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WuXi AppTec Reports Strong Third-Quarter 2021 Results

2021/10/29

Revenue Up 30.6% Year-Over-Year to RMB5,985 Million

Net Profit Attributable to Owners of the Company Up 36.2% Year-Over-Year to RMB887 Million

Diluted EPS Up 30.4% Year-Over-Year to RMB0.30

Adjusted Non-IFRS[1] Net Profit Attributable to Owners of the Company Up 37.8% Year-Over-Year to RMB1,358 Million

Adjusted Non-IFRS Diluted EPS Up 39.4% Year-Over-Year to RMB0.46[2]



(SHANGHAI, October 29, 2021) — WuXi AppTec (stock code: 603259.SH / 2359.HK), a global company that provides a broad portfolio of R&D and manufacturing services that enable companies worldwide in the pharmaceutical, biotech and medical device industries to advance discoveries and deliver groundbreaking treatments to patients, is pleased to announce its financial results for the third quarter and nine months ended September 30, 2021 (“Reporting Period”).

 

This document serves purely as a summary and is not intended to provide a complete representation of the relevant matters. For further information, please refer to the 2021 third quarter report and relevant announcements published on the websites of the Shanghai Stock Exchange (www.sse.com.cn) and the Stock Exchange of Hong Kong (www.hkexnews.hk), and the designated media for dissemination of the relevant information. Investors are advised to exercise caution and be aware of the investment risks in dealing in the shares of the Company.

All financials disclosed in this press release are prepared based on International Financial Reporting Standards (IFRS), in currency of RMB.

The 2021 Third-Quarter Report of the Company has not been audited.

 

Third-Quarter 2021 Financial Highlights

-Revenue grew 30.6% year-over-year to RMB5,985 million. This strong revenue growth was mainly attributable to the Company’s continued focus on leveraging its unique integrated end-to-end platform to achieve synergy and strong growth across our business segments:

·WuXi Chemistry revenue grew 33.3% to RMB3,651 million, adjusted non-IFRS gross profit grew 28.7% to RMB1,503 million, gross profit margin at 41.2%.

·WuXi Testing revenue grew 37.4% to RMB1,227 million, adjusted non-IFRS gross profit grew 18.6% to RMB397 million, gross profit margin at 32.3%.

·WuXi Biology revenue grew 22.4% to RMB504 million, adjusted non-IFRS gross profit grew 52.2% to RMB256 million, gross profit margin at 50.8%.

·WuXi ATU revenue grew 14.7% to RMB283 million, adjusted non-IFRS gross profit declined 57.3% to RMB17 million, gross profit margin at 6.0%. ATU China revenue grew 223% YoY.

·WuXi DDSU revenue grew 10.5% to RMB311 million, adjusted non-IFRS gross profit declined 15.2% to RMB118 million, gross profit margin at 38.0%.



Third-Quarter 2021 Key Financials

-IFRS gross profit increased 24.7% year-over-year to RMB2,200 million. Gross profit margin was 36.8%.[3]

-Adjusted Non-IFRS gross profit increased 23.5% year-over-year to RMB2,295 million. Adjusted Non-IFRS gross margin was 38.3%.

-EBITDA increased 47.2% year-over-year to RMB1,523 million.

-Adjusted EBITDA increased 42.1% year-over-year to RMB2,012 million.

-Net profit attributable to owners of the Company increased 36.2% year-over-year to RMB887 million. The strong net profit growth is mainly attributable to robust revenue growth and continuous improvements to the Company’s operating efficiencies.

-Adjusted non-IFRS net profit attributable to owners of the Company increased 37.8% year-over-year to RMB1,358 million.

-Diluted EPS increased 30.4% year-over-year to RMB0.30, while adjusted diluted non-IFRS EPS increased by 39.4% year-over-year to RMB0.46.


Year-to-Date 2021 Financial Highlights

-Revenue grew 39.8% year-over-year to RMB16,521 million. The strong revenue growth was mainly attributable to the Company’s continued focus on leveraging its unique integrated end-to-end platform to achieve synergy and strong growth across our business segments:

·WuXi Chemistry revenue grew 47.5% to RMB10,077 million, adjusted non-IFRS gross profit grew 44.7% to RMB4,238 million, gross profit margin at 42.1%.

·WuXi Testing revenue grew 43.9% to RMB3,335 million, adjusted non-IFRS gross profit grew 51.4% to RMB1,132 million, gross profit margin at 33.9%.

