Wuxi finishes 2010 on a high, predicts growth in 2011

By Gareth Macdonald contact

- Last updated on GMT

Related tags: Cent, Employment, Bristol-myers squibb

Wuxi PharmaTech finished the fourth quarter and the full year 2010 on a high driven by growth across all business units and the payoff from former suitor Charles River Laboratories (CRL).

Net revenue for the three months ended December 31, 2010 was $88.6m, up 20 per cent year on year, with the biggest contribution coming from Wuxi’s laboratory services business, which grew 16 per cent to $78.5m.

Within lab services Wuxi saw continued growth for its China-based operations, with revenue increasing 16 per cent to $60m for the final three months of the year and 18 per cent for 2010 as a whole.

Revenue from the Chinese firm’s US laboratory operations also increased, growing 17 per cent to $18.9m in Q4 and 18 per cent for the 12 months to December 31.

Gross margins for Wuxi’s lab business dropped from 41.9 per cent to 40.6 per cent, primarily as a result of higher labour costs and costs associated with the new DPMK and toxicology labs the firm set up in Shanghai​ and Suzhou​.

The contract research organisations (CRO) manufacturing services business also grew with revenue climbing 59 per cent to $10.1m in the fourth quarter and 95 per cent to $39.2m for the year.

This growth is in marked contrast with the unit’s performance in 2009​ and, according to Wuxi, is a result of improved capacity utilisation for large-scale manufacturing increased improved margins from 18.1 to 20 per cent.

This, coupled with the $25m termination fee it received from US CRO CRL on the termination of a planned takeover last summer​, meant that Wuxi ended 2010 with revenue up 24 per cent to $332m and operating income up 37 per cent to $71.5m.

Forecast

CEO Ge Li predicted that the growth will continue in 2011, predicting that revenue will be between 17 and 21 per cent higher “despite an environment of RMB appreciation and labour cost inflation in China.”

Le also said that the firm will continue to invest in its R&D service capabilities, citing the chemistry site it is building in Wuhan, a biologics manufacturing plant it is setting up in Wuxi, as well as pharmacology and stability testing capabilities as examples.

He also predicted that: “Growth in offshore outsourcing and in China’s domestic pharmaceutical market will drive more and more R&D to China​.”

This idea is supported by the deal Wuxi signed with US drug major Bristol-Myers Squibb earlier this week​, which will see the Chinese CRO set up a dedicated testing lab to support all of the US firm’s future small-molecule submission’s worldwide.

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