WuXi PharmaTech ($WX) posted 3.2% net income growth in the third quarter, as the costs of expanding its research and manufacturing capabilities ate into a 21% year-over-year revenue jump.
The Chinese CRO pulled in $125.8 million in revenue, but a 34.6% increase in expenses left $20.1 million in net income. However, the company's investments in biologics, genomics and drug discovery will pay off down the road, CEO Ge Li said, and the company raised the lower end of its full-year revenue projection, expecting between $495 million and $498 million.
WuXi's China-based lab services division grossed $77.1 million in the quarter, a 32.4% increase over last year, and its manufacturing business grew 7% to $26.9 million. While discovery services claim the lion's share of WuXi's business, Li said the company is focused on expanding its manufacturing unit. Last month, the CRO opened a cGMP biologics manufacturing facility, a plant it says is the first in China to meet U.S. standards, and it is working to expand the pipeline for its small-molecule manufacturing operation.
The third quarter was full of dealmaking for the Chinese CRO. It partnered with Open Monoclonal Technology to develop human antibodies using that company's OmniRat platform, signed on with TaiMed Biologics to produce the ibalizumab HIV treatment, and inked a deal with AstraZeneca ($AZN) to develop MEDI5117, an arthritis drug.
WuXi's growing profile comes as the company tries to distance itself from last year's intellectual property scandal, after a WuXi employee stole investigational Merck ($MRK) drugs and sold them on the Internet. That case has since been tried, and the scientist was convicted and sentenced.
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