WuXi AppTec Revenue Surpassed RMB40 Billion in 2023, and Adjusted Non-IFRS Net Profit Exceeded RMB10 Billion for the First Time

• Revenue Up 2.5% Year-over-Year to RMB40,341 Million; Excluding COVID-19 Commercial Projects, Up 25.6%
• Net Profit Attributable to the Owners of the Company^[1] Increased 9.0% to RMB9,607 Million; Diluted Earnings per Share (EPS) Increased 14.9% to RMB3.24
• Adjusted Non-IFRS Net Profit Attributable to the Owners of the Company Increased 15.5% to RMB10,855 Million; Adjusted Non-IFRS Diluted EPS Increased 15.7% to RMB3.68^[2]
• Free Cash Flow Continued to Increase to RMB7,125 Million; Operating Cash Flow Grew by 23.6% Year-Over-Year
• Company to Pay Cash Dividend of RMB2,882 Million, 30% of 2023 Net Profit

SHANGHAI, March 18, 2024 /PRNewswire/ -- WuXi AppTec (stock code: 603259.SH / 2359.HK), a global company that provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical and life sciences industry, today announced its financial results for the year ending December 31, 2023 ("Reporting Period"): 

• Revenue grew 2.5% year-over-year to RMB40,341 million; excluding COVID-19 commercial projects, revenue grew by 25.6%.
• Adjusted non-IFRS gross profit increased 11.2% year-over-year to RMB16,938 million. Adjusted non-IFRS gross profit margin improved 3.3pts to 42.0%. The Company continued to improve operating efficiency; adjusted non-IFRS net profit margin reached 26.9% due to FX impact and efficiency enhancement.
• Net profit attributable to the owners of the Company^[1] increased 9.0% year-over-year to RMB9,607 million; diluted EPS increased 14.9% year-over-year to RMB3.24. Adjusted non-IFRS net profit attributable to the owners of the Company increased 15.5% year-over-year to RMB10,855 million; adjusted diluted non-IFRS EPS increased by 15.7% year-over-year to RMB3.68.
• Free cash flow continued to increase to RMB7,125 million. Due to FX impact and efficiency improvement, the Company's operating cash flow grew by 23.6% year-over-year.
• The Company's Board of Directors has decided to maintain a 30% payout ratio, and distribute RMB ~9.8 cash dividend for every 10 shares (RMB 2.88 billion in total).
• In 2023, we added over 1,200 new customers, and in total we served more than 6,000 active customers over the past 12 months. Demand from customers across regions globally continued to grow.
• As of December 31, 2023, backlog grew 18% year-over-year excluding COVID-19 commercial projects, among which TIDES backlog grew significantly by 226% year-over-year.
• Revenue from the top 20 global pharmaceutical companies maintained rapid growth and reached RMB16.11 billion in 2023, which grew 44% year-over-year excluding COVID-19 commercial projects. 
• The sustained and steady revenue growth is attributed to our unique fully integrated Contract Research, Development and Manufacturing Organization (CRDMO) platform. WuXi Chemistry's D&M pipeline has maintained rapid growth, with a total of 1,255 new molecules added in 2023. By end of 2023, our D&M pipeline reached 3,201 molecules, among which 20 commercial and phase III projects were added during the year. Revenue from D&M services maintained strong growth. Excluding COVID-19 commercial projects, D&M services revenue grew by 55.1%.
• As an enabler of innovation, a trusted partner and a contributor to the global pharmaceutical and life sciences industry, the Company is committed to environmental protection and sustainability. We committed to the Science Based Targets initiative (SBTi) in December 2023. We received an "AA" rating from MSCI for the third consecutive year, an "A-" rating in CDP Climate Change for the second consecutive year, and an "A-" rating in CDP Water Security for the first time. In addition, we were upgraded to the "Silver" medal by EcoVadis. Our outstanding ESG performances have also been widely acknowledged by major global ESG rating agencies, including S&P Global, Sustainalytics, and FTSE Russell.

2024 Outlook

Despite uncertainties in the external environment, revenue is expected to reach RMB 38.3-40.5 billion in 2024, and maintain positive growth of 2.7-8.6% excluding COVID-19 commercial projects. We will continue to improve operating efficiency. Adjusted non-IFRS net profit margin (NPM) in 2024 is expected to remain at a similar level as last year, taking into consideration of new capacity ramp-up and FX impact. With improved asset utilization and operating efficiency, free cash flow is expected to remain positive and reach RMB 4-5 billion in 2024, which will continuously cover the cash dividends and investments in talents, while global capacity is expected to be expanded as planned (with capex of RMB ~5 billion). 

