RMB 5.741 Billion to Raise! The Second Unicorn This Year—CRO Dominant Wuxi AppTec to be Listed on Shanghai Stock Exchange

WuXi AppTec Co., Ltd. was in the IPO list on March 27, with the intention to be listed on Shanghai Stock Exchange and raise fund of about RMB 5.741 billion. If everything goes well, it will be successfully listed next week, being the second unicorn listed in China this year after Foxconn.

Financial indexes in recent four years and major shareholders of Wuxi AppTec are as follows:

Financial Indexes of Wuxi AppTec Co., Ltd. in Recent Four Years

Major Shareholders of Wuxi AppTec Co., Ltd., by February 6, 2018

The scheming listing road of "dividing one into three"

Wuxi AppTec was listed on New York Stock Exchange early in 2007, however, it was voluntarily delisted in 2015 due to reasons like undervalued market value; thereafter, Wuxi AppTec has implemented the strategic deployment: it first had STA Pharmaceutical listed on the NEEQ, then had WuXi Biologics listed in Hong Kong, S.A.R., China, and then it applied for IPO on A-share, with the total market value of the three having exceeded RMB 100 billion.

Absolute supremacy among CROs in China

Established in 2000, Wuxi AppTec has now become China’s largest and world’s top small molecule pharmaceutical R&D service enterprise. It mainly provides customers with small molecule chemical drug discovery and R&D and other CRO services at preclinical stages and relevant support, to thus provide customers with production process improvement, lab trial/pilot test, and commercial production, etc. of APIs/clinical drug candidates. Besides the above preclinical CRO services and CMO/CDMO main business segments, other CRO businesses of the company include clinical service support, monitoring and data analysis service for clinical trial stages of new drugs, new drug government application process (CDS business) to FDA and CFDA, clinical coordination, and site management service (SMO service). Besides the above main businesses, Wuxi AppTec also furnish R&D, testing, and production services including medical device testing service and precision medicine, etc. abroad, and it plans to further expand current business and develop new business in the future through overseas subsidiaries controlled by it.

Main businesses of Wuxi AppTec

China’s CRO industry rapidly develops, with compound annual growth rate of above 20%

There have been more than 50% pharmaceutical enterprises in the world selecting to hire the professional CROs to assist with the new drug R&D to reduce own R&D expenditures and control risks, with increased R&D investment costs, longer R&D cycles, and low R&D success rate of global pharmaceutical enterprises. According to the forecast of South Medicine Economic Research Institute, sales of global CROs reached USD 31.7 billion in 2016, and this figure will reach USD 42.1 billion in 2020, with the compound annual growth rate reaching 7.42% during 2016-2020.

Chinese CROs have rapidly developed, as influenced by factors like continuous growth of the Chinese pharmaceutical market demands, accelerated segmentation trend of the pharmaceutical industry, China’s implementation of the consistency evaluation standard and promotion of tiered medical diagnosis and treatment, and further strengthened globalization trend of CRO industry. According to the forecast of South Medicine Economic Research Institute, the market sales of CROs in China reached RMB 46.2 billion in 2016, and this figure will reach RMB 97.5 billion in 2020, with the compound annual growth rate reaching 20.79% during 2016-2020, showing that China’s CRO industry will rapidly develop in the future. In 2016, Wuxi AppTec achieved revenue of RMB 6.12 billion, net profits of RMB 1.12 billion, and consolidated gross margin of 40%.

According to an insider, once Wuxi AppTec was successfully listed, it would be likely to challenge the position of the pharmaceutical leader Hengrui on A-share; however, according to another insider, Wuxi AppTech’s PE ratio is too high, and how it will performance will be seen in the near future.

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