Wuxi income up in ’09, plans investments this year

By Nick Taylor

- Last updated on GMT

Related tags: Generally accepted accounting principles, Wuxi

WuXi PharmaTech posted an operating profit of $52m (€38m) in 2009 and is optimistic about 2010, when it will make investments in laboratory services and large-scale manufacturing to drive growth in coming years.

Full year and fourth quarter results reflected the trends seen at WuXi throughout 2009, with strong growth in China-based laboratory services and declining revenues from the manufacturing business.

WuXi expects China-based laboratory services to maintain double-digit growth in 2010 and this will be supported by an upturn in revenues from manufacturing services. Manufacturing struggled in 2009, with net revenues dropping 58 per cent, but WuXi retains faith in the business.

This is demonstrated by planned investments in 2010. WuXi indicated it will invest in large-scale manufacturing, China-based laboratory services and toxicology to drive growth in 2011 and beyond.

Expenditure on these improvements will affect operating income in 2010, although WuXi still predicts 10 per cent growth, and consequently the company is describing it as a “transition year​”.

The short-term spike in expenditure is intended to equip WuXi to benefit from “trends favouring greater R&D outsourcing and offshoring and greater use of integrated services​”, explained Ge Li, the company’s chairman and CEO.

Li added that demand for these offerings will continue to grow over the coming decade. More immediately, revenues from manufacturing services are predicted to grow by 70 per cent compared to 2009 underpinned by a large order in the first quarter and improving demand.

This upturn is expected to help total net revenues grow by up to 19 per cent. China-based Laboratory services is predicted to grow by up to 16 per cent and its US-based equivalent, net revenues from which were up two per cent in 2009, will achieve a single digit increase.

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