WuXi Biologics reports 2023 annual results

WuXi Biologics (Cayman) Inc. announced its audited annual results for the year ended December 31, 2023.

2023 financial highlights

• Revenue: The Group’s revenue increased to RMB17,034.3 million with an increase of 11.6% y-o-y. The increase was primarily attributed to: (i) the successful execution of the Group’s “Follow and Win the Molecule” strategies, coupled with the leading technology platform, best-in-industry timeline and excellent execution track record, contributing to the growth of the Group’s revenue; (ii) enlarged spectrum of services offered to the biologics industry, fast-growing technology platforms including ADCs and bispecific antibodies, contributing to the Group’s revenue stream; (iii) the growth of research services revenue generated from the Group’s various cutting-edge technologies; and (iv) the utilization of existing and newly expanded capacities, including ramp-up of the manufacturing sites in Europe and the U.S..
• Gross profit and gross profit margin: The Group’s gross profit increased by 1.5% to RMB6,827.9 million, with a gross profit margin of 40.1%. The decrease of gross profit margin was mainly due to the expected ramp-up impact of new manufacturing facilities in Ireland, Germany, and the U.S., which was partially offset by the efficiency achieved from WBS and other continuous improvement initiatives.
• Net profit & net profit attributable to owners of the company: Net profit and net profit attributable to owners of the Company for the Reporting Period amounted to RMB3,570.6 million and RMB3,399.7 million respectively, representing a 21.5% and 23.1% decrease compared to the same period last year. The decreases were mainly due to: (i) a decrease in gross profit margin due to the ramp-up impacts; (ii) a decrease in investment gains and losses due to the downturn in the capital market; (iii) a decrease in foreign exchange gains; (iv) increases in selling and marketing expenses, administration expenses and R&D expenses; and (v) the listing expenses associated with the separate listing of WuXi XDC.
• Adjusted net profit: Excluding non-recurring investment gains and losses, foreign exchange impact, share-based compensation, and the WuXi XDC listing expenses, the Adjusted Net Profit for the period decreased by 2.0% y-o-y to RMB4,950.4 million. Margin of adjusted net profit was 29.1%.
• Basic Earnings Per Share (EPS): Basic EPS and adjusted basic EPS were RMB0.82 and RMB1.13, respectively.
• In 2023, the Group’s Free Cash Flow reached RMB0.6 billion, solidifying a strong financial foundation to support the Group’s ongoing capacity enhancement, globalization efforts, and continuous investment in cutting-edge technologies.

