Revenue Up 5.8% Year-Over-Year to RMB8,964 Million
Net Profit Attributable to Owners of the Company Up 32.0% Year-Over-Year to RMB2,168 Million
Diluted Earnings per Share (EPS) Up 35.8% Year-Over-Year to RMB0.72
Adjusted Non-IFRS Net Profit Attributable to Owners of the Company Up 14.1% Year-Over-Year to RMB2,342 Million
Adjusted Non-IFRS Diluted EPS Up 15.9% Year-Over-Year to RMB0.80
Free Cash Flow Achieved RMB1,682 Million, Turned Positive and Grew Strongly Year-Over-Year
(SHANGHAI, April 24, 2023) — 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 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 first quarter ending March 31, 2023 (“Reporting Period”).
This release provides a summary of the results and is not intended to be a comprehensive report. For additional information, please refer to the 2023 First-Quarter Report and other 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 trading Company shares.
All financial information disclosed in this press release is prepared based on International Financial Reporting Standards (IFRS), in currency of RMB.
The 2023 First-Quarter Report of the Company has not been audited.
First-Quarter 2023 Financial Highlights
Revenue grew 5.8% year-over-year to RMB8,964 million. This is primarily attributable to the Company’s continued strong execution of our unique Contract Research, Development and Manufacturing Organization (CRDMO) business model to achieve synergy and continuous growth:
●WuXi Chemistry revenue grew 5.1% to RMB6,433 million and adjusted non-IFRS gross profit grew 17.1% to RMB2,888 million, with a gross profit margin of 44.9%.
●WuXi Testing revenue grew 13.6% to RMB1,453 million and adjusted non-IFRS gross profit grew 15.6% to RMB528 million, with a gross profit margin of 36.3%.
●WuXi Biology revenue grew 8.3% to RMB577 million and adjusted non-IFRS gross profit grew 8.7% to RMB240 million, with a gross profit margin of 41.5%.
●WuXi ATU revenue grew 8.7% to RMB324 million and adjusted non-IFRS gross profit was RMB(24) million, with a gross profit margin of (7.4)%
●WuXi DDSU revenue declined 31.0% to RMB166 million and adjusted non-IFRS gross profit declined 49.9% to RMB40 million, with a gross profit margin of 24.0%.
 In 2022 Q1 and 2023 Q1, WuXi AppTec had a fully-diluted weighted average share count of 2,952,655,854 and 2,948,890,231 ordinary shares, respectively.
●IFRS gross profit increased 16.9% year-over-year to RMB3,526 million. Gross profit margin was 39.3%.
●Adjusted non-IFRS gross profit increased 14.8% year-over-year to RMB3,678 million. Adjusted non-IFRS gross margin was 41.0%.
●Net profit attributable to owners of the Company increased 32.0% year-over-year to RMB2,168 million.
●Adjusted non-IFRS net profit attributable to owners of the Company increased 14.1% year-over-year to RMB2,342 million.
●Diluted EPS increased 35.8% year-over-year to RMB0.72, while adjusted diluted non-IFRS EPS increased by 15.9% year-over-year to RMB0.80.
●Free cash flow achieved RMB1,682 million, turned positive and grew strongly year-over-year.
First-Quarter 2023 Business Operation Highlights
—We continued to expand our customer base globally. In the first quarter of 2023, we grew our customer base to more than 6,000 active accounts by adding over 310 new customers. We continued to optimize our cross-platform synergies to better serve our customers worldwide, strengthen our unique competitive advantage as a fully integrated Contract Research, Development and Manufacturing Organization (CRDMO) and Contract Testing, Development and Manufacturing Organization (CTDMO) platform, and provide one-stop services for our customers from discovery to development and manufacturing. The diversified revenue from customers across regions ensures the stability and resilience of the Company’s financial performance:
●Revenue from US-based customers grew 3% to RMB5.41 billion, which grew by 22% excluding COVID-19 commercial projects; revenue from Europe-based customers grew 19% to RMB1.44 billion; revenue from China-based customers grew 5% to RMB1.67 billion; and revenue from other regions grew 12% to RMB0.44 billion.
