|WuXi CEO Ge Li|
Chinese CRO WuXi Pharma ($WX) posted more soaring revenue in the second quarter, but some costly investments and currency issues drove down the company's profits as it prepares to go private.
WuXi cleared $194.1 million in revenue on the quarter, an 18.8% increase over the same period last year driven largely by growth in manufacturing and biologics services, the company said. But the CRO's net income fell 35.7% to $18.9 million, the effect of WuXi's recent bets on genomics and bioinformatics, according to management.
The company is sticking to its full-year sales guidance, expecting about $795 million at midpoint, but withdrew its profit projections in response to "the rapid depreciation of the RMB against the U.S. dollar," warning that China's slumping currency could lead to major losses on foreign-exchange contracts.
"WuXi today is two groups of businesses--strong core businesses, and promising, but very challenging, new businesses," CEO Ge Li said in a statement. "Our core businesses are performing well, generating solid revenue and operating income growth. But we also see many compelling investment opportunities in new businesses, such as in genomics/bioinformatics, e-commerce and China healthcare initiatives, opportunities that we are choosing to seize during this period of strength to drive long-term growth."
Meanwhile, after months of speculation, WuXi has finally made a decision on an offer from Li and a group of investors to take the company private, last week agreeing to a $3.3 billion deal that would take the company off of the New York Stock Exchange by year's end. Pending shareholder approval, WuXi will become part of a newly formed parent company through an all-cash transaction that trades $46 for each of WuXi's American-traded securities. The total represents a 16.5% premium over WuXi's closing price before the potential deal came to light.
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