2023 business highlights

• Amid a challenging macroeconomic environment post Covid-19, the Group maintained its stable growth trajectory, underpinned by its unique CRDMO business model and the successful execution of its “Follow and Win the Molecule” strategies.
• The total number of integrated projects rose to a new height of 698 with 132 new integrated projects added to the pipeline, setting a historic record for non-Covid project additions within a fiscal year. 51 late-phase projects and 24 commercial manufacturing projects provided a solid foundation for the Group’s continued revenue growth.
• The “Win-the-Molecule” strategy further propelled the growth of the project pipeline by contributing 18 external projects, including a record high of 9 late-phase and commercial manufacturing projects, which will boost near-term revenue growth and elevate long-term growth prospects.
• As of Dec 31, 2023, the Group’s total backlog, which includes Services and Milestones, reached US$20,592 million. Of this total, Services accounted for US$13,398 million and Milestones contributed US$7,194 million, ensuring sustainable growth in both the short and long term.
• Bolstered by a robust non-Covid pipeline, the Group’s non-Covid business maintained strong growth momentum with a notable 37.7% y-o-y revenue increase, reinforcing the Group’s outlook for sustained long-term growth.
• Late-phase and commercial manufacturing revenue increased to RMB7,731.5 million, accounting for 45.4% of the total revenue in 2023, driven by the accelerated momentum of the Group’s late-stage and commercial manufacturing businesses. Excluding Covid-19 projects, revenue from late-phase and commercial manufacturing grew substantially by 101.7% y-o-y, showcasing the Group’s continued growth momentum in the post-Covid era.
• Leveraging industry-leading technology platforms, the Group’s research business has flourished, establishing numerous drug discovery collaborations with a wide range of clients. Notable examples include a research service agreement with GSK plc (LSE/NYSE: GSK) for multiple novel bi- & multi-specific TCEs antibodies, and a research service agreement with BioNTech SE  for the discovery of investigational monoclonal antibodies (mAbs). These partnerships underscore the Group’s strong research capabilities – the “R” in its CRDMO business model.
• The Group is devoted to providing a full range of CRDMO services through its industry-leading and globally accessible proprietary technology platforms. By the end of 2023, the Group boasted a diverse portfolio with 114 bispecific projects, including 45 WuXiBodyTM projects, 143 ADC projects, and 25 vaccine projects on its integrated platforms. These advanced platforms not only underpin the Group’s integrated CRDMO business model but are also pivotal in driving the Group’s ongoing growth.
• To address burgeoning capacity demands and fulfill its “Global Dual Sourcing” strategy, the Group is enhancing its global footprint through capacity increases in Ireland, Germany, the U.S., and Singapore. With diversified manufacturing facilities in China, the U.S., Ireland, Germany, and Singapore, the Group offers a versatile and robust global supply chain network, ensuring it can meet the needs of its clients and partners around the world.
• To maximize its business potential, the Group’s subsidiary, WuXi XDC Cayman Inc., a leading global CRDMO focused on ADC and the broader bioconjugate market, was listed on the Main Board of the Hong Kong Stock Exchange on November 17, 2023 (stock code: 2268.HK), embarking on a new chapter of growth and opportunity.
• Excluding Covid-19 projects, the combined revenue from the North American and European markets grew strongly by 52.5% y-o-y. Furthermore, non-Covid revenue from Europe saw a significant surge of 172.4%, fueled by ongoing business momentum and enhanced global outreach.
• The Group has consistently advanced its WBS initiatives, implementing over 370 WBS projects in 2023 and achieving cost savings exceeding RMB245 million across materials, capital expenditure, and operating expenses. Moreover, these initiatives have resulted in a significant reduction in inventory, equivalent to RMB270 million. The Group is committed to further developing WBS as a management system to drive continuous improvement and create value for its clients and partners.
• The Group continues to adhere to the highest quality standards, and has completed 33 regulatory inspections conducted by the U.S. FDA, EU EMA, China NMPA and other global regulatory agencies since 2017.
• As of Dec 31, 2023, the Group’s total staff reached 12,740, with a top-tier biologics development team of 4,432 scientists. The Group’s international hiring has been fruitful. Talent retention has remained robust, with a key talent retention rate of approximately 97%, surpassing the industry average.
• The Group has incorporated Environmental, Social and Governance (ESG) as an essential part of its sustainable business growth strategies. The Group’s ESG performance has been evaluated by major ESG rating agencies and institutional investors, resulting in recognitions that include: listing on the Dow Jones Sustainability™ World Index and Emerging Markets Index; an MSCI AAA Rating; the EcoVadis Platinum Medal; ranking as a Sustainalytics Industry and Regional Top-Rated Company; and scoring a CDP “A” rating for water security and “A-” for climate change.

Amidst an increasingly dynamic macroeconomic environment in 2023, the Group maintained its growth momentum supported by strong execution, advanced technologies, flexible manufacturing capacities, a premier quality system, and a persistent pursuit of operational excellence. Adhering to its “Follow and Win the Molecule” strategies and capitalizing on its distinctive CRDMO business model, the Group will continue to build momentum around its long-term growth and accelerate the empowerment of global partners for the benefit of patients worldwide.

Solid business performance sustained despite macroeconomic uncertainties
Throughout 2023, the Group adeptly navigated the global biopharmaceutical industry’s evolving dynamics and maintained strong business momentum by executing its “Follow and Win the Molecule” strategies and leveraging its unique CRDMO business model. The Group added 132 new integrated projects, reaching an all-time high (excluding Covid-19 projects) since its inception, which brought the total number of integrated projects to 698. In addition, 51 late-phase projects and 24 commercial manufacturing projects laid a solid foundation for the Group’s enduring revenue growth.

The Group’s revenue exceeded RMB17.0 billion in 2023, marking a 11.6% increase from 2022. This growth was propelled by a robust non-Covid pipeline, which resulted in a 37.7% y-o-y increase in non-Covid revenue. The booming development of the non-Covid business more than offset the sales decline in the Covid sector.

As of Dec 31, 2023, total backlog, service backlog and milestone backlog reached US$20,592 million, US$13,398 million and US$7,194 million respectively, providing high visibility of the Group’s sustainable growth. Backlog within three years increased to US$3,850 million, reinforcing stable short-term growth.

Even with the strong backlog and a record number of projects, the Group is still able to start any new project within four weeks, supported by its strong capabilities and ample capacity.

Late-phase and commercial manufacturing projects drive future growth
With the execution of its proven “Follow and Win the Molecule” strategies, the Group accelerated business momentum in late-stage and commercial manufacturing projects. By the end of the Reporting Period, the number of late-phase and commercial manufacturing projects had increased to 51 and 24 respectively. Late-phase and commercial manufacturing revenue increased by 12.8% y-o-y to RMB7,731.5 million, accounting for 45.4% of the total revenue in 2023. Excluding Covid-19 projects, late-phase and commercial manufacturing revenue saw a remarkable 101.7% y-o-y increase, indicating strong future growth potential.