·WuXi Biology revenue grew 33.2% to RMB1,424 million, adjusted non-IFRS gross profit grew 26.6% to RMB596 million, gross profit margin at 41.8%.

·WuXi ATU revenue declined 5.2% to RMB736 million, adjusted non-IFRS gross profit declined 89.7% to RMB14 million, gross profit margin at 1.9%. ATU China revenue grew 187% YoY.

·WuXi DDSU revenue grew 16.4% to RMB932 million, adjusted non-IFRS gross profit declined 0.6% to RMB412 million, gross profit margin at 44.2%.



Year-to-Date 2021 Key Financials

-IFRS gross profit increased 37.5% year-over-year to RMB6,084 million. Gross profit margin was 36.8%.[4]

-Adjusted Non-IFRS gross profit increased 36.0% year-over-year to RMB6,397 million. Adjusted Non-IFRS gross margin was 38.7%.

-EBITDA increased 50.3% year-over-year to RMB5,466 million.

-Adjusted EBITDA increased 49.2% year-over-year to RMB5,660 million.

-Net profit attributable to owners of the Company increased 50.4% year-over-year to RMB3,562 million. The strong net profit growth is mainly attributable to robust revenue growth and continuous improvements to the Company’s operating efficiencies.

-Adjusted non-IFRS net profit attributable to owners of the Company increased 55.7% year-over-year to RMB3,806 million.

-Diluted EPS increased 42.4% year-over-year to RMB1.21, while adjusted diluted non-IFRS EPS increased by 49.4% year-over-year to RMB1.30.


Year-to-Date 2021 Business Highlights

-During the first nine months of 2021, demand for our services was strong and we continued to grow our customer base to more than 5,640 active accounts by adding over 1,300 new customers. We continued to optimize cross-platform synergies to better serve our customers worldwide, strengthening our unique competitive advantage as a fully integrated CRDMO (Contract Research Development and Manufacturing Organization) and a one-stop service provider for our clients’ discovery, development and manufacturing service needs.

·Revenue from US grew 38% to RMB9,011 million, revenue from Europe grew 33% to RMB2,255 million, revenue from China grew 45% to RMB4,038 million, and revenue from others grew 53% to RMB1,216 million.

·We continued to expand our customer base and retain existing clients. During the Reporting Period, revenue from existing clients grew 30% to RMB15,337 million and new clients contributed RMB1,184 million in revenue.

·During the Reporting Period, revenue from top 20 global pharmaceutical companies grew 21%, up to RMB4,699 million in revenue; revenue attributable to all other customers grew 49% to RMB11,823 million.

·Our unique positioning across the pharmaceutical development value chain drove our “follow-the-customer”, “follow-the-molecule” strategy and enhanced synergies across our business segments. Customers using services from more than one of our business units contributed RMB14,190 million in revenue, growing 40% year-over-year.


-WuXi Chemistry: CRDMO integrated business model drives strong growth

·Revenue of WuXi Chemistry grew 47.5% to RMB10,077 million, adjusted non-IFRS gross profit grew 44.7% to RMB4,238 million, with gross margin at 42.1%. During the Reporting Period:


·Revenue of small molecule discovery services grew 42.3% to RMB4,443 million.

              i. We have a world-leading small molecule research team that delivered approximately 200,000 custom synthesized compounds to our clients from January to September 2021. Through our small molecule discovery service, we enable our customers to accelerate their R&D while generating opportunities for our downstream business units. Executing our strategies of “follow the customer” and “follow the molecule,” we establish trusted partnership with our customers, which supports continued clinical and commercial projects and opportunities for the company. The small molecule discovery service laid a solid foundation to support the rapid and sustainable growth of our CRDMO business.

              ii. We continue executing our “long-tail” strategy and the “long-tail” customers demonstrated outperforming growth. During the Reporting Period, revenue from “long-tail” customers in our small molecule discovery service grew 68%, with its percentage of revenue contribution continuously rising.


·Revenue of our small molecule CDMO service grew 51.9% to RMB5,634 million.

               i. During the Reporting Period, the Company added 526 new molecules to our project funnel, including 9 commercial projects and 31 projects from “win-the-molecule,” with a total of 1,548 molecules, including 37 in commercial stage, 47 in phase III stage, 235 in phase II stage and 1,229 in phase I and pre-clinical stage.

               ii. New modalities CDMO business is gaining strong momentum. During the reporting period, oligo & peptide clients and molecules grew 96% and 97% respectively versus the end of 2020.

