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WuXi AppTec is C&EN’s 2018 Company of the Year

The pharmaceutical services contractor made news, again and again

by Jean-François Tremblay, special to C&EN
January 27, 2019 | A version of this story appeared in Volume 97, Issue 4


A 2016 photo of WuXi AppTec chair Ge Li.
Credit: Yanming Yang
WuXi chair and cofounder Ge Li in 2016

WuXi AppTec at a glance

Founded: 2000

Headquarters: Shanghai

R&D labs: 28 sites. Largest: Shanghai’s Waigaoqiao Free Trade Zone.

Manufacturing sites: Several global locations. Main ones for small molecules: Shanghai’s Jinshan area and Changzhou, China. Biologics: Wuxi, China. Cell therapy: Wuxi and Philadelphia.

Employees: 18,000, most of whom are in China

Annual sales: ~$1.5 billion (a projection based on first six months of 2018)

Sources: WuXi AppTec, C&EN.

Plus ça change . . . In 2004, C&EN ran an article on WuXi AppTec (then called WuXi PharmaTech) that opened with the observation that change at the firm had been dizzying since it was founded in 2000. The contract research and manufacturing organization had in its first few years raised its head count from 4 to 200 while signing up several of the world’s largest pharmaceutical firms as customers.

Rapid change has remained a way of life at WuXi, which now employs more than 18,000 and may be the world’s largest employer of chemists. C&EN usually selects a major chemical producer as its Company of the Year. This time, we recognize WuXi because, even by the standards of the company’s chronically frantic pace, 2018 was a banner year.

“Every drug can be made, and every disease can be treated,” is what Ge Li, WuXi’s chair and cofounder, proclaimed as his vision on the occasion of the company’s initial public offering (IPO) on the Hong Kong stock exchange in December.

Li’s words show that WuXi’s ambitions today are much loftier than they were 15 years ago, when he described his company’s main mission as providing high-quality research services at low cost. In 2018, WuXi went all out to further extend its already-wide range of services. It’s trying hard to become a company able to discover, develop, and manufacture any drug.

When Li founded WuXi in 2000, it was one of a handful of Chinese companies providing contract research services to innovative drug firms. Taking advantage of the large number of chemistry graduates in China, WuXi filled its newly built labs with enthusiastic young scientists, mostly chemists.

Previous years
2017: Chemours
2016: Evonik
2015: DowDuPont

WuXi sold its staff’s time to drug firms as “full-time equivalents” of their in-house scientists. Because WuXi paid its scientists much less than what Western drug firms paid theirs, it could promise roughly equivalent research output at a small fraction of the price. To prevent leaks of intellectual property from one customer to another, WuXi grouped its scientists in separate labs according to which foreign company they were working for.

The emergence of WuXi sent chills though Western drug-research labs. On online discussion boards, drug industry chemists are prone to blame foreign contractors like WuXi for the job losses they or their colleagues have suffered. WuXi has countered the criticism by asserting that it doesn’t aim to replace the scientists in Western drug firms but rather provide tools allowing them to be more productive.

How C&EN makes the choice

C&EN’s Company of the Year is the firm that stands out across the global chemical enterprise. Editors and reporters in C&EN’s business department start by nominating candidates. Over several weeks, the team discusses these options, winnowing the list down to three choices and then a final selection. The factors the team considers include financial and technological performance, notoriety, and the consequences—good or bad—of the company’s actions on the industry and the larger world.

From full-time equivalent chemists, WuXi rapidly expanded into other services as its business model caught on and sales surged. It began offering pharmaceutical manufacturing in 2004 and added other services in quick succession.

It also expanded internationally. In 2008, for example, it acquired AppTec Laboratory Services, a 400-employee contract research, testing, and manufacturing firm based in Saint Paul, Minnesota. Today, WuXi operates some of the world’s largest labs dedicated to antibody-drug conjugate development, drug formulation, gene sequencing, and manufacturing process testing.

WuXi has been expanding for some time, but this year it picked up the pace. In April, its small-molecule manufacturing subsidiary, STA Pharmaceutical (WuXi STA), said it will build a 30,000 m2 lab in Shanghai large enough for 500 scientists. The subsidiary already claims to employ 1,000 scientists.

