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WuXi AppTec Reports Strong 2020 Annual Results
Revenue Up 28.5% Year-over-Year to RMB16,535 Million
Net Profit Attributable to Owners of the Company Up 59.6% Year-over-Year to RMB2,960 Million
Diluted EPS Up 56.3% Year-over-Year to RMB1.25
Adjusted Non-IFRS Net Profit Attributable to Owners of the Company Up 48.1% Year-over-Year to RMB3,565 Million
Adjusted Diluted Non-IFRS EPS Up 45.2% Year-over-Year to RMB1.51[1]
SHANGHAI, March 30, 2021 /PRNewswire/ -- WuXi AppTec (stock code: 603259.SH / 2359.HK), a company that provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical, biotech and medical device industries worldwide to advance discoveries and deliver groundbreaking treatments to patients, announces its audited annual results for the year ended December 31, 2020 ("Reporting Period").
All financials disclosed in this press release are prepared based on International Financial Reporting Standards (or "IFRSs"), in currency of RMB.
2020 Financial Highlights
- Revenues grew 28.5% year-over-year to RMB16,535 million. From the early onset of the COVID-19 pandemic, through early implementation of our business continuity plan, we managed to ensure the health of our employees whilst continuing to operate safely. By leveraging our global platform and comprehensive capabilities, we were able to meet customers' project delivery timelines and capture new business opportunities.
- Our China-based laboratory services revenue grew 32.0% to RMB8,546 million.
- Our CDMO services revenue grew 40.8% to RMB5,282 million.
- Our U.S.-based laboratory services declined 3.0% to RMB1,517 million, largely due to the impact of COVID-19 and clients' project delays.
- Our clinical research and other CRO services revenue grew 10.0% to RMB1,169 million.
- IFRS gross profit increased 24.9% year-over-year to RMB6,255 million. Gross profit margin was 37.8%.[2]
- Non-IFRS gross profit increased 25.2% year-over-year to RMB6,583 million. Non-IFRS gross margin was 39.8%.
- EBITDA increased 37.1% year-over-year to RMB4,701 million.
- Adjusted EBITDA increased 35.7% year-over-year to RMB5,449 million.
- Net profit attributable to owners of the Company increased 59.6% year-over-year to RMB2,960 million. In 2020, our venture investment portfolio and associates' fair market value change contributed gain of RMB1,717 million, due primarily to the stock price increase of certain portfolio companies which went IPO in the Reporting Period and RMB14 million loss of equity pick-up from our joint ventures. Conversely, in 2019, we reported RMB107 million loss from the fair market value change of our investment portfolio and associates, and RMB39 million loss of equity pick up from our joint ventures.
- Adjusted Non-IFRS net profit attributable to owners of the Company increased 48.1% year-over-year to RMB3,565 million.
- Diluted EPS increased 56.3% year-over-year to RMB1.25, while adjusted diluted year-over-year Non-IFRS EPS increased by 45.2% year-over-year to RMB1.51.
[1] Full-year 2019 and 2020, we had a fully-diluted weighted average share count of 2,287,088,730 and 2,348,623,012 ordinary shares, respectively. |
[2] If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 25.3% year-over-year to RMB6,282 million. Gross profit margin was 38.0%. |
2020 Business Highlights
- We continue to execute our strategy by leveraging our integrated R&D services platform to enable companies to innovate and accelerate drug discovery and development globally. We added over 1,300 new customers in 2020, giving us a total of more than 4,200 active customers.
- Our global platform continued to enable innovation worldwide. During the Reporting Period, our overseas customers contributed RMB12,390 million in revenue, representing a year-over-year growth of 25.1%. Our China-based customers contributed RMB4,145 million in revenue, representing a year-over-year growth of 39.8%.
- We continued to expand our customer base and retain existing customers. During the Reporting Period, our existing customers contributed RMB15,504 million in revenue, representing a year-over-year growth of 32.1%. Our newly added customers in 2020 contributed RMB1,032 million in revenue.