·On August 3, 2021, WuXi STA, a subsidiary of the Company, completed the acquisition of a drug product manufacturing facility in Couvet, Switzerland (“Couvet site”) from Bristol Myers Squibb. The Company has consolidated its contribution starting from July. The Couvet site is a state-of-the-art manufacturing facility with commercial-scale production capacity for capsule and tablet dosage forms.

·On Sep 24, 2021, WuXi STA announced its decision to build a new state-of-the-art pharmaceutical clinical and commercial manufacturing complex in Middletown, Delaware. The new facility will feature space for testing laboratories, manufacture active pharmaceutical ingredients (APIs), and manufacture and package solid dosage pharmaceutical products and sterile products. The site responds to the growing industry and local customer demand for manufacturing innovative new medicines.

 


-WuXi Testing: strengthening synergies between preclinical and clinical testing services

·Revenue of WuXi Testing grew 43.9% to RMB3,335 million, adjusted non-IFRS gross profit grew 51.4% to RMB1,132 million, with gross margin at 33.9%. During the Reporting Period:


·Revenue of lab testing services grew 41.9% year-over-year to RMB2,133 million. Lab testing services revenue excluding medical devices testing grew 58% YoY.

                i. The Company provides a full range of laboratory testing services to our customers, including DMPK, toxicology, and bioanalysis for drug developing testing as well as medical device testing. We leveraged our integrated WuXi AppTec Investigational New Drug (IND) program (WIND) to generate preclinical data and prepare global regulatory submissions of IND packages, expediting the IND application process for many of our customers worldwide. 123 WIND service packages were signed during the Reporting Period and the average revenue per WIND package ranges from USD1.1 million to 1.5 million.

                ii. Toxicology services achieved strong revenue growth of 72% year-over-year. We maintain and reinforce our industry leading position in China for drug safety evaluation services.

                iii. The Company formed a cross-functional team between laboratory testing departments and clinical CRO department to approach our customers when their projects are close to IND stage. We believe this business realignment will further strengthen the funnel flow from pre-clinical testing to clinical testing, creating synergy across our integrated testing platform.


·Revenue of clinical CRO & SMO grew 47.4% year-over-year to RMB1,201 million.

                 i. For clinical CRO, the Company provided services to more than 200 projects for our clients, enabling our customers to obtain 14 IND approvals and file 5 BLA/NDA applications. During the Reporting Period, biometrics revenue grew quickly.

                 ii. For SMO (site management organization), the Company keeps expanding quickly. Our SMO maintained its leadership position in China with around 4,500 staff in 153 cities, providing services for hundreds of clinical trials across about 1,000 hospitals. Team size increased 42% year-over-year, implying continued strong market demand for our SMO services.

                 iii. In the first nine months of 2021, SMO supported 16 new drug approvals versus 17 drugs approvals in the full year of 2020.



-WuXi Biology: leading innovation in new modalities

·Revenue of WuXi Biology grew 33.2% to RMB1,424 million, adjusted non-IFRS gross profit grew 26.6% to RMB596 million, with gross margin at 41.8%.

·The Company has the largest discovery biology enabling platform with over 2,000 experienced scientists. We provide comprehensive biology services and solutions, with a strong track record of enabling the delivery of hits, leads and PCCs (Preclinical Candidates).

·The Company has a leading DNA Encoded Library (DEL). As of September 30, 2021, our DEL had more than 90 billion compounds, 6,000 proprietary scaffolds and 35,000 building blocks.

·Through comprehensive integration of our DEL, protein production, and structure-based drug design (SBDD) capabilities, we have established a competitive Target-to-Hit platform to enable our customers’ innovative R&D of small molecule drugs.

·The Company continues to build new biology capabilities related to new modalities, including oligo, cancer vaccine, PROTAC, vector platform, novel drug delivery vehicles, etc. During the Reporting Period, revenue from new modalities and large molecules in WuXi Biology grew 56%, and its revenue contribution rose to 13.3% by the end of third quarter 2021, from 10.4% by end of 2020, implying that new modalities related biology service has become an increasingly important growth driver.


-WuXi ATU: CTDMO integrated business model drives future growth

·Revenue of WuXi ATU declined 5.2% to RMB736 million. Driven by strong demand for plasmids and lenti-viral vectors manufacturing, ATU China saw strong performance with revenue growth of 223% in the third quarter and 187% in the first nine months of 2021, which partially offset the decline in ATU US. 

·During the Reporting Period, the Company focused on improving our CTDMO integrated enabling platform and provided testing services for 326 projects, and provided development and manufacturing services for 45 pre-clinical and Phase I projects, 6 Phase II projects, and 10 Phase III projects.

