What’s New: WuXi Biologics Cayman Inc., a leading Chinese medical contract research and manufacturing company, plunged 23.8% in Hong Kong on Monday morning after the company warned of a weaker-than-expected business performance.
In a business update released Monday, WuXi Biologics stated it is likely to miss its annual growth target due to weaker biotech funding, sliding Covid-19 related incomes and a broader industry slowdown.
A funding slowdown has led to a reduction in new drug research projects this year, erasing nearly $300 million in revenues, said the company. Meanwhile, delayed regulatory approvals for three new medicines have affected the company’s income by about $100 million, it said.
WuXi Biologics estimated a gross net loss of $100 million in 2023 amid a ramp-up of production capacity and business slowdown.
Concerns over the company's business outlook sparked selloffs, erasing HK$44 billion ($5.6 billion) from its market value during morning trading. WuXi Biologics’ market cap stood at about HK$141.1 billion ($18 billion) before it halted trading midday, citing pending disclosure. The company’s stock has slid 45% this year amid declines in sales and profit growth.
The context: WuXi Biologics is a major contactor of medical research and manufacturing. It has supplied ingredients for AstraZeneca Plc’s Covid-19 vaccine.
WuXi Biologics previously projected a 30% revenue growth for 2023, contingent on an industrywide expansion of 15%. However, in the Monday update, the company said it foresees industry growth below 10% over the next two years due to slower funding support.
The company said it expects a “positive turnaround” in the second half of 2024 and steady growth over the next several years.
Medical contract outsourcing service providers, a key segment of the pharmaceutical industry with many leading players in China, have experienced a slowdown this year as investors become more cautious about pouring money into new drug developments.
According to recent research by Pacific Securities, investment deals in the global healthcare industry decreased by 9% in October from the previous month, with the total transaction value plunging by 19%. In China, the number of deals dropped by 26% in October from September, with the deal value sliding by 24%.
Contact reporter Han Wei (weihan@caixin.com)
Get our weekly free Must-Read newsletter.
