As the Chinese contract manufacturer awaits the U.S. Senate’s consideration of the BIOSECURE Act, it has added 800 new customers in the first nine months of 2024, while being hit with a 2% revenue decline in the third quarter.
With the BIOSECURE Act looming, WuXi AppTec released a business report on Monday, touting revenue and profit growth in the first three quarters of 2024 amid “external challenges” from the proposed legislation seeking to restrict American companies from working with Chinese firms.
In addition to its new clients, the China-based CDMO said it was able to retain its existing active customer base of more than 6,000 companies. Most of its new contracts were early- or mid-stage projects, with only 20 commercial or Phase III assets secured so far this year, according to a company presentation. In total, WuXi AppTec added 915 molecules in the first three quarters of 2024.
In Q3, WuXi AppTec recorded around $1.46 billion in total revenue, a 2% year-over-year decline. Almost all its business segments took a sales hit, most notably the company’s domestic drug discovery division which suffered a 78.2% decline in revenue. Meanwhile, its biggest division—WuXi Chemistry—grew 1.4% to bring in $1.1 billion in the quarter.
Still, chairman and CEO Ge Li in a statement called the company’s Q3 performance “steady,” choosing to focus on its results excluding COVID-19 and touting 14.6% year-over-year growth in Q3.
For the full year 2024, WuXi AppTec expects to generate $5.36 billion to $5.67 billion in revenue, with free cash flow of $840 million to $980 million.
“Although the recently proposed U.S. legislation may create short-term uncertainty for the global pharmaceutical and life sciences industry, WuXi AppTec remains steadfast in ‘doing the right thing and doing it right,’” Li said, noting that the company will continue to “enhance our capabilities and capacity” to better support its customers in developing treatments for patients worldwide.
WuXi AppTec’s financial results on Monday suggest for now that the CDMO is remaining resilient in the face of the BIOSECURE Act threat in the U.S.—its biggest market.
The BIOSECURE Act, introduced in January 2024, is aimed at keeping U.S. taxpayer dollars from biotech companies of national concern, particularly those aligned with the Chinese government. WuXi AppTec is explicitly named by the proposed legislation, alongside WuXi Biologics, Beijing Genomics Institute, MGI and Complete Genomics.
Last month, the U.S. House of Representatives overwhelmingly passed the BIOSECURE Act, which moves on to the Senate for consideration and where strong bipartisan support is expected.
Several industry players are strongly in favor of the bill—including the Biotechnology Innovation Organization and manufacturing service providers—but other analysts point to supply chain vulnerabilities that the legislation would potentially aggravate. A June 2024 report from GlobalData noted that nearly 50 U.S.-based companies currently have contracts with Chinese firms, and that the BIOSECURE Act could disrupt the supply of many drugs—both commercially available or in clinical trials.