During the Reporting Period, one of the Group’s strategic partners, Amicus Therapeutics, Inc. , received the U.S. FDA, the U.K. MHRA and the European Commission’s approval for Pombiliti™, a long-term enzyme replacement therapy used in combination with miglustat therapy for adults with late-onset Pompe disease. Pombiliti™ was initiated within the Group in 2012, starting from a mere concept and has since achieved commercialization. This success was made possible through the Group’s proprietary integrated technology platform and extensive manufacturing capabilities. Such an achievement truly attests to the effectiveness of the Group’s long-standing “Follow the Molecule” strategy, which turns concepts into commercialized biologics therapeutics.

Leveraging its track record of reliable execution, swift timelines and cutting-edge technology, the Group has forged an outstanding reputation for its capabilities and scale in commercial manufacturing, garnering widespread recognition from global customers. During the Reporting Period, the Group’s “Win-the-Molecule” strategy continued to accelerate pipeline expansion by adding 18 external projects, including a record-breaking 9 late-phase and commercial manufacturing projects. This strategy will continue to spur the rise of late-phase and commercial revenues and contribute to the Group’s long-term growth.

Management comment
Dr Chris Chen, CEO of WuXi Biologics, said, “Despite challenges from an uncertain macroenvironment, our unique CRDMO business model and the successful implementation of ‘Follow and Win the Molecule’ strategies led to new opportunities and stable growth in 2023. With a notable recovery in the second half, 132 new integrated projects were added during the year, including a record increase in non-Covid projects. The total number of integrated projects grew to 698, featuring 51 in late-phase and 24 in commercial manufacturing, underscoring our continued strong growth momentum. The ‘Win-the-Molecule’ strategy introduced 18 external projects, including a record 9 late-phase and commercial manufacturing projects, reflecting increased recognition from global customers. Powered by a robust pipeline, the non-Covid sector remained a pivotal growth driver, with overall non-Covid revenue increasing by 37.7% y-o-y and revenue from non-Covid late-phase and commercial manufacturing surging by 101.7% y-o-y. With active business development and enhanced global presence, non-Covid revenue from North America and Europe witnessed a rapid 52.5% y-o-y growth, fueled by deeper collaboration and strong industry trust.”

Dr Chris Chen added, “In 2023, we achieved positive advancements across our Research, Development, and Manufacturing segments. In Research, we secured service agreements with GSK and BioNTech, demonstrating the capabilities of our integrated discovery platforms in enabling global partners to develop new modalities. In Development, we facilitated 110 INDs for global clients, and launched new technology platforms such as WuXiUITM and WuXiHighTM. We will continue to invest in cutting-edge technologies and enhance our R&D capabilities to maintain our position at the technological forefront, ensuring the delivery of high-quality results to our customers. In Manufacturing, with 24 ongoing projects and an expected rise in commercial projects and potential blockbusters, we anticipate a bright future for growth. To support this accelerated momentum, we have furthered our ‘Global Dual Sourcing’ strategy and increased global capacity with solid free cash flow, laying the groundwork for a comprehensive global biomanufacturing network with major operations in China, the U.S., Ireland, Germany, and Singapore.

In the face of uncertainties, we are dedicated to finding certainty and stability through our strategic initiatives. Looking ahead to 2024, we are committed to serving and contributing to the global healthcare community, adhering to the highest standards of compliance and the legal requirements of all jurisdictions where we operate. In our pursuit to deepen trust with our customers and enhance collaboration, we will continue to improve operational efficiency through additional WBS efforts, while steadfastly upholding global ESG and quality standards. Our ongoing investments in capabilities, capacity, and innovative technology platforms will drive the acceleration and transformation of biologics discovery, development, and manufacturing processes worldwide, benefiting global partners and patients alike.”

Dr Ge Li, Chairman of WuXi Biologics, concluded, “WuXi Biologics continued to achieve consistent and steady business growth, driven by our distinctive CRDMO business model and a steadfast commitment to meeting our customers’ needs. Looking ahead, we will adhere to our end-to-end CRDMO model, further improve our execution capabilities, enhance our global footprint, and strive for operational excellence, all while maintaining a customer-centric approach. We remain dedicated to delivering groundbreaking therapies to patients and fulfilling our vision that ‘every drug can be made and every disease can be treated’.”

Key financial ratios
(For the Twelve Months Ended Dec 31)

MB Bureau