- We continued to execute our "long-tail" strategy and increase our support to large global pharmaceutical companies. During the Reporting Period, our global "long-tail" customers and China-based customers contributed RMB11,108 million in revenue, representing a year-over-year growth of 28.3%. Top 20 global pharmaceutical companies contributed RMB5,427 million in revenue, representing a year-over-year growth of 28.8%.
- We continued to increase customer conversion and enhance synergies across our platforms. During the Reporting Period, customers using services from more than one of our business units contributed RMB14,352 million in revenue, representing a year-over-year growth of 27.6%.
China-based Laboratory Services: early adoption of business continuity plan; turning challenges into new opportunities
- Despite the impact of COVID-19 on our Wuhan Site, our chemistry FFS (Fee for Services) achieved over 35% revenue growth while concurrently transferring multiple new projects to our CDMO segment.
- By leveraging our industry-leading infectious disease R&D capability, we were able to quickly form a COVID-19 small molecule drug discovery platform that has enabled 77 customers globally.
- Through comprehensive integration of our DNA-encoded library (DEL), protein production and structure-based drug design capabilities, our Target-to-Hit platform has enabled over 500 customers globally, creating incremental business opportunities for our downstream business units.
- In our success-based drug discovery service unit, we filed INDs for 33 new-chemical-entities for China-based customers and obtained 30 CTAs. As of December 31, 2020, we had cumulatively submitted 118 new-chemical-entity IND filings with the NMPA and obtained 87 CTAs. As of December 31, 2020, there were 2 projects in Phase III clinical trials, 9 projects in Phase II clinical trials, and 60 projects in Phase I clinical trials.
- Our safety assessment / toxicology services achieved approximately 74% revenue growth due to a surge in demand and increased capacity.
- We leveraged our integrated platform to prepare and facilitate submissions of 100 integrated WIND packages for customers (the WuXi IND program or "WIND"), helping many of our global and domestic customers file IND and FDA applications efficiently with the FDA for clinical trial approval.
- In July 2020, our newly-built Chengdu R&D center began operations and has already provided services to 95 global customers for chemistry services.
CDMO Services: accelerated growth offsets early COVID-19 impact during the first quarter of 2020
- We added 575 new molecules into our small molecule CDMO pipeline, including 35 new projects that were transferred from clients' facilities or other CDMOs. We provided CDMO services to over 1,300 active projects, including 45 projects in Phase III clinical trials and 28 projects in commercial manufacturing. In December 2020, our customer InnoCare Pharma's BTK inhibitor orelabrutinib was approved - our first integrated CMC CDMO project. Our subsidiary STA supports end-to-end manufacturing of orelabrutinib, including API manufacturing, spray drying commercial manufacturing, tablet manufacturing and packaging.
- In January 2020, we started the construction of a new STA drug product development and production facility in Wuxi city. This facility will not only improve the development and production capacity of solid dosages, but will also be capable of sterile drug product development, clinical trial material production and commercial scale manufacturing.
- STA's high-potency active pharmaceutical ingredient (API) manufacturing facility, large-scale oligonucleotide API manufacturing facility and large-scale peptide API manufacturing facility located in Changzhou began operations, supporting process R&D and small molecule manufacturing, as well as oligonucleotide and peptide APIs from preclinical to commercial.
US-based Laboratory Services: long term commitment to build capability and capacity despite pandemic impacts
- Our cell and gene therapies CTDMO services enabled customers globally. During the Reporting Period:
- Our laboratories and facilities in the U.S. provided services for 36 clinical stage projects, including 24 projects in Phase I clinical trials and 12 projects in Phase II/III clinical trials.
