By HUANG Hua
On December 4, after plummeting more than 20 percent during trading, Hong Kong-listed company WuXi Biologics suspended trading, closing at HK$33.15 m(US$4.3, 30 yuan) before the halt.
WuXi Biologics had revised its performance outlook, lowering its growth expectations from 30 percent to 10 percent.
Lowest growth since IPO
WuXi Biologics is a leading player in China's bio-pharmaceuticals market. In 2022, WuXi achieved revenue of 15.3 billion yuan (US.4 billion), up 48.4 percent year on year, with a net profit of 4.4 billion yuan, a year-on-year increase of 30.5 percent. Growth of 30 percent to 40 percent is considered low for the company. Growth of 10 percent would be the lowest since its IPO in 2017.
Declining revenue from both drug development and production will affect revenue and profit. Revenue from drug development is expected to decline by at least 18 percent.
WuXi failed to achieve a target of adding 120 new projects and delays in approval for new drugs have slashed income.
‘Investing in global capacity’
For companies like WuXi that specialize in outsourcing production, growth is largely due to a considerable number of drugs requiring commissioned production, many as a result of the pandemic. A decline in such businesses is foreseeable. Many companies entered the CDMO (Contract Development and Manufacturing Organization) field in recent years and they will not all survive.
With the end of the pandemic and the arrival of the "winter" for innovation drugs both domestically and internationally, domestic CDMOs are in trouble. Some have started laying off staff.
WuXi is “investing in global capacity,” and with no drugs to make, this is going to cost about US$100 million this year.
High hopes, low expectations
On the positive side, WuXi’s sub-sectors of conjugated drugs and vaccine production have both grown by more than 60 percent.
Regarding the latest performance, in H1 WuXi’s revenue increased by 17.8 percent to 8.5 billion yuan, and gross profit increased by 4.3 percent to 3.6 billion yuan.
WuXi Biologics' stock price reached its historical peak of HK$148 in July 2021. The price now is HK$45.