Several of WuXi’s most significant moves came late in the year. In November, the firm announced the construction of a 15,000 m2 medical device testing lab in Suzhou, China, to complement similar facilities in Atlanta and Saint Paul. The new lab will be able to test medical devices for compliance with international standards while helping companies that plan to register new products in China.

Gene sequencing was another area of substantial expansion for WuXi. Building on its 2015 acquisition of the sequencing firm NextCODE, WuXi acquired Genomics Medicine Ireland in November. GMI has a bold plan to spend $400 million to map Ireland’s full human genome by enrolling about 10% of the country’s population in a sequencing program. Genetic data on Ireland’s ethnically homogeneous population will be valuable to innovative pharmaceutical firms, WuXi says.


Then in December, WuXi said it will spend $65 million in San Diego to build a bioanalytical lab and commercial-scale plant that will produce cell and gene therapy products. The firm is also expanding its capability there to do drug discovery on behalf of US and foreign customers.

While WuXi’s business initiatives were impressive, it was in the financial realm that the company made the biggest headlines last year. The Hong Kong IPO raised almost $1 billion, money that WuXi has some fairly clear ideas about how to spend.

The firm said it will invest $188 million to build or expand facilities at seven sites. For instance, in addition to the $65 million being spent in California, WuXi said it will build a $65 million R&D center in Hong Kong. WuXi also said it will put $250 million into acquiring other contract research and manufacturing firms.

An IPO is an event for any company, but the Hong Kong listing was actually WuXi’s second issue of new shares in 2018. In May, WuXi raised about $900 million from an IPO on the Shanghai Stock Exchange. The company said it will use those funds to finance the expansion of its sites in Suzhou, Tianjin, and Shanghai.

Chinese investors gave the Shanghai listing an extremely warm welcome. So warm, in fact, that in early June WuXi took the unusual step of warning investors to cool their enthusiasm for its stock. At the time, WuXi shares had risen by the daily allowed maximum of 10% for 15 days in a row.

In a lengthy analysis of WuXi’s stock published in October on Gelonghui Information, a Shenzhen-based financial news website, reporter Zuo Xiansheng observed that WuXi’s share price had more than doubled since its listing, giving the firm a total market valuation of $30 billion.

The strong market response to WuXi’s twin listings is a vindication of Li’s late 2015 decision to delist WuXi from the New York Stock Exchange. The public buyout cost Li and a consortium of investors a total of $3.3 billion. In an interview with C&EN a few months later, Li said his decision was motivated by his frustration with US investors who, in his view, didn’t support spending on new businesses that might take a few years to turn a profit.

Some company watchers maintain that WuXi has been accumulating the research capabilities of a major drug company so it could eventually become one. In the same 2016 interview, Li emphatically denied that was the case. “Why would we break something that is doing very well?” he said. “From day one, I’ve said that WuXi is not going to become a pharmaceutical company.”

Highlights of a banner year

April: Small-molecule manufacturing subsidiary WuXi STA announces construction of a lab in Shanghai large enough for 500 scientists.

May: Starts trading shares in Shanghai and sees share value ascend rapidly. In June, WuXi warns investors that they might be overenthusiastic.

October: Launches a drug-discovery venture with computational chemistry firm Schrödinger.

November: Opens a large testing facility for medical devices in Suzhou.

November: Acquires Genomics Medicine Ireland for its ability to conduct studies on a genetically homogeneous population.

December: Announces expansion of service capabilities at its San Diego site.

December: Raises $1 billion when its shares start trading on the Hong Kong stock exchange.

A few months ago, WuXi announced that it is forming a drug-discovery venture with the computational chemistry firm Schrödinger. At the time, Hui Cai, WuXi’s head of external alliances and external communications, again denied that WuXi is developing its own pharmaceutical intellectual property. “No, we don’t run our own drug-discovery programs,” she said. “We are an enabler.”

China now is slowing down in preparation for the Lunar New Year on Feb. 5, the biggest holiday of the year. For WuXi’s staffers, this should mean a few days of well-earned rest after a frenzied 2018. Then again, given the company’s track record, it’s quite likely that several of them will remain at their posts working overtime during the holiday.

Jean-François Tremblay is a freelance writer based in Hong Kong.


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