• Revenue of RMB9,908 Million in the Second Quarter, Up 6.7% Year-over-Year;
Excluding COVID-19 Commercial Projects, Up 39.5%
• Revenue of RMB18,871 Million in the First Half, Up 6.3% Year-over-Year;
Excluding COVID-19 Commercial Projects, Up 27.9%
• Net Profit Attributable to Owners of the Company for the First Half Increased 14.6% to RMB 5,313 Million
• Diluted Earnings per Share (EPS) for the First Half Increased 20.9% to RMB1.79
• Adjusted Non-IFRS Net Profit Attributable to Owners of the Company for the First Half Increased 18.5% to RMB5,095 Million
• Adjusted Non-IFRS Diluted EPS for the First Half Increased 18.5% to RMB1.73
• Free Cash Flow Achieved RMB2,926 Million for the First Half, Turned Positive and Grew Strongly
 In the first half year of 2022 and 2023, WuXi AppTec had a fully-diluted weighted average share count of 2,951,897,466 and 2,949,311,622ordinary shares, respectively.
(SHANGHAI, July 31, 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 half ending June 30, 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 Interim 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 Interim Report of the Company has not been audited.
Second Quarter 2023 Financial Highlights
Revenue grew 6.7% year-over-year to RMB9,908 million, excluding COVID-19 commercial projects, revenue grew strongly by 39.5%. This is primarily attributable to the Company’s continued excellent execution of our unique Contract Research, Development and Manufacturing Organization (CRDMO) business model to achieve strong synergy and continuous growth:
• WuXi Chemistry revenue grew 2.6% year-over-year to RMB7,034 million, excluding COVID-19 commercial projects, revenue grew strongly by 51.6%. Adjusted non-IFRS gross profit grew 12.9% year-over-year to RMB3,216 million, with a gross profit margin of 45.7%.
• WuXi Testing revenue grew 23.6% year-over-year to RMB1,638 million and adjusted non-IFRS gross profit grew 36.2% year-over-year to RMB640 million, with a gross profit margin of 39.1%.
• WuXi Biology revenue grew 17.5% year-over-year to RMB656 million and adjusted non-IFRS gross profit grew 21.3% year-over-year to RMB 271 million, with a gross profit margin of 41.4%.
• WuXi ATU revenue grew 22.9% year-over-year to RMB389 million and adjusted non-IFRS gross profit was RMB(16) million, with a gross profit margin of (4.2)%
• WuXi DDSU revenue declined 17.9% year-over-year to RMB176 million and adjusted non-IFRS gross profit grew year-over-year 5.2% to RMB63 million, with a gross profit margin of 35.8%. Meanwhile, we received the first royalty income from customers in the second quarter, which is a breakthrough for DDSU.
Notes: 1. Adjusted non-IFRS gross profit of WuXi ATU was RMB(16.34) million in Q2 2023, compared to RMB(20.40) million in Q2 2022, an increase of RM4.05 million.
2. Any sum of the data above that is inconsistent with the total is due to rounding.
• IFRS gross profit increased 18.1% year-over-year to RMB4,030 million. Gross profit margin was 40.7%
• Adjusted non-IFRS gross profit increased 16.4% year-over-year to RM4,177 million. Adjusted non-IFRS gross margin was 42.2%.
• Net profit attributable to owners of the Company increased 5.1% year-over-year to RMB3,145 million.
• Adjusted non-IFRS net profit attributable to owners of the Company increased 22.4% year-over-year to RMB2,753 million.
First-Half 2023 Financial Highlights
Revenue grew 6.3% year-over-year to RMB18,871 million, excluding COVID-19 commercial projects, revenue grew strongly by 27.9%. This is primarily attributable to the Company’s continued excellent execution of our unique Contract Research, Development and Manufacturing Organization (CRDMO) business model to achieve strong synergy and continuous growth:
• WuXi Chemistry revenue grew 3.8% year-over-year to RMB13,467 million, excluding COVID-19 commercial projects, revenue grew strongly by 36.1%. Adjusted non-IFRS gross profit grew 14.9% year-over-year to RMB6,103 million, with a gross profit margin of 45.3%.
• WuXi Testing revenue grew 18.7% year-over-year to RMB3,091 million and adjusted non-IFRS gross profit grew 26.1% year-over-year to RMB1,168 million, with a gross profit margin of 37.8%.