- We expanded our plasmid manufacturing facility, providing integrated services from bacteria banking, process development, research manufacturing and commercial manufacturing to our global customers. We also launched our fully integrated Closed Process CAR-T Cell Therapy Platform, AAV adherent manufacturing platform and AAV Vector Suspension Platform in both U.S. and China, enabling our customers to accelerate the timeline for cell and gene therapy development, manufacturing and release.
- In our Medical Device segment, the EU Medical Device Regulation changes and the adoption of chemical characterization are driving growth. This growth has also been fueled by our investment in industry leading capabilities and expansion within the China market.
Clinical Research CRO/SMO Services: maintained growth and achieved strong backlog momentum despite impact of the pandemic
- Our clinical research services continued to enable customers in China and the U.S. During the Reporting Period:
- Our clinical development services (CDS) backlog increased approximately 48% on a year-over-year basis and our site management organization (SMO) backlog increased approximately 41% on a year-over-year basis.
- Our CDS team provided services to more than 130 projects for our clients in China and the U.S. and completed the registration trials for 6 products, including a first-in-class drug for the treatment of type II diabetes and a global customer's new drug for the treatment of pulmonary arterial hypertension, which obtained FDA approval. Our biometrics business has maintained strong momentum and achieved strong growth in both the U.S. and China.
- Our SMO team assisted in the market approval of 17 products for our customers, including the approval of a surgical implant for the treatment of glaucoma under real world evidence, the first bevacizumab biosimilar in China, and the first Chinese company's trastuzumab biosimilar in the EMA.
Expanded Capabilities Via Strategic Acquisitions
- In September 2020, we acquired Milestone to expand the capacity of our pharmaceutical analytical testing services. Milestone provides comprehensive analytical services from registration to lot release testing.
- In February 2021, STA announced the acquisition of Bristol Myers Squibb's manufacturing facility in Couvet, Switzerland. We anticipate completing the transaction in Q2 2021, subject to regulatory approvals and the satisfaction of other closing conditions. The Couvet site will be STA's first facility in Europe. The acquisition enhances our existing capabilities whilst increasing capacity to support our drug product manufacturing services.
- In March 2021, we acquired OXGENE, a pioneering United Kingdom-based contract research and development organization that designs and develops scalable gene therapy technologies. Combining our world-class cell and gene therapies CTDMO platform with OXGENE's innovative capabilities, we will be able to provide end-to-end services in the creation and development of cutting-edge cell and gene therapy for customers.
Continuous improvement in ESG performance
At the center of WuXi AppTec's Environmental, Social and Governance (ESG) strategy is its vision that "every drug can be made and every disease can be treated." In 2020, facing the sudden COVID-19 outbreak, we immediately took action to ensure the health and safety of our employees, and quickly launched our business continuity plan to sustain our support for the discovery and development of partners' innovative new drugs. We also formed a collaborative international alliance with industry partners and hosted a series of COVID-19 forums; helping to strengthen global collaboration and bring COVID-19 treatments to patients faster.
Throughout the year, we further rooted ESG initiatives in every aspect of our strategy and operations. We established an ESG Committee and established a series of policies intended to bring clarity and direction to our efforts, further enhancing our robust governance structure. On the environmental side, we promoted energy conservation and emissions reduction through technological upgrades and energy management, and we pushed forward green chemistry through biocatalysts and flow chemistry. Our greenhouse gas emissions fell by 6% from 2019. In tandem, we reiterated our commitment to an inclusive and diverse workplace that fosters collaboration among, and professional development for, all WuXi AppTec employees. As a result, by the end of 2020, the number of female employees increased to 53% of our workforce. We have been awarded "Employer Excellence of China" for six consecutive years and one of the "Most Attractive Employers in China" twice in a row. These efforts have been recognized for good ESG performance by various ESG rating agencies around the world.