·Our Shanghai Lin-gang site opened on October 18, 2021. It is the fourth site for WuXi ATU globally providing testing, process development and manufacturing services to global clients.


-WuXi DDSU: enabling domestic customer innovation

·Revenue of WuXi DDSU grew 16.4% to RMB932 million, adjusted non-IFRS gross profit declined 0.6% to RMB412 million, implying gross margin at 44.2%.

·During the Reporting Period, our success-based drug discovery service unit filed INDs for 16 drug candidates and obtained 12 CTAs for domestic customers. As of September 30, 2021, we have cumulatively submitted 136 new chemical entity IND filings with the NMPA and obtained 103 CTAs, with 1 project in NDA pending stage, 1 project in Phase III clinical trial, 14 projects in Phase II clinical trials, and 73 projects in Phase I clinical trials. Upon the products’ successful launch to the market by our customers, we will begin receiving royalty income.

·Among the 136 projects that IND were filed or currently in clinical stage, over 70% of them rank top 3 in China in terms of the drug development progress among same-class drug candidates.

 


Continuous Improvements in ESG Management and Performance

 

As a global corporate citizen, we are continuing to improve our ESG management and performance and the implementation of our sustainability strategy. We strictly comply with the highest ethical standards, while continuously refining our standards and sustainability policies across all business operations. In order to accomplish this, we conducted Business Code of Conduct trainings for all employees. We also carried out the annual Supplier Business Code of Conduct training and ESG audit trainings for all of our key suppliers to ensure the implementation of the high ESG requirements and standards across our supply chain management.

 

In September 2021, Morgan Stanley Capital International ("MSCI”) upgraded our MSCI ESG Rating to AA. This new rating reflects our commitment to incorporating environmental and social responsibilities into the company’s business strategies and operations.

 

We remain committed to “doing the right thing and doing it right,” and will focus on delivering on our commitments to our customers, employees, investors, communities and the environment to operate in a sustainable way both today and in the future.



Management Comment

 

Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, “As part of our commitment to serving our customers better, we have completed changes to the organization of our business segments in the third quarter 2021. We have integrated our capabilities to form three new business divisions – WuXi Chemistry, WuXi Biology, and WuXi Testing – which now possess the end-to-end capabilities needed to provide integrated services to customers. Along with WuXi ATU and WuXi DDSU, we now have five integrated platforms.”

 

“Dr. Minzhang Chen leads the WuXi Chemistry segment, which now encompasses all chemistry services, including research, development and commercial manufacturing under one roof. This is our new business model that we have named CRDMO (Contract Research, Development and Manufacturing Organization). Executing our strategy of ‘follow-the-molecule,’ we believe it will provide more integrated service offerings to our customers, spanning from discovery and process development to commercial manufacturing, which will in turn enhance funnel flow and realize synergies across our end-to-end platform. WuXi Chemistry performed very well in the first nine months of 2021, with revenue growth of 47.5% YoY.”

 

“Dr. Steve Yang leads our WuXi Testing and WuXi Biology segments. WuXi Testing now integrates our drug development testing services (DMPK, Toxicology, Bioanalytical) and clinical trial services (clinical CRO and SMO) to provide customers with seamless experience to accelerate project and pipeline progression. WuXi Biology provides a full spectrum of discovery biology enabling service and collaborates with WuXi Chemistry to support integrated small molecule drug discovery. WuXi Testing and WuXi Biology both performed well in the first nine months of 2021, with revenue growth of 44.1% and 33.2% respectively.”

 

Dr. Ge Li concluded, “In the third quarter of 2021, we began to experience apparent results of our business segment realignment come to bear in the form of enhanced synergies, increased cross-selling, and deeper customer penetration. The power of our unique and differentiated CRDMO and CTDMO end-to-end business models lay the foundation for reliable and continued long-term growth. Concurrently, the fundamentals of our business and its future outlook both remain very strong. Looking ahead, we will further increase investment in our R&D services in both capacity and capabilities, particularly in new modalities. We are confident that this will better enable our customers to bring innovative medicines to patients in need – realizing our vision that ‘every drug can be made and every disease can be treated.”









[1] To better reflect the operation results and key performance, we adjusted the scope of Non-IFRS, and the comparative financial figures for the comparable periods have been adjusted to reflect this change.

[2] Third quarter 2021 and 2020, we had a fully-diluted weighted average share count of 2,949,275,618 and 2,821,245,946 ordinary shares, respectively.

[3] If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 24.9% year-over-year to RMB2,213 million. Gross profit margin was 37.0%. 

