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ShangPharma (NYSE: SHP), the China CRO that completed its IPO on the NYSE last October, announced its Q1 revenues climbed 26% to $24.8 million and net income (GAAP) rose a somewhat smaller 10% to $3 million. Results were in line with expectations. The company said higher share-based compensation expenses, appreciation of the yuan, and higher material costs kept a lid on profit, offsetting a rise in overall efficiency.

The revenues that ShangPharma derived from China-based customers rose 186% in Q1, accounting for 9.3% of the total. Business from its top 10 customers increased 20% in the quarter, comprising 61% of overall revenues.

In many ways, ShanghPharma resembles WuXi PharmaTech, as both enterprises compete in many of the same sectors. Although WuXi has about four times the revenue, both companies have similar trailing 12-month P/E ratios. ShangPharma’s P/E is 17.6, while WuXi’s is slightly lower at 15.7. Much of WuXi’s growth is coming from increases in its contract manufacturing business (see story), so it is not surprising that ShangPharma is investing to develop that business as well.

“We saw strong growth across all of our businesses, especially from discovery biology and preclinical development services as well as biologics services as we continue to expand our integrated service platform and add new capabilities,” said Michael Xin Hui, founder and Chief Executive Officer of ShangPharma,

"Progress on our new state-of-the art manufacturing facilities in Fengxian, Shanghai, remained on track during the quarter. We successfully started the first phase of our new c-GMP-quality multi-purpose facility and continued construction on our laboratory service building. Our increased capabilities in research manufacturing should further strengthen our overall integrated service platform and allow us to capture more promising opportunities in research manufacturing," Hui continued.

ShangPharma said it remains on track to meet its guidance of full-year 2011 guidance, which call for revenues of about $115 million, a 25% increase, non-GAAP gross margins in the 35% range, and capital expenditures between $28 and $32 million. The company finished Q1 with cash of $48 million, which is just about the amount it raised (before fees) in its IPO last October.

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Source: ShangPharma Reports 26% Increase in Q1 Revenues