Acquisitive Chinese CRO WuXi PharmaTech ($WX) is borrowing up to $165 million to keep up its string of deals, eyeing investments in R&D and manufacturing.
The loan, courtesy of Asian financiers led by Citibank, will help WuXi pay for its latest expansions, including new facilities in China and the U.S. The CRO plans to pay it back in four installments, including interest of 2.89%.
|WuXi CEO Ge Li|
WuXi spent about $110 million on capital expenditures last year and plans to dial that up to $200 million in 2015, CEO Ge Li said, part of an ongoing effort to differentiate his company as a value-adding partner for global R&D, not just a box-checking contractor.
"While continuously strengthening our existing capabilities, we also see new investment opportunities in the rapidly growing China healthcare market," Li said in a statement. "We need to invest aggressively to extend our research and development capabilities to hospitals, doctors and patients to capture many of these exciting opportunities."
The company's last two acquisitions, NextCODE Health and XenoBiotic Laboratories, were designed to bolster its R&D capacity, expanding its capabilities in genomics and giving it a bigger footprint in the U.S. market for preclinical testing.
The deals are part of a cross-cutting plan to grow its presence on the market through expansions in technology and geographic presence. In the third quarter of last year, WuXi's revenue jumped 18% to $173.6 million, a gain driven by 16% growth in its lab services business and a 23% leap in manufacturing. For 2014, the company forecast as much as $672 million, an improvement over its previously announced range of between $665 million and $670 million.
- read the statement