WuXi Focuses On Expansion with $165 Million Loan, Subsidiary Stock Offering and New Offices
WuXi PharmaTech appears to be gearing up to expand its manufacturing capacity and boost its services from discovery all the way through commercial manufacturing.
WuXi is borrowing up to $165 million from a consortium of banks in Asia, led by Citibank, to help fund new manufacturing capacity. The loan will help fund a nearly $150 million effort to double small molecule API manufacturing capacity at WuXi’s Changzhou facilities by late 2015 or early 2016. WuXi is also building commercial biologics manufacturing capacity in WuXi City, to be completed by late 2016 at a cost of about $150 million, and two cell therapy manufacturing plants in Philadelphia, Pa., USA, which will cost about $40 million. WuXi plans to invest about $200 million in new capacity in 2015, up from $110 million in 2014.
WuXi management is committed to aggressive growth, and its series of announcements reflect that commitment. After years of 20%+ annual revenue growth, the company’s top line grew “just” 17% in 2013 and is on a similar track for 2014; the slowdown reflects, in part, the law of large numbers as revenues are now over $500 million. In addition, there are signs that growth in some of its legacy business lines like discovery chemistry has begun to slow. Expanding its capabilities in biologics positions the company better for the faster growing segment of the market, although the cell therapy business is more risky than traditional biomanufacturing.
In addition to the growth theme, WuXi is on record as wanting to offer an end-to-end pharmaceutical development business model, and its investment and acquisition efforts are helping to fill out the offering. The NextCODE acquisition strengthens discovery biology services and probably helps discovery chemistry by building a more complete offering.
This article is reprinted from the March 2015 issue of Emerging Markets Outsourcing Report. To learn more, click here.
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