●We remain focused on delivering high quality services with great efficiency to retain loyal customers long term. During the Reporting Period, 99.1% of total revenue was generated from existing customers, growing 6.7% to RMB8.88 billion, which grew by 18.4% excluding COVID-19 commercial projects; and new customers contributed RMB83 million in revenue.
●During the Reporting Period, revenue from the top 20 global pharmaceutical companies declined 17.4% to RMB3.15 billion. Excluding COVID-19 commercial projects, top 20 global pharma revenue grew 1.2%, mainly due to projects phasing among quarters, and is expected to grow steadily in the remaining year. Revenue generated from all other customers grew 24.6% to RMB5.82 billion, among which revenue from biotech clients grew very strongly by 53.2% for the first quarter of 2023 as compared to the same period in 2022.
●Our unique positioning across the pharmaceutical development value chain drove our “follow-the-customer” and “follow-the-molecule” strategies and enhanced synergies across our business segments. Customers using services from multiple business units contributed RMB7.95 billion in revenue, growing 7.5% year-over-year, and growing by 21.2% excluding COVID-19 commercial projects, accounting for an increased proportion of the Company's revenue at 88.6%.
—WuXi Chemistry: Integrated CRDMO Business Model Drives Steady Growth, with Continuous Expansion in New Modalities-related Services (TIDES)
●Revenue grew 5.1% to RMB6.43 billion and adjusted non-IFRS gross profit grew 17.1% to RMB2.89 billion, with a gross margin of 44.9%, with 4.6pts improvement compared to the first quarter of 2022. Excluding COVID-19 commercial projects, WuXi Chemistry revenue maintained a growing momentum, with a growth rate of 21.8%.
●Revenue from discovery chemistry services (“R”) grew 8.5% to RMB1.89 billion. The discovery chemistry business experienced relatively slow growth due to the impact of global biotech funding environment.
i. Our industry-leading small molecule drug discovery platform delivered more than 420,000 custom synthesized new compounds to our customers in the past twelve months. Through our small molecule discovery services, we enabled our customers to accelerate their research while generating opportunities for our downstream business units. As part of our “follow-the-customer” and “follow-the-molecule” strategies, we established trusted partnerships with our global customers, supporting the rapid and sustainable growth of our CRDMO business.
ii. We continued executing our “long-tail” strategy. Demand from “long-tail” customers in small molecule and new modality-related discovery services continued to grow.
●Revenue from development and manufacturing (D&M) services grew 3.8% to RMB4.54 billion. Excluding COVID-19 commercial projects, D&M service revenue grew strongly by 30.0%.
i. During the Reporting Period, we won 258 molecules to our D&M pipeline, including 1 new molecule at the commercial stage. To date, our D&M pipeline consists of 2,590 molecules, including 55 in the commercial stage, 57 in phase III, 301 in phase II and 2,177 in phase I and pre-clinical stages.
●Revenue from TIDES grew 44.1% to RMB0.54 billion.
i. Our TIDES business (mainly oligo and peptides) has a unique end to end CRDMO platform, enabling R&D and production of multiple complex conjugates.
ii. During the Reporting Period, the number of TIDES D&M clients increased 22% to 112 customers, and the number of TIDES molecules increased 28% to 193 molecules. Revenue from TIDES D&M business continued to grow strongly by 69.1% to RMB0.42 billion.
—WuXi Testing: Lab Testing Services Drives Steady Growth
●Revenue from WuXi Testing grew 13.6% to RMB1.45 billion and adjusted non-IFRS gross profit grew 15.6% to RMB0.53 billion, with a gross margin of 36.3%, with 0.7pts improvement.