• WuXi Biology revenue grew 13.0% year-over-year to RMB1,233 million and adjusted non-IFRS gross profit grew 15.1% year-over-year to RMB511 million, with a gross profit margin of 41.5%.
• WuXi ATU revenue grew 16.0% year-over-year to RMB714 million and adjusted non-IFRS gross profit was RMB(40) million, with a gross profit margin of (5.7)%.
• WuXi DDSU revenue declined 24.9% year-over-year to RMB342 million and adjusted non-IFRS gross profit declined 26.2% year-over-year to RMB103 million, with a gross profit margin of 30.1%. Meanwhile, DDSU achieved a breakthrough in receiving the first royalty income from customers.
 If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 19.6% year-over-year to RMB4,070 million. Gross profit margin was 41.1%.
• IFRS gross profit increased 17.6% year-over-year to RMB7,556 million. Gross profit margin was 40.0%.
• Adjusted non-IFRS gross profit increased 15.7% year-over-year to RMB7,855 million. Adjusted non-IFRS gross margin was 41.6%.
• Net profit attributable to owners of the Company increased 14.6% year-over-year to RMB 5,313 million.
• Adjusted non-IFRS net profit attributable to owners of the Company increased 18.5% year-over-year to RMB5,095 million.
• Diluted EPS increased 20.9% year-over-year to RMB1.79, while adjusted diluted non-IFRS EPS increased by 18.5% year-over-year to RMB1.73.
• Free cash flow achieved RMB2,926 million, turned positive and grew strongly year-over-year.
 If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 18.8% year-over-year to RMB7,646 million. Gross profit margin was 40.5%.
First-Half 2023 Business Operation Highlights
Ø As an industry innovation enabler, we grow together with our customers. In the first half of 2023, we added over 600 new customers, and in total we served more than 6,000 active customers over the past 12 months. Backlog grew 25% year-over-year excluding COVID-19 commercial projects. 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 streams from customers across regions ensure the stability and resilience of the Company’s financial performance.
• Revenue from US-based customers was RMB12.37 billion for the first half of 2023, excluding COVID-19 commercial projects, revenue grew 42% year-over-year; revenue from Europe-based customers grew 19% to RMB2.22 billion; revenue from China-based customers grew 6% to RMB3.23 billion; and revenue from other regions grew 6% to RMB1.04 billion.
• We have built a large and growing customer base with very strong customer stickiness. In the first half of 2023, nearly 99% of total revenue was generated from existing customers, reaching RMB18.65 billion, which grew 30% year-over-year excluding COVID-19 commercial projects. At the same time, our new customers have provided us with broader opportunities to continuously follow new technologies and new modalities, in addition to their revenue contribution of RMB0.22 billion.
• We continued to execute our “long-tail” strategy and increase our support to large biopharmaceutical companies. In the first half of 2023, revenue from the top 20 global pharmaceutical companies was RMB7.14 billion, which grew strongly by 47% year-over-year excluding COVID-19 commercial projects. Revenue generated from all other customers maintained growth momentum and grew 20% year-over-year to RMB11.73 billion.
• 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 RMB17.33 billion in revenue, growing by 37% year-over-year excluding COVID-19 commercial projects, accounting for an increased proportion of the Company's revenue at 92%.
Ø WuXi Chemistry: Integrated CRDMO Business Model Drives Steady Growth, with Continued Expansion in New Modalities (WuXi TIDES)
• Q2 2023 revenue grew 2.6% year-over-year to RMB7.03 billion, excluding COVID-19 commercial projects, revenue grew strongly by 51.6%; H1 2023 revenue grew 3.8% year-over-year to RMB13.47 billion, excluding COVID-19 commercial projects, revenue grew strongly by 36.1%. H1 2023 adjusted non-IFRS gross profit margin was 45.3% with 4.4pts year-over-year improvement, besides FX impact, thanks to favorable mix and efficiency improvement.
• Drug discovery services (“R”) continued to generate downstream opportunities.
i. In the past 12 months, we successfully synthesized and delivered more than 420,000 new compounds to customers, which grew 20% year-over-year. Through our chemistry drug discovery services, we enabled our customers to accelerate their research while generating opportunities for our downstream business units. In the past 12 months, 120 molecules have transitioned from R to D&M, representing a year-on-year growth of 21%. Through our “follow-the-customer” and “follow-the-molecule” strategies, we established trusted partnerships with our global customers, supporting the sustainable growth of our CRDMO business.
ii. We continued executing our “long-tail” strategy. Demand from “long-tail” customers in discovery services of small molecule and new modalities continued to grow, with the number of new customers growing 17% year-over-year.
