WuXi posts buoyant increases in revenue and profit
pharmafile | May 13, 2010 | News story | Research and Development | CRO, Charles River, Charles River Laboratories, WuXi
China’s WuXi PharmaTech has given would-be purchaser Charles River Laboratories a lift after posting buoyant increases in both revenues and operating profit.
The contract research and manufacturing services (CRAMS) specialist saw its first-quarter revenues rise 36% to $81 million, while operating profit rocketed ahead 70% to around $17 million, helped by a good performance by its laboratory services unit and a return to form for its manufacturing division.
WuXi now expects 2010 revenue to be at the upper end of its earlier estimate of $310 million to $320 million, up from 270 million in 2009.
The lab division saw revenues grow 18% year-on-year to $67 million on the back of growing demand for discovery chemistry as well as WuXi’s newer offerings, such as DMPK/ADME testing, biology, process research, formulation and analytical services. The performance lends further credibility to claims that the contract research business is rebounding from its slump in 2009.
As expected, the opening of a new toxicology facility in Suzhou ate into the lab division’s profit margins, but this still improved year-on-year as WuXi managed to increase the proportion of contracts carried out in China rather than overseas.
The strong results – particularly for the lab division – are good news for US contract R&D and lab supplies company Charles River, which made a $1.6 billion offer to buy WuXi in April. The US CRO was upgraded from neutral to outperform by analysts at Robert W. Baird as news of the WuXi figures emerged.
The star performer in growth terms, however, was WuXi’s contract manufacturing unit, which is not a primary focus for Charles River as it concentrates on early-stage to first-in-human testing services.
Manufacturing brought in a little under $14 million in the quarter, over four times the amount a year ago, albeit with the gain coming largely from a single order. In 2009 total revenues for the manufacturing division were $20 million.
WuXi’s manufacturing operations has been held back by the closedown of a biologics manufacturing facility in Philadelphia, USA, as well as weaker demand, but the company believes investments in large-scale capacity will help solidify demand in 2010.
Investors responded to the figures by driving the firm’s US-listed shares up more than 5% yesterday to around $18.90, still below Charles River’s $21.25 per share offer.
• WuXi also announced that it had appointed a new chief financial officer, Hao Zhou, who joined the company in May 2009 as vice president of finance.
Phil Taylor
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