●Revenue from lab testing services grew 15.9% year-over-year to RMB1.05 billion, in which the early stage business experienced a relatively slow growth due to the impact of global biotech funding environment.
i. The Company provides a full range of laboratory testing services for our customers, including drug metabolism and pharmacokinetics (DMPK), toxicology, and bioanalysis for drug development testing, as well as medical device testing. We provide customers with high-quality services, realize "one report for global submission," and enable customers to save time, reduce costs and increase efficiency. We focus on maintaining close collaborative relationships with our customers based on our “follow-the-molecule” and “follow-the-customer” strategies.
ii. Drug safety evaluation services grew 24% year-over-year. We maintained our industry-leading position in Asia Pacific for drug safety evaluation services that meet global regulatory requirements.
iii. Our largely US-based medical device testing business grew 14% year-over-year. Affected by the delay of MDR policy, the demand returned to a normal level.
●Our clinical CRO & SMO (Site Management Organization) reached a revenue of RMB0.4 billion, representing year-over-year growth of 7.7%.
i. For clinical CRO, the Company provided services to approximately 150 projects, enabling our customers to obtain 6 IND approvals.
ii. SMO revenue grew 16.9%, achieving double-digit growth despite the pandemic impact in early months of the first quarter of 2023, and maintained No.1 leadership position in China. By the end of the first quarter of 2023, our SMO business provided services at more than 1,000 hospitals across around 150 cities in China. During the Reporting Period, we supported 13 new drug approvals for customers.
—WuXi Biology: Strong Contribution from New Modalities Related Services
●Revenue from WuXi Biology grew 8.3% to RMB0.58 billion and adjusted non-IFRS gross profit grew 8.7% to RMB0.24 billion, with a gross margin of 41.5%, demonstrating 0.2pts improvement. The early stage business experienced a relatively slow growth due to the impact of global biotech funding environment.
●The Company has one of the largest discovery biology enabling platforms, with approximately 3,000 experienced scientists (across 9 campuses in China, the U.S. and Germany) who provide comprehensive biology services covering all major stages and therapeutic areas of drug discovery.
●Our comprehensive early discovery screening platform, integrating multi-technologies (HTS, DEL, ASMS, FBDD, CADD etc.) and analysis capabilities of multi-dimensional databases, provides extensive and in-depth services to clients. Meanwhile, the Company has a global leading DNA Encoded Library (DEL) serving more than 1,600 customers with over 90 billion compounds, 6,000 unique proprietary scaffolds and 35,000 building blocks, and in addition, multiple special functional libraries for targeting RNA, covalent compounds, bifunctional molecules, cyclic peptides, etc.
●The Company continues to build its biology capabilities for new modalities, including target protein degradation, nucleic acid-based and conjugated modalities, etc. By the end of the first quarter of 2023, we have cumulatively delivered more than 260 ADC discovery projects with comprehensive experiences from target identification, in vitro/in vivo proof-of-concept (PoC) to preclinical pharmacology studies, which is well recognized by our customers. During the Reporting Period, WuXi Biology revenue from new modalities grew by 40%. Its revenue contribution grew to 25.3%, suggesting that new modalities-related biology services have become an increasingly important growth driver.
—WuXi ATU: CTDMO Business Model Drives Growth
●Revenue from WuXi ATU grew 8.7% year over year to RMB0.32 billion. Revenue from our cell and gene therapy (CGT) Testing services grew 8.6%; revenue from our Development services declined 55.4% mainly due to the cancellation of certain projects in the second half of 2022; and revenue from our Manufacturing services grew 7.1%. Adjusted non-IFRS gross profit was RMB-0.02 billion, with a gross margin of -7.4%, demonstrating 0.1pts improvement. Gross profit declined mainly due to under-utilized capacity at the Shanghai Lingang site which we had closed its GMP manufacturing operations at the end of March 2023.
