WuXi grows in Q3

By Nick Taylor

- Last updated on GMT

WuXi PharmaTech’s operating income increased by 35 per cent in the third quarter, underpinned by strong growth in China-based laboratory services, but its manufacturing operations continue to struggle.

For the past two quarters the China-based laboratory services has beaten expectations, leading to WuXi raising its expectations for the division this year, and this has compensated for difficulties in other sectors of WuXi’s business.

Net revenues from China-based laboratory services grew year-on-year by 29 per cent to $48m (€32.2m), which offset a slight dip in US business and a 44 per cent drop in manufacturing income.

WuXi continues to attribute the difficulties at its manufacturing operations to customers’ delivery schedules which make the sector inherently volatile. The company is continuing its push into large-scale manufacturing and gave an update on the progression in its latest results.

Test runs are planned for the fourth quarter at the recently completed facility but WuXi refrained from saying when it would begin generating revenues as it depends on the progress of clients’ clinical trials.

WuXi expects large-scale manufacturing to be a major contributor to growth in revenues and earnings over the next few years. This will be supported by investments WuXi has made in toxicology.

Non-good laboratory practice (GLP) toxicology studies have been initiated and WuXi is also performing client-sponsored GLP validation studies. These are intended to develop WuXi’s GLP capabilities in order for it to launch the toxicology services by mid-2010.

Double-digit growth

In the third quarter WuXi recorded a 10 per cent year-on-year growth in revenues, which totalled $70m, giving it confidence that it can achieve its goal of $265-275m in sales for the year.

To support this growth WuXi hired 400 people in the third quarter from college recruiting. The majority of these new employees will work in laboratory services, taking the total number of scientists at WuXi to 3,230, which is 78 per cent of total headcount.

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