WuXi Pharma Feels the Worst of the Downturn Is Over

WuXi PharmaTech (NYSE: WX), a bellwether for China’s CRO industry, reported a modest increase in Q3 revenues, but clearly feels the worst of the economic downturn is in the past. Revenues move up 10% to $70 million, and net income (non-GAAP) was 33% higher at $17.6 million. The company reiterated its guidance for 2009 revenues ($265-$275 million) while raising its estimate for 2009 adjusted EBITDA ($86-$90 million, up $5 million). China-based Laboratory Services division is the company’s best performing segment.

Revenues from China-based Laboratory Services rose 29% to $48 million, about 69% of the company’s total sales. The biggest problem for WuXi PharmaTech was its Manufacturing Services division, which saw its revenues decline 44% to $5.7 million. WuXi is quick to point out that the division’s sales are volatile, depending on customers' delivery schedules. The US Laboratory Services division’s revenues were down 1%.

During the third quarter, WuXi PharmaTech increased its headcount by about 400 people to a total of 4,135, of whom 3,230 are scientists.

The company is on track to make capital expenditures of $55-$60 million in 2009. It hopes to offer GLP toxicology services by mid-2010. It has completed a large-scale manufacturing facility, which is now undergoing tests. WuXi said the start date for manufacturing would depend on the progress made by clients in advancing their drugs through clinical trials.

Disclosure: none.