Management Comment
Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "2020 presented unique challenges as the sudden outbreak of COVID-19 dramatically impacted all of us personally and professionally. The power of our geographically-diverse and comprehensive service platform truly came to bear, enabling us to turn the enormous challenges brought on by COVID-19 into new opportunities to support our customers and the patients we all serve. The continued strength of our operating platform once again proved not only to our customers, but also to the broader market the resilience of our business model. Over our twenty year history, WuXi AppTec has earned a solid reputation via our track record of continuously delivering stable and outstanding results for our stakeholders."
"Thanks to the combined efforts of all our employees and strong support from our global customers, we overcame the impact of the COVID-19 pandemic and continued to meet customer demand and project schedules. Through early implementation of our business continuity plans, we managed to ensure the health of our employees whilst continuing to operate safely. This allowed us to leverage our global presence and comprehensive capabilities to meet project delivery timelines and capture new business opportunities. During the Reporting Period, our revenue increased 28.5% over the prior year to RMB16,535 million and our adjusted Non-IFRS net profit attributable to owners of the Company increased 48.1% to RMB3,565 million."
"Relentlessly executing our 'Follow the Customer / Follow the Project / Follow and Win the Molecule' strategy, the power of our integrated business model allowed us to achieve remarkable results. During the Reporting Period, we added over 1,300 new customers and our total number of active customers now exceeds 4,200. Our China-based laboratory services and CDMO services realized robust growth and we gained market share across different business units. At our U.S.-based laboratories and clinical research services, we strengthened our capabilities and increased our backlog to support future growth. Meanwhile, we also continued to invest in building new capabilities and capacity globally. In early 2021, we acquired OXGENE, a pioneering United Kingdom-based cell and gene therapies contract research and development organization. We also announced the acquisition of a drug product manufacturing facility in Couvet, Switzerland. We believe these investments and geographic diversification will enable us to sustain our long-term growth objectives."
Dr. Ge Li concluded, "The fundamentals of our business remain very strong. Looking ahead, we will further increase investment in our R&D service capabilities and in our capacity of new modalities, in keeping with the industry trend and to better enable our customers in bringing innovative medicines to patients in need - realizing our vision that 'every drug can be made and every disease can be treated.'"
2020 IFRS Results
- Revenue increased 28.5% year-over-year to RMB16,535 million.
- Gross profit increased 24.9% year-over-year to RMB6,255 million. Gross profit margin was 37.8%, slightly lower than the 38.9% achieved in 2019[3], due primarily to: (1) the reduced operating efficiency of our U.S.-based laboratory services as a result of the COVID-19 pandemic, with decreased revenue and gross profit margin due to government mandatory lockdown and travel restrictions; (2) the impact of the pandemic on our clinical research and other CRO services, with decreased gross profit margin due to delays in patient recruitment and project commencement.
- Net profit attributable to owners of the Company increased 59.6% year-over-year to RMB2,960 million. In 2020, our gain from venture investment portfolios and loss from associates totally contributed gain of RMB1,717 million, due primarily to the stock price increase of certain portfolio companies which went IPO in the Reporting Period and RMB14 million loss from our joint ventures. Conversely, in 2019, we reported RMB107 million loss from investment portfolios and associates, and RMB39 million loss from our joint ventures.
[3] If prepared under Accounting Standard for Business Enterprises of PRC, 2020 gross profit increased 25.3% year-over-year to RMB6,282 million. Gross profit margin was 38.0%, slightly lower than the 39.0% achieved in 2019. |
2020 Non-IFRS Results
- 2020 Non-IFRS net profit attributable to owners of the Company increased 133.0% year-over-year to RMB5,268 million. This adjusts for share-based compensation expenses, convertible bonds issuance and distribution expenses, fair market value gain or loss from derivative component of convertible bonds, foreign exchange-related effects and amortization of intangible assets acquired in business combinations and goodwill impairment.
2020 Adjusted Non-IFRS Results
- Excluding realized/unrealized gains or losses from our venture investments and realized/unrealized gains or losses from our joint ventures and associates, 2020 adjusted Non-IFRS net profit attributable to owners of the Company increased 48.1% year-over-year to RMB3,565 million.
