WuXi offers more details on the complexity of CRO, CMO competition

By Zachary Brennan

- Last updated on GMT

WuXi offers more details on the complexity of CRO, CMO competition

Related tags Clinical trial Contract research organization Wuxi

Competition in the notoriously tight-lipped CRO (contract research organization) and CMO (contract manufacturing organization) industries is getting fiercer as outsourcing picks up, though that hasn’t stopped one Chinese company from revealing who it competes with in all of its various markets.

According to an annual report released via a Form 20-F from China’s WuXi PharmaTech on Wednesday, the company competes not only with CROs and CMOs, but also academic institutions and a range of other outsourcing partners.

We believe that we do not compete with any single company across the entire breadth of our service offerings​,” WuXi said, noting that it competes with Charles River Laboratories in the preclinical services area; with ShangPharma and Pharmaron in the drug discovery and chemistry area; Sigma-Aldrich’s BioReliance in the biologics testing area; and with North American Science Associates and Toxikon in the medical device testing area.

After the acquisition of Jiecheng and MedKey and the formation of a JV with PRA Health Sciences​, WuXi also now competes with top CROs such as PPD, Parexel and Tigermed Consulting in the clinical research services area, in addition to all of the multi-national CMOs it competes with on the manufacturing end. In genomics, WuXi also competes with companies such as Beijing Genomics Institute.

And like most of its competitors, WuXi relies on fee-for-service contracts for the bulk of its revenue. “A significant portion of our net revenues, including a significant portion of our Laboratory Services revenues and all of our Manufacturing Services revenues, are based on fee-for-service contracts. In 2014, fee-for-service contracts accounted for approximately 73% of our total net revenues​,” the company says.

The increasing competition also means the company has to stay nimble, especially as outsourcing increases to developing countries.

We believe the share of small-molecule pharmaceutical R&D spending that is being outsourced to developing countries like China is increasing and will continue to increase for the foreseeable future as the fast-growing pharmaceutical market in China draws increasing R&D activities there​,” the company says.

Genomics Questions

WuXi also said it’s already begun integrating its recent acquisition, NextCODE Health, with its China-based WuXi Genome Center to create WuXi NextCode Genomics Inc., which eventually will offer new genomic and bioinformatic products and services and expand WuXi’s customer base to include hospitals, doctors and patients.

Areas where we are considering the development of new products and services include diagnostic products for rare pediatric diseases, cancer panels and executive health check services​,” the company says.

But these plans may run into new Chinese regulations that seem increasingly murky.

The regulatory environment for activities involving genomics in China is still unclear and evolving​,” WuXi says, warning that it “may be unable to obtain or maintain the required licenses to allow us to offer specified genomics-related products and services in China​.”

As a result, “substantial uncertainties exist regarding the interpretation and implementation of current and any future PRC [People’s Republic of China] laws and regulations applicable to the genomics industry. For example, in February 2014 the CFDA and the National Health and Family Planning Commission, or NHFPC, issued a notice regarding strengthening administration on use of products and technologies related to gene sequencing in clinical applications. The notice ordered an immediate halt to gene sequencing practices in clinical applications in China except for those already operating on a trial basis after approval​,” WuXi says.

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