel target discovery in diseases like kidney disease, neurodegeneration, and metabolic disorders. The company's strategic partnerships, notably with Bristol Myers Squibb in protein degradation and neuroscience, underpin future pipeline value.
In contrast, Evotec's Just – Evotec Biologics (JEB) segment has shown strong growth. This segment, focused on biologics manufacturing and related technologies, increased revenues by 16% to €102.2 million in the same period. This growth was driven by a broadened customer base and progress in shifting towards an asset-lighter, capital expenditure–lighter model.
The company is also planning to sell its biologics EU site in Toulouse to Sandoz AG as part of these structural changes aimed at enhancing profitability.
The financial performance in Hamburg, where the D&PD segment is headquartered, reflects these trends. Group revenues declined 5% to €371.2 million due to the weak demand in preclinical research. However, the company's strategic partnerships and ongoing investments are expected to support medium-term growth.
Preclinical research is a crucial stage in drug development that evaluates the risks and benefits of drugs before they are tested on humans. The struggle at Evotec is primarily due to weak demand in this area.
In summary, demand for preclinical research services in Hamburg under Evotec’s D&PD segment remains weak currently, affecting revenue, though the company is making strategic advances and maintaining collaborations expected to support medium-term growth. Meanwhile, the biologics segment is performing strongly and undergoing structural changes to enhance profitability.
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