Reconciliation of Non-IFRS and Adjusted Non-IFRS Net Profit Attributable to Owners | |||
RMB Million | Year Ended | Year Ended | |
Profit Attributable to the owners of the | 2,960.2 | 1,854.6 | |
Add: | |||
Share-based compensation | 587.8 | 161.2 | |
Issuance expenses of convertible | 4.9 | 4.4 | |
Fair value losses from derivative | 1,349.4 | 98.1 | |
Foreign exchange related losses | 286.0 | 114.6 | |
Amortization of intangible assets | 35.6 | 27.9 | |
Goodwill impairment | 44.4 | - | |
Non-IFRS Net Profit Attributable the | 5,268.3 | 2,260.8 | |
Add: | |||
Realized and unrealized | (1,716.9) | 107.4 | |
Realized and unrealized share of | 13.9 | 39.3 | |
Adjusted non-IFRS net profit attributable | 3,565.3 | 2,407.4 | |
[4] If the sum of the data below is inconsistent with the total, it is caused by rounding. | |||
EBITDA [5] | ||
RMB Million | Year Ended | Year Ended |
Profit before tax | 3,369.4 | 2,337.0 |
Add: | ||
Interest expense | 196.0 | 128.0 |
Depreciation and amortization | 1,136.0 | 963.4 |
EBITDA | 4,701.4 | 3,428.4 |
% EBITDA margin | 28.4% | 26.6% |
Add: | ||
Share-based compensation expenses | 713.8 | 195.2 |
Issuance expenses of convertible | 6.6 | 5.9 |
Fair value losses from derivative | 1,349.4 | 98.1 |
Foreign exchange related losses | 337.0 | 140.4 |
Goodwill impairment | 44.4 | - |
Realized and unrealized (gains)/losses | (1,716.9) | 107.4 |
Realized and unrealized share of | 13.9 | 39.3 |
Adjusted EBITDA | 5,449.4 | 4,014.5 |
% Adjusted EBITDA margin | 33.0% | 31.2% |
[5] If the sum of the data below is inconsistent with the total, it is caused by rounding. | ||
Consolidated Statement of Profit or Loss[6] | |||
RMB Million | Year Ended | Year Ended | Year-over- |
Revenue | 16,535.4 | 12,872.2 | 28.5% |
Cost of services | (10,280.4) | (7,866.1) | 30.7% |
Gross profit | 6,255.0 | 5,006.1 | 24.9% |
Other income | 326.3 | 249.5 | 30.8% |
Other gains and losses | 283.2 | (188.8) | 250.0% |
Impairment losses under expected credit | (12.6) | (43.2) | -70.7% |
Impairment losses of goodwill, net of reversal | (44.3) | - | 100% |
Selling and marketing expenses | (588.5) | (438.5) | 34.2% |
Administrative expenses | (1,869.7) | (1,509.0) | 23.9% |
Research and development expenses | (693.3) | (590.4) | 17.4% |
Operating Profit | 3,656.2 | 2,485.7 | 47.1% |
Share of (losses) / profits of associates | (76.8) | 18.6 | -513.3% |
Share of (losses) / profits of joint ventures | (13.9) | (39.3) | -64.6% |
Finance costs | (196.0) | (128.0) | 53.1% |
Profit before tax | 3,369.4 | 2,337.0 | 44.2% |
Income tax expense | (383.1) | (425.6) | -10.0% |
Profit for the year | 2,986.3 | 1,911.4 | 56.2% |
Profit for the year attributable to: | |||
Owners of the Company | 2,960.2 | 1,854.6 | 59.6% |
Non-controlling interests | 26.0 | 56.9 | -54.2% |
2,986.3 | 1,911.4 | 56.2% | |
[6] If the sum of the data below is inconsistent with the total, it is caused by rounding. | |||
Consolidated Statement of Profit or Loss (continