Divesting Chinese clinical operations and deepening in Saudi Arabia, WuXi AppTec accelerates its globalization efforts

WuXi AppTec is continuously optimizing its global capacity layout to gradually build a global supply chain network with deep localization response capabilities.

Key Points:

• WuXi AppTec's entry into NEOM is not only expected to seize the first-mover advantage in the Middle East market but also a key step in building a global supply chain network.
• In the first three quarters, the company achieved operating revenue of 32.857 billion yuan, a year-on-year increase of 18.61%, and raised its full-year performance guidance for the second time.

Molly

As a leading enterprise in the pharmaceutical research and development (CXO) sector, WuXi AppTec Co., Ltd. (2359.HK; 603259.SH) ranks among the top in international operational capabilities among its peers in China and globally, with its business network spanning Asia, Europe, and North America. In the face of changes in the global pharmaceutical industry chain and external environmental challenges, WuXi AppTec is continuously optimizing its global capacity layout to gradually build a global supply chain network with deep localization response capabilities.

This strategy is clearly reflected in WuXi AppTec's recent business changes, as the company is selling its domestic clinical research service business while engaging in strategic cooperation with Saudi Arabia's NEOM. On October 24, WuXi AppTec sold all equity of Kangde Hongyi and Jinshi Pharmaceutical to Hillhouse Capital for 2.8 billion yuan; both companies are major players responsible for domestic clinical research services in China. The announcement indicated that in the first three quarters of 2025, the combined revenue and net profit of Kangde Hongyi and Jinshi Pharmaceutical were approximately 1.16 billion yuan and 90 million yuan, respectively. Although the scale is not small, their contribution to WuXi AppTec's current revenue and net profit was only 3.5% and 0.7%, respectively.

WuXi AppTec clearly stated in the announcement that this move is to "focus on the CRDMO (Contract Research, Development, and Manufacturing) business model and accelerate the deployment of globalization capabilities and capacity." This is not an isolated case; since the end of 2024, the company has repeatedly divested non-core businesses: in December 2024, WuXi AppTec announced the sale of its U.S. and U.K. operations of WuXi ATU (WuXi Biologics), involving high-end therapeutic CTDMO (research, testing, and manufacturing of cell and gene therapies); in January 2025, WuXi AppTec sold its U.S. medical device testing business.

Although the sold businesses can contribute revenue to WuXi AppTec, their synergy with the CRDMO system is limited. After this portion of funds is recovered, WuXi AppTec is actively promoting the globalization of its core CRDMO business, with cooperation with NEOM in Saudi Arabia as a clear example.

On October 28, WuXi AppTec announced that it had signed strategic cooperation memorandums with NEOM and the Saudi Ministry of Health, with NEOM being a sustainable new city under construction in northwestern Saudi Arabia. WuXi AppTec stated that this cooperation lays the foundation for establishing a world-class CRDMO research and production base in NEOM's advanced, clean manufacturing city Oxagon or other regions in Saudi Arabia The Saudi government places great importance on investment in the health sector, listing the healthcare industry as a core development area in its "Vision 2030" plan, with plans to invest over $65 billion, focusing on the construction of medical infrastructure. The entry of WuXi AppTec is not only expected to seize the first-mover advantage in the Middle East market but also represents a key step in building a global supply chain network. The company has quietly begun its global layout: a 770,000 square meter base in Delaware, USA, is expected to be operational by 2026, the production base in Kuewei, Switzerland, is also continuously expanding, and the base in Singapore is expected to be operational by 2027.

Strong Business Growth in the First Three Quarters

WuXi AppTec's confidence in making bold business adjustments comes from its strong performance growth, as the company even raised its full-year performance guidance for the second time this year. On the evening of October 26, WuXi AppTec released its latest quarterly report, showing that in the first three quarters of 2025, the company achieved operating revenue of 32.857 billion yuan, a year-on-year increase of 18.61%; the net profit attributable to shareholders of the listed company was 12.076 billion yuan, a year-on-year surge of 84.84%.

As of September 30, the company's order backlog was 59.88 billion yuan, a year-on-year increase of 41.2%. Based on the good momentum of continuous business expansion, WuXi AppTec raised its expected revenue growth rate for 2025 to a year-on-year increase of 17% to 18%, with annual revenue expected to reach 43.5 billion to 44 billion yuan, compared to the revenue guidance at the beginning of 2025 of 41.5 billion to 43 billion yuan.

The company explained that the high growth in performance is due to "continuously focusing on and strengthening the CRDMO business, while continuously optimizing production processes and operational efficiency, as well as the capacity efficiency improvement brought about by the growth of large projects in the later stages of clinical and commercialization." In addition, the company has repeatedly reduced its holdings in WuXi AppTec (2268.HK) at high levels, with this investment income impacting the company's net profit after tax by approximately 4.351 billion yuan.

However, in stark contrast to the strong performance, the actual controllers of the company, Li Ge, Zhang Chaohui, and Liu Xiaozhong, announced a reduction plan on October 29. These shareholders plan to reduce their holdings of no more than 2% of the company's total share capital in A-shares through centralized bidding or block trading within three months after the announcement date, due to "personal funding needs." Based on the closing price on the announcement date, the maximum scale of this reduction could reach approximately 6.3 billion yuan