With the specter of the BIOSECURE Act clouding its future, China’s WuXi AppTec sustained its fourth straight period with a year-over-year revenue decline as the contract research, development and manufacturing organization reported its third-quarter financials.
WuXi’s revenue for the period came in at 10.46 billion Chinese yuan ($1.46 billion), a decline of 2% from the third quarter of 2023. Additionally, profit for the quarter was down 17% year over year to 2.32 billion yuan ($325 million).
While the top-line figures were an indicator of WuXi’s continued slide, there were some positive notes. Excluding sales from COVID-19 projects, for example, the company’s revenue for the quarter was up 15%.
Additionally, in a regulatory filing, WuXi said that it has added more than 800 new customers this year to maintain its base of 6,000-plus clients. The company reported that its work backlog—the monetary value of revenue awaiting fulfillment from an ongoing contract—was up 35% year over year.
For the first three quarters of 2024, revenue from U.S. clients came to 17.6 billion yuan ($2.46 billion), a 9% decrease from the first three quarters of 2023. Despite this slide, the result was an 8% increase year over year excluding COVID-related projects, WuXi said. Sales to U.S. companies are particularly important considering that they have made up 64% of WuXi’s overall revenue for the first three quarters of this year.
There is much consternation over the financial impacts for WuXi related to the potential passage of the BIOSECURE Act, which would restrict federally-funded U.S. drugmakers from doing business with “companies of concern,” that pose a threat to national security.
The measure brings the threat of crippling the business of WuXi and three other Chinese companies. The BIOSECURE Act passed the U.S. House of Representatives last month, but the bill's future remains uncertain as it has not seen a vote in the Senate.
WuXi’s business unit that has taken the biggest hit has been WuXi Advanced Therapies, which has seen a 17% revenue decline in the first three quarters. The unit offers services to help partners advance and manufacture their cell and gene therapies.
With regard to the advanced therapy unit, WuXi is "assessing options for continuing operations and avoiding impact on patients due to proposed U.S. legislation," according to a Monday presentation (PDF). The admission came after the Financial Times reported early this month that the unit was up for sale.
Each of WuXi’s larger business units—Chemistry, Testing and Biology—has seen revenue declines of between 3.6% and 5.4% over the first three quarters, year over year.
Before its momentum was stalled by the potential consequences of the BIOSECURE Act and declining COVID revenue, WuXi achieved revenue growth starting from 2017, when it generated sales of $1.15 billion, to 2022, when it maxed out at $5.8 billion.