• Development and manufacturing (D&M) services delivered strong growth.
i. In the first half of 2023, D&M services revenue grew 2.1% year-over-year to RMB9.67 billion. Excluding COVID-19 commercial projects, D&M services revenue grew strongly by 54.5%.
ii. In the first half of 2023, we added 583 molecules to our D&M pipeline. To date, our D&M pipeline consists of 2,819 molecules, including 56 commercial projects, 59 in phase III, 301 in phase II and 2,403 in phase I and pre-clinical stages, among which, 8 commercial and phase III projects were added in the first half of 2023.
• Specifically, TIDES business (mainly oligo and peptides) continued to expand.
i. In the first half of 2023, TIDES revenue grew 37.9% year-over-year to RMB1.33 billion. As of June 30, 2023, backlog of TIDES grew strongly by 188% year-over-year. We expect revenue growth from TIDES business to exceed 70% in 2023.
ii. The number of TIDES D&M customers increased 25% year-over-year to 121, and the number of TIDES molecules increased 46% year-over-year to 207.
Ø WuXi Testing: Lab Testing Services Drive Steady Growth, Clinical Business Fully Recovered
• Q2 2023 revenue from WuXi Testing grew 23.6% year-over-year to RMB1.64 billion; H1 2023 revenue grew 18.7% year-over-year to RMB3.09 billion. H1 2023 adjusted non-IFRS gross profit margin was 37.8% with 2.2pts year-over-year improvement, besides FX impact, thanks to the full recovery of clinical business and efficiency improvement.
• Q2 2023 revenue from lab testing services grew 21.4% year-over-year to RMB1.19 billion; H1 2023 revenue grew 18.8% year-over-year to RMB2.25 billion.
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.
ii. H1 2023 revenue from drug safety evaluation services grew 24% year-over-year. We maintained our industry leadership position in Asia Pacific for drug safety evaluation services that meet global regulatory requirements. In the first half of 2023, new lab testing facilities in Qidong and Suzhou began operations as scheduled, ensuring the business growth to accelerate in the second half of 2023.
iii. Moreover, we continued to enhance capabilities related to new modalities, with comprehensive coverage such as target protein degradation, nucleic acids, conjugates, and cell and gene therapies (CGT), etc.
i. SMO revenue grew strongly by 53.9% in Q2 2023 and 34.3% in H1 2023, maintaining a leadership position in China. In the first half of 2023, SMO supported 25 new drug approvals for customers.
ii. In the first half of 2023, clinical CRO enabled our customers to obtain 8 IND approvals and submit 3 NDA filings.
Ø WuXi Biology: Strong Contribution from New Modalities; Early Discovery Screening Platform Continued to Generate Downstream Opportunities
• Q2 2023 revenue from WuXi Biology grew 17.5% year-over-year to RMB0.66 billion; H1 2023 revenue grew 13.0% year-over-year to RMB1.23 billion. H1 2023 adjusted non-IFRS gross profit margin was 41.5% with 0.7pts year-over-year improvement.
• 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), to provide a full range of biological services and solutions to customers.
• The Company focused on improving capabilities related to new modalities. The number of customers and projects served by our nucleic acid platform continued to increase. Cumulatively, we have provided services to over 110 customers, and have successfully delivered over 700 projects since 2021. In the first half of 2023, WuXi Biology revenue from new modalities grew strongly by 51% year-over-year, contributing 25.4% of WuXi Biology revenue.
• The comprehensive early discovery screening platform integrates multi-technologies (HTS, DEL, ASMS, FBDD, CADD etc.) and analysis capabilities of multi-dimensional databases, which can provide 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 function libraries for targeting RNA, covalent compounds, bifunctional molecules, and cyclic peptides, etc. In the first half of 2023, it continued to generate downstream opportunities and contributed more than 20% of the new customers to the Company.
Ø WuXi ATU: CTDMO Business Model Drives Growth
• Q2 2023 revenue from WuXi ATU grew 22.9% year-over-year to RMB0.39 billion; H1 2023 revenue grew 16.0% year-over-year to RMB0.71 billion. H1 2023 adjusted non-IFRS gross profit margin was (5.7)% with 1.3pts year-over-year improvement. By the end of June 2023, backlog grew 28.8% year-over-year.