●The Company focused on improving our CTDMO integrated enabling platform and strengthening capabilities and capacities. We provided development and manufacturing services for 68 projects, including 52 pre-clinical and Phase I projects, 8 Phase II projects, and 8 Phase III projects (2 projects are in Biological License Application (BLA) review stage, and 2 other projects are in the BLA preparation stage). We supported a U.S. customer to complete the BLA filing for a Tumor Infiltrating Lymphocyte (TIL) product, which is expected to be the world’s first innovative TIL-based therapy. In addition, we supported a China-based customer to file BLA for Lenti-viral Vector (LVV) used in a CAR-T product, and we successfully passed the on-site extended inspection of Pre-approval Inspection by Center for Food and Drug Inspection of NMPA (CFDI), making us the first CGT CDMO in China to pass CFDI LVV on-site inspection. If these projects proceed as planned to get approvals, we expect to have commercial stage projects in the second half of 2023.
—WuXi DDSU: First Year to Receive New Drug Application (NDA) Approval of New Drugs Developed for Customers
●Revenue from WuXi DDSU declined 31.0% to RMB0.17 billion and adjusted non-IFRS gross profit was RMB0.04 billion, with a gross margin of 24.0%, demonstrating 9.1pts decline. DDSU’s revenue and profit decline was mainly due to fewer new projects as a result of decreased demands in China. The future revenue growth will gradually come from royalty income.
●In the first quarter of 2023, our success-based drug discovery service unit filed INDs for 3 drug candidates and obtained 6 Clinical Trial Approvals (CTAs). As of the end of the first quarter of 2023, we have cumulatively submitted 175 new chemical entity IND filings with the National Medical Products Administration (NMPA) and obtained 150 CTAs, with 1 project receiving NDA approval, 1 project in the NDA review stage, 6 projects in Phase III, 27 projects in Phase II, and 70 projects in Phase I, covering multiple therapeutic areas.
●Currently, we support 15 projects for customers in new modalities that include Peptide/Peptide-Drug-Conjugation (PDC), protein degraders and oligo. Several of these projects have filed IND, and multiple other projects are expected to file IND in 2023.
●In March 2023, a customer has obtained approval of a new drug to treat COVID-19 infection. Royalty income will be generated based on the sales according to the agreements with customers, which is estimated to grow with about 50% CAGR over the next 10 years as more and more products get commercialized by DDSU customers.
Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, “As global demand for life saving and innovative drugs continues to grow, demand for our integrated CRDMO and CTDMO services keeps growing. On top of an exceptionally strong year of 2022, we continued to achieve growth of revenue, net profit and free cash flow in the first quarter of 2023. Our revenue increased 5.8% year-over-year. Our adjusted non-IFRS net profit attributable to owners of the company increased 14.1% year-over-year, and our free cash flow achieved RMB1.68 billion, as a result of the Company’s relentless pursuit of operating excellence and productivity increase.”
“WuXi AppTec’s performance during the first quarter of 2023 demonstrated that the Company’s unique CRDMO and CTDMO business models can effectively meet the growing demands from customers worldwide and continue to drive solid growth for the Company. In 2023, we will achieve 5-7% revenue growth, increase adjusted non-IFRS gross profit by 12-14%, and expand free cash flow by 600-800%. We remain committed to prioritizing our customers’ needs, and remain steadfast in ‘doing the right thing and doing it right.’ The Company will continue to enhance our capacity and capabilities as we support our partners in their efforts to bring groundbreaking therapies to patients around the world, realizing our vision that ‘every drug can be made and every disease can be treated’.”
 If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 17.9% year-over-year to RMB3,576 million. Gross profit margin was 39.9%.
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 2022 and its open-access platform is enabling more than 6,000 customers 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
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 customers’ 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 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, goodwill impairment, etc. 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 capital investments and joint ventures. Neither is required by, or presented in accordance with IFRS.
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:
Ms. Ruijia Tang (for investors)
Mr. Davy Wu (for media)