In 2008, China-based WuXi PharmaTech, a provider of R&D outsourcing services, spent $151 million to buy Minnesota-based medical research group AppTec. The move would use up most of the $185 million WuXi had raised with its NYSE debut, but execs said the buyout would give WuXi entrance into the U.S. market, as well as access to AppTec biologics manufacturing operations.
What they didn't see coming was the global economic crisis. "In retrospect, we wish we had foreseen the unprecedented economic downturn and credit freeze that severely impacted many of AppTec's customers," said WuXi CEO Dr. Ge Li. WuXi's stock has dropped 80 percent since the acquisition of AppTec early last year. The credit crunch has forced biotech companies to scale back their R&D activities and, in many cases, focus on just one or two lead programs. That lack of business forced WuXi to close AppTec's biologics manufacturing ops in December--the part of AppTec's business that initially attracted WuXi to the company last year. "The 2008 AppTec acquisition in hindsight [was] more of a disruption than an enhancement," said analyst Tycho Peterson.
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