[4] If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 37.6% year-over-year to RMB6,111 million. Gross profit margin was 37.0%. 

[5] If the sum of the data below is inconsistent with the total, it is caused by rounding

[6] If the sum of the data below is inconsistent with the total, it is caused by rounding

[7] In 2021, pursuant to the 2020 Profit Distribution Plan considered and approved by the shareholders' general meeting, the Company issued 2 shares for every 10 shares of the Company by way of capitalization of reserve. In accordance with the regulations of the China Securities Regulatory Commission, the Company has adjusted the basic earnings per share and diluted earnings per share for the comparative period according to the 2020 Profit Distribution Plan.

[8] If the sum of the data below is inconsistent with the total, it is caused by rounding.

[9] If the sum of the data below is inconsistent with the total, it is caused by rounding.

[10] If the sum of the data below is inconsistent with the total, it is caused by rounding.

[11] If the sum of the data below is inconsistent with the total, it is caused by rounding.



About WuXi AppTec

As a global company with operations across Asia, Europe, and North America, WuXi AppTec provides a broad portfolio of R&D and manufacturing services that enable the global pharmaceutical and healthcare industry to advance discoveries and deliver groundbreaking treatments to patients. Through its unique business models, WuXi AppTec’s integrated, end-to-end services include chemistry drug CRDMO (Contract Research, Development and Manufacturing Organization), biology discovery, preclinical testing and clinical research services, cell and gene therapies CTDMO (Contract Testing, Development and Manufacturing Organization), helping customers improve the productivity of advancing healthcare products through cost-effective and efficient solutions. WuXi AppTec received an AA ESG rating from MSCI in 2021 and its open-access platform is enabling more than 5,600 collaborators from over 30 countries to improve the health of those in need – and to realize the vision that "every drug can be made and every disease can be treated." Please visit: http://www.wuxiapptec.com

 

Forward-Looking Statements

This press release may contain certain “forward-looking statements” which are not historical facts, but instead are predictions about future events based on our beliefs as well as assumptions made by and information currently available to our management. Although we believe that our predictions are reasonable, future events are inherently uncertain and our forward-looking statements may turn out to be incorrect. Our forward-looking statements are subject to risks relating to, among other things, the ability of our service offerings to compete effectively, our ability to meet timelines for the expansion of our service offerings, our ability to protect our clients’ intellectual property, unforeseeable international tension, competition, the impact of emergencies and other force majeure. Our forward-looking statements in this press release speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements except as required by applicable law or listing rules. Accordingly, you are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. All forward-looking statements contained herein are qualified by reference to the cautionary statements set forth in this section. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date, and we do not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

Use of Non-IFRS and Adjusted Non-IFRS Financial Measures

We provide non-IFRS gross profit, exclude the impact in revenue and cost from effective hedge accounting, share-based compensation expenses and amortization of intangible assets acquired in business combinations, and non-IFRS net profit attributable to owners of the Company, which exclude share-based compensation expenses, issuance expenses of convertible bonds, fair value gain or loss from derivative component of convertible bonds, foreign exchange-related gains or losses, amortization of intangible assets acquired in business combinations and goodwill impairment. We also provide adjusted non-IFRS net profit attributable to owners of the Company and earnings per share, which further exclude realized and unrealized gains or losses from our venture investments and joint ventures. Neither is required by, or presented in accordance with IFRS.

 

To better reflect the operation results and key performance, the Company has adjusted the scope of the foreign exchange related gains or losses by adjusting only the gains or losses that the management believes irrelevant to the core business. The comparative financial figures for the comparable periods have been adjusted to reflect the change of the scope.


We believe that the adjusted financial measures used in this press release are useful for understanding and assessing our core business performance and operating trends, and we believe that management and investors may benefit from referring to these adjusted financial measures in assessing our financial performance by eliminating the impact of certain unusual, non-recurring, non-cash and non-operating items that we do not consider indicative of the performance of our core business. Such adjusted non-IFRS net profit attributable to owners of the Company, the management of the Company believes, is widely accepted and adopted in the industry the Company is operating in. However, the presentation of these adjusted non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. You should not view adjusted results on a stand-alone basis or as a substitute for results under IFRS, or as being comparable to results reported or forecasted by other companies.

 

For more information, please contact:

 

Mr. Kyler Lei (for investors)

IR Director

Email: kyler_lei@wuxiapptec.com

 

Mr. Davy Wu (for media)

PR Director

Email: davy_wu@wuxiapptec.com

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