• The Company focused on improving our CTDMO integrated enabling platform and strengthening capabilities and capacities. We provided development, testing and manufacturing services to 69 projects, including 7 Phase III projects (2 projects in BLA review stage, and 2 projects in BLA preparation stage), 10 Phase II projects and 52 pre-clinical and Phase I projects.
• In the first half, we supported a customer to complete the BLA filing for a Tumor Infiltrating Lymphocyte (TIL) product with the FDA, which is expected to be the world’s first innovative TIL-based therapy. In addition, we supported a customer to file BLA for Lenti-viral Vector (LVV) used in a CAR-T product, and became the first CGT CDMO in China to pass Center for Food and Drug Inspection of NMPA (CFDI) LVV on-site inspection. We expect that our customers will obtain approval for their products in the second half of 2023. Moreover, we completed the technology transfer for the manufacturing of a blockbuster commercial CAR-T product, which is expected to start commercial manufacturing after FDA approval in the second half of 2024. In June 2023, we signed an LVV manufacturing contract with a large pharmaceutical customer used in a commercial CAR-T product, which is expected to start manufacturing in the first half of 2024.
Ø WuXi DDSU: the First Year to Receive New Drug Application (NDA) Approval of New Drugs Developed for Customers; Breakthrough to Receive the First Royalty Income
• Q2 2023 revenue from WuXi DDSU declined 17.9% year-over-year to RMB0.18 billion; H1 2023 revenue declined 24.9% year-over-year to RMB0.34 billion. H1 2023 adjusted non-IFRS gross profit margin was 30.1%, a 0.6pts year-over-year decline.
• In the first half of 2023, 2 new drugs developed for our customers have obtained National Medical Products Administration (NMPA) approvals, including one for COVID-19 infection treatment and the other for tumor treatment. We have received the first royalty income in the second quarter of 2023. Royalty income is estimated to grow with more than 50% CAGR over the next 10 years as more and more products are commercialized by customers.
• In the first half of 2023, we supported customers to file INDs for 12 drug candidates and obtain 11 Clinical Trial Approvals (CTAs). Cumulatively, we have submitted 184 new chemical entity IND filings with NMPA and obtained 155 CTAs for customers, among which 2 projects have obtained NDA approvals, 2 projects are in the NDA review stage, 5 projects are in Phase III, 30 projects are in Phase II, and 70 projects are in Phase I, covering multiple therapeutic areas.
• Currently, we support 17 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 projects are expected to file IND in 2023.
Our Commitment to ESG
As an industry innovation enabler, a trusted partner and a contributor to the global healthcare industry, the Company is committed to environmental protection and sustainability, and to being a good global corporate citizenship.
Our outstanding ESG performance has been recognized by major global ESG rating agencies, including MSCI, S&P Global, Sustainalytics, CDP and EcoVadis. In June 2023, we received the fourth “Silver” medal recognition from EcoVadis for our Couvet site in Switzerland.
By the first half of 2023, our carbon emission intensity, energy consumption intensity and water use intensity reduced by 20.1%, 18.4%, and 31.6%, respectively, as compared to the baseline year 2020.
As we continue to advance our sustainability strategy, we embrace our shared responsibility to be good stewards of the environment.
Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, “We continued to achieve steady growth of revenue, net profit, and free cash flow in the first half of 2023. Our revenue increased 6.3% year-over-year to RMB18.87 billion, or 27.9% if excluding COVID-19 commercial projects. Our adjusted non-IFRS net profit attributable to owners of the Company increased 18.5% year-over-year, outpacing the revenue growth rate, and our free cash flow achieved RMB2.93 billion, as a result of the Company’s pursuit of operational excellence and productivity.”
“The Company’s performance in the first half of 2023 demonstrated that WuXi AppTec’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 aim to deliver a 5-7% revenue growth, increase adjusted non-IFRS gross profit by 13-14%, and expand free cash flow by 750-850%. We remain committed to prioritizing our customers’ needs and enhancing our capacity and capabilities as we support our customers’ efforts to bring groundbreaking therapies to patients around the world. Together, we can realize our vision that ‘every drug can be made and every disease can be treated’.”
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, non-financial assets 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)