WuXi AppTec frees up money for Middle East push

The drugs services giant has stepped up sales of non-core Chinese assets to concentrate on its international expansion, with plans for a base in Saudi Arabia

Key Takeaways:

• The company is partnering with Saudi authorities on a scheme to build a facility in the high-tech NEOM complex
• In a busy month of corporate news, WuXi AppTec reported a jump in quarterly earnings, but investors were unsettled to hear that key stakeholders were selling down their holdings

By Molly Wen

Drug services giant WuXi AppTec Co. Ltd. (2359.HK; 603259.SH) is streamlining its non-core business in China to focus on strengthening its global production base.

The company announced late last month it had agreed to sell two clinical research businesses, WuXi Clinical and WuXi MedKey, to Hillhouse Investment Management for 2.8 billion yuan ($390 million), the latest in a series of disposals that have freed up funds to channel into its international ambitions.

A few days later, WuXi AppTec announced it had entered into a preliminary agreement to build a production facility in Saudi Arabia’s NEOM site, a mega-project that aspires to become a futuristic innovation hub in the Middle East.

WuXi AppTec already boasts an international production network spanning Asia, Europe and North America, but is looking to create a more resilient global supply chain to respond to shifting market needs and growing external risks.

The sale of the two Chinese businesses through the wholly owned subsidiary WuXi AppTec (Shanghai) Co. Ltd. fits with a strategy of focusing on core strengths in drug discovery, testing and manufacturing, the company said, adding that the move would help accelerate the development of its global capabilities.

According to the statement, the two units generated combined unaudited revenue of about 1.16 billion yuan and net profit of 0.09 billion yuan in the first three quarters of 2025, accounting for just 3.5% of top line income and 0.7% of the bottom line.

WuXi AppTec has periodically divested several non-core operations, selling its gene and cell therapy business, WuXi ATU, in a deal announced in December last year, and offloading a U.S. medical-device testing firm a month later.

Although the businesses generated revenue, they offered limited synergies with the core business of being a Contract Research, Development and Manufacturing Organization (CRDMO). The disposals bolster profitability and allow for the funding of new projects and collaborations with the likes of Saudi Arabia.

On Oct. 28, Wuxi AppTec and its Saudi partners announced they had entered into a memorandum of understanding to explore building a research and manufacturing base in Oxagon, NEOM’s advanced industrial zone, or at another suitable location in the kingdom.

Healthcare is a central pillar of the Saudi vision to diversify its economy, with plans to invest more than $65 billion to strengthen medical infrastructure. With a presence in NEOM, WuXi AppTec could gain early advantage in the Middle East market while further building out its global network.

The pharmaceutical outsourcing giant has already established an international footprint, with a site spanning 770,000 square meters in the U.S. state of Delaware and an ongoing expansion of its Swiss plant in Couvet. Another facility in Singapore is expected to begin operations in 2027.

Profits up but shares down

WuXi AppTec’s restructuring has been coupled with a strong earnings record and upbeat guidance.

Its latest earnings report on Oct. 26 showed robust gains for the third quarter and for the nine months of 2025. Over the three quarters, revenue rose 18.61% to 32.86 billion yuan from the same period a year earlier, while net profit soared 84.84% to 12.08 billion yuan, swelled by non-recurring gains. For the third quarter alone, revenue jumped 15.26% and profits rose 53.27%. As of Sept. 30, WuXi AppTec’s order backlog stood at 59.88 billion yuan, a year-on-year rise of 41.2%.

Based on those results, the company raised its 2025 forecast for revenue growth to between 17% and 18%, implying full-year turnover in a range of 43.5 billion yuan to 44.0 billion yuan, against initial guidance of 41.5 billion to 43.0 billion yuan.

The company attributed its rising profits to a continued focus on the CRDMO business and efforts to optimize efficiency. In addition, its disposal of a stake in WuXi XDC Cayman Inc. (2268.HK) added about 4.35 billion yuan to net profit.

But a few days after the earnings news, investors were rattled by another announcement about planned sales of the firm’s Shanghai-listed shares.

Key shareholders including Ge Li, Zhang Zhaohui and Liu Xiaozhong disclosed plans on Oct. 29 to sell up to 2% of the company’s A-share capital, citing personal funding needs. The holdings will be sold through centralized bidding or block trades within a three-month period starting 15 trading days after the announcement. Based on the closing price on the day of the news, the planned sale could realize up to 6.3 billion yuan.

WuXi AppTec’s Shanghai shares plunged 8.47% the day after the planned share sale was flagged. The company’s current price-to-earnings ratio stands at around 20 times, much lower than the 32 times for its sister company WuXi Biologics (2269.HK), possibly reflecting the short-term hit over the share sales.

If WuXi AppTec succeeds in building a global base and boosting its resilience to geopolitical strains, the company’s stock would deserve renewed investor attention.

To subscribe to Bamboo Works weekly free newsletter, click here