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WuXi Q1 lab biz grows, good news for potential new owner CRL

By Gareth Macdonald , 12-May-2010
Last updated on 10-Mar-2011 at 11:53 GMT

Continued strong demand for laboratory services and improved manufacturing division performance helped Wuxi PharmaTech to grow in Q1.

Operating income for the three months ended March 31 was $17.4m (€13.7m), up increased 70 per cent on the year earlier quarter, while total revenue increased some 36 per cent to $80.6m.

Wuxi said that its contract lab testing business was the key driver for gains made in the quarter, reporting that revenue from the unit increased 18 per cent to $67m with double-digit growth being achieved by both its US and China operations.

The firm went on to explain that while revenue from its established discovery services unit had increased, newer offerings such as DMPK/ADME, process research and formulation had also made a significant contribution.

The performance, which continues the 22 per cent growth the laboratory unit achieved in 2009, fits with the forecast Wuxi issued earlier this year and makes its decision to expand this part of its business though a partnership with Qiagen look like a shrewd move.

And, while this growth is obviously good news for Wuxi and its staff, the gains will also be welcomed by US contract research organisation (CRO) Charles River Laboratories (CRL) who is trying to buy the Chinese firm by the end of the year.

CRL CEO James Foster, who announced the potential takeover deal last month , said that Wuxi’s strength in laboratory and preclinical services, as well as its presence in China, were key motivations for the proposed $1.6bn takeover.

Manufacturing recovery

Wuxi’s contract manufacturing business, which struggled in 2009, also made a good start in 2010 with revenue reaching $13.6m for the three months ended March 31, which is an increase of 433 per cent on the year-earlier quarter.

And while Wuxi said this expansion is due in the most part to the “delivery of a large order,” details of which were not disclosed, the firm also reported that it had seen improving demand in the quarter.

This improvement matches with the prediction Wuxi issued when reporting its 2009 financials and appears to support its plans to invest in large-scale manufacturing capacity.

Potential new owner CRL is also likely to be pleased by the recovery of Wuxi’s manufacturing unit, which it described as a “really good addition” to its existing portfolio of contract pharmaceutical industry services.

The CRL takeover, which is still subject to approval, would create the world's largest CRO and provide CRL with a strong presence in one of the world most in demand contract research markets.

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