China's WuXi Expands In U.S.

WuXi Pharmatech, China's leading provider of chemistry research services to the global pharmaceutical industry, is paying about $140 million to acquire AppTec, a U.S.-based provider of biology services and medical devices.

"Many of our customers are developing both small molecules and biological drugs," said Li Ge, the founder, chairman, and CEO of Shanghai-based WuXi, during a conference call with analysts. "The acquisition enables WuXi to immediately obtain biologics capabilities and expertise."

WuXi's sales will increase by about 50% as a result of the deal. Last year, the Chinese firm posted sales of close to $135 million, while AppTec booked revenues of $71 million. AppTec will add 495 U.S.-based employees to the 2,700 WuXi has in China.

WuXi says the deal will bring it capabilities that no Chinese firm offers at present. Last year, Minnesota-based AppTec derived two-thirds of its revenue from biological testing and one-third from medical devices. With facilities in Philadelphia, Atlanta, and St. Paul, Minn., the 20-year-old firm has expertise in biological safety testing and viral clearance. It can test medical devices and manufacture cellular and protein therapeutics.

Li founded WuXi in 2000 after returning from the U.S., where he had been head of research at the drug discovery firm Pharmacopeia. The company he created has been a runaway success. Last year's sales were more than six times what it reported in 2004. WuXi went public on the New York Stock Exchange last August and now has a market capitalization of nearly $2 billion.

Li says customers are asking for an increasingly wide range of services. With the AppTec acquisition, WuXi says it will be able to provide chemistry, biology, and manufacturing services spanning the entire drug development chain from early-stage discovery to commercialization. Aptuit, a three-year-old Connecticut-based company, is trying to assemble a similar suite of services (see page 33).