Management Comment

Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "We achieved an important milestone in 2023, with revenue surpassing RMB40 billion and adjusted non-IFRS net profit exceeding RMB10 billion for the first time. The Company's unique CRDMO and CTDMO business models have enabled us to better meet the increasing quality demands from customers worldwide while continuing to drive business growth."

"As technology advancement and science innovations continue to emerge, global demand for life saving and innovative drugs continues to grow, along with customers' demand for our enabling services. Nevertheless, the recent proposed legislation in the U.S. Congress would preemptively and unfairly designate our company without due process. As the proposed legislation remains subject to further review and changes, we continue to engage with relevant stakeholders to explore possible solutions and appeal for due process through a transparent consideration of the facts. WuXi AppTec has always been committed to 'doing the right thing and doing it right.' Our company has not been subject to any sanctions, and does not pose a national security risk to any country. Since its founding two decades ago, the value of WuXi AppTec has been to serve as an enabler to the pharmaceutical and life sciences industry. Today, we continue to do so as a trusted and valued service partner for our customers by constantly providing relevant capacity and capabilities required for new drug R&D and manufacturing."

"We are truly thankful for our customers' long-term trust and support. We will further enhance our capacity and capabilities and continuously improve our operating efficiency, supporting our customers and partners in their endeavors to bring lifesaving medicines to patients around the world. Together, we can realize our vision that 'every drug can be made and every disease can be treated'."

Business Performance by Segments

• WuXi Chemistry: Integrated CRDMO Business Model Drives Steady Growth, with Continued Expansion in New Modalities (WuXi TIDES)
  • Revenue from WuXi Chemistry grew 1.1% year-over-year to RMB 29.17 billion; excluding COVID-19 commercial projects, revenue grew strongly by 36.1%. Adjusted non-IFRS gross profit margin improved 4.0pts year-over-year to 45.1%, mainly due to FX impact, while efficiency continued to improve.
  • Drug discovery services ("R") continued to generate downstream opportunities. In the past 12 months, we successfully synthesized and delivered more than 420,000 new compounds to customers, which grew 6% year-over-year. Through our "follow-the-customer" and "follow-the-molecule" strategies, we established trusted partnerships with our global customers, supporting the sustainable growth of our CRDMO business.
  • Development and manufacturing (D&M) services delivered strong growth.

i.        In 2023, D&M services revenue declined 0.1% year-over-year to RMB21.62 billion; excluding COVID-19 commercial projects, D&M services revenue grew strongly by 55.1%.
ii.       In 2023, we added 1,255 new molecules to our D&M pipeline. By end of 2023, our D&M pipeline reached 3,201 molecules, including 61 commercial projects, 66 in phase III, 326 in phase II and 2,748 in phase I and pre-clinical stages, among which 20 commercial and phase III projects were added during the year.
iii.      We commenced operations at the new Taixing API manufacturing site in January 2024, preparing for future business growth.

• • Specifically, TIDES business (mainly oligo and peptides) continued to expand.

i.        In 2023, TIDES revenue grew strongly by 64.4% year-over-year to RMB3.41 billion. By end of 2023, backlog of TIDES grew significantly by 226% year-over-year.
ii.       In 2023, the number of TIDES D&M customers increased 36% year-over-year to 140, and the number of TIDES molecules increased 41% year-over-year to 267.
iii.      We completed capacity expansion in Changzhou and Taixing. The expanded workshops commenced operations in January 2024, with the total reactor volume of solid phase peptide synthesizers increasing to 32,000L.

• WuXi Testing: Drug Safety Evaluation Service & SMO Maintain Leadership Position and Drive Steady Growth
  • Revenue from WuXi Testing grew 14.4% year-over-year to RMB6.54 billion. Adjusted non-IFRS gross profit margin improved 1.9pts year-over-year to 38.6%, mainly due to FX impact, while efficiency continued to improve.
  • Revenue from lab testing services grew 15.3% year-over-year to RMB4.78 billion. Among which, revenue from drug safety evaluation services grew 27.3% year-over-year. We maintained our industry-leading position in the Asia-Pacific region. The 55,000m² new facilities in Qidong and Suzhou ramped up smoothly. In 2023, additional 20,000m² facilities were GLP-qualified.
  • Revenue from clinical CRO & SMO (Site Management Organization) grew 11.8% year-over-year to RMB1.76 billion.

i.        SMO revenue grew 26.1% year-over-year, maintaining an industry leading position in China. In 2023, SMO supported 54 new drug approvals for customers.
ii.       Clinical CRO enabled our customers to obtain 21 IND approvals and submit 5 NDA filings.

• WuXi Biology: New Modalities Business Drives Growth; WuXi Biology Platform Continues to Generate Downstream Opportunities
  • Revenue from WuXi Biology grew 3.1% year-over-year to RMB2.55 billion. Adjusted non-IFRS gross profit margin improved 1.5pts year-over-year to 42.4%, thanks to FX impact.
  • The Company focused on improving capabilities related to new modalities. In 2023, WuXi Biology revenue from new modalities grew 26% year-over-year, contributing 27.5% of WuXi Biology revenue.
  • The comprehensive early discovery screening platform integrates multi-technologies  (HTS, DEL, ASMS, FBDD, CADD etc.) and analysis capabilities of multi-dimensional databases, which can provide extensive and in-depth services to customers. In 2023, it continued to generate downstream opportunities and contributed more than 20% of the Company's new customers.

• WuXi ATU: CTDMO Business Model Drives Growth
  • Revenue from WuXi ATU grew 0.1% year-over-year to RMB1.31 billion. Adjusted non-IFRS gross profit margin declined 3.7pts year-over-year to (9.6)%, mainly due to the revenue decline from high-margin projects and under-utilization of capacity.
  • The Company focused on improving our CTDMO integrated enabling platform and strengthening capabilities and capacities. By end of 2023, we provided development, testing and manufacturing services to 64 projects, including 1 commercial project, 5 Phase III projects (1 project in BLA review stage, and 2 projects in BLA preparation stage), 9 Phase II projects and 49 pre-clinical and Phase I projects. In February 2024, the 2^nd commercial product obtained approval.
  • In 2023, we supported a customer to file BLA for plasmid and Lenti-viral Vector (LVV) used in a CAR-T product and passed China's Center for Food and Drug Inspection (CFDI) LVV on-site inspection. Our customer's product obtained approval in November 2023. In addition, we supported a customer to complete the BLA filing for the world's first innovative Tumor Infiltrating Lymphocyte (TIL)-based therapy, and our facilities in Philadelphia (U.S.) successfully passed FDA pre-license inspection (PLI). Our customer's product obtained approval in February 2024. In June 2023, we signed an LVV manufacturing contract used in a commercial CAR-T product. With the process performance qualification now in progress, it is expected to start manufacturing in the first half of 2024. Moreover, we are preparing for the BLA filing for the manufacture of a blockbuster commercial CAR-T product, which is expected to complete process performance qualification in the first half of 2024 and is expected to file pre-approval submission (PAS) to the FDA in the second half of 2024.

• WuXi DDSU: the First Year to Receive New Drug Application (NDA) Approval of New Drugs Developed for Customers; Breakthrough to Receive the First Royalty Income
  • Revenue from WuXi DDSU declined 25.1% year-over-year to RMB0.73 billion due to business transitions. Adjusted non-IFRS gross profit margin improved 6.3pts year-over-year to 36.5%, mainly due to favorable project mix.
  • In 2023, 3 new drugs developed for our customers obtained National Medical Products Administration (NMPA) approvals, including 2 for COVID-19 infection treatments and 1 for tumor treatment. We continued to receive the royalty income of the approved new drugs from customers. Moreover, 2 new drug candidates are in the NDA review stage.
  • In November 2023, for the first time, we supported a customer to reach a licensing agreement with one of the top 10 global pharmaceutical companies in the field of oncology.
  • In 2023, we supported customers to file INDs for 18 drug candidates and obtain 25 Clinical Trial Approvals (CTAs). Cumulatively, we have submitted 190 new chemical entity IND filings and obtained 169 CTAs for customers, among which 3 projects have obtained NDA approvals, 2 projects are in the NDA review stage, 4 projects are in Phase III, 32 projects are in Phase II, and 73 projects are in Phase I, covering multiple therapeutic areas.

This release provides a summary of the results and is not intended to be a comprehensive report. For additional information, please refer to the WuXi AppTec 2023 Annual Results Presentation and 2023 Annual Report disclosed on the Company's official website, as well as the 2023 Annual Report and other relevant announcements published on the websites of the Shanghai Stock Exchange (www.sse.com.cn) and the Stock Exchange of Hong Kong (www.hkexnews.hk), and the designated media for dissemination of the relevant information. Investors are advised to exercise caution and be aware of the investment risks in trading Company shares.

Net Profit Attributable to the Owners of the Company is prepared under Accounting Standard for Business Enterprises of PRC ("People's Republic of China Financial Reporting Standards"), in currency of RMB. Besides, all other financial information disclosed in this press release is prepared based on International Financial Reporting Standards (IFRS), in currency of RMB.

The 2023 Annual Report of the Company has been audited.

2023 Results by Segments

Unit: RMB million

Notes: 1. Adjusted non-IFRS gross profit of WuXi ATU was RMB(125.11) million in 2023, compared to RMB(76.69) million in 2022, a decline of RMB48.42 million.
            2. Any sum of the data above that is inconsistent with the total is due to rounding.

Consolidated Statement of Profit or Loss^[3] – Prepared under IFRS

Consolidated Statement of Financial Position^[4] – Prepared under IFRS

Consolidated Statement of Financial Position (continued)^[5] – Prepared under IFRS

Adjusted Non-IFRS Net Profit Attributable to the Owners of the Company^[6]

About WuXi AppTec

As a global company with operations across Asia, Europe, and North America, WuXi AppTec provides a broad portfolio of R&D and manufacturing services that enable the global pharmaceutical and life sciences industry to advance discoveries and deliver groundbreaking treatments to patients. Through its unique business models, WuXi AppTec's integrated, end-to-end services include chemistry drug CRDMO (Contract Research, Development and Manufacturing Organization), biology discovery, preclinical testing and clinical research services, advanced therapies CTDMO (Contract Testing, Development and Manufacturing Organization), helping customers improve the productivity of advancing healthcare products through cost-effective and efficient solutions. WuXi AppTec received an AA ESG rating from MSCI for the third consecutive year in 2023 and its open-access platform is enabling more than 6,000 customers from over 30 countries to improve the health of those in need – and to realize the vision that "every drug can be made and every disease can be treated." Please visit: http://www.wuxiapptec.com

Forward-Looking Statements

This press release may contain certain "forward-looking statements" which are not historical facts, but instead are predictions about future events based on our beliefs as well as assumptions made by and information currently available to our management. Although we believe that our predictions are reasonable, future events are inherently uncertain and our forward-looking statements may turn out to be incorrect. Our forward-looking statements are subject to risks relating to, among other things, the ability of our service offerings to compete effectively, our ability to meet timelines for the expansion of our service offerings, our ability to protect our customers' intellectual property, unforeseeable international tension, competition, the impact of emergencies and other force majeure. Our forward-looking statements in this press release speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements except as required by applicable law or listing rules. Accordingly, you are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. All forward-looking statements contained herein are qualified by reference to the cautionary statements set forth in this section. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date, and we do not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-IFRS and Adjusted Non-IFRS Financial Measures

We provide non-IFRS gross profit and non-IFRS net profit attributable to the owners of the Company, which exclude share-based compensation expenses, issuance expenses of convertible bonds, fair value gain or loss from derivative component of convertible bonds, foreign exchange-related gains or losses, amortization of intangible assets acquired in business combinations, non-financial assets impairment, etc. We also provide adjusted non-IFRS net profit attributable to the owners of the Company and earnings per share, which further exclude realized and unrealized gains or losses from our venture capital investments and joint ventures. Neither is required by, or presented in accordance with IFRS.

We believe that the adjusted financial measures used in this press release are useful for understanding and assessing our core business performance and operating trends, and we believe that management and investors may benefit from referring to these adjusted financial measures in assessing our financial performance by eliminating the impact of certain unusual, non-recurring, non-cash and non-operating items that we do not consider indicative of the performance of our core business. Such adjusted non-IFRS net profit attributable to the owners of the Company, the management of the Company believes, is widely accepted and adopted in the industry the Company is operating in. However, the presentation of these adjusted non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. You should not view adjusted results on a stand-alone basis or as a substitute for results under IFRS, or as being comparable to results reported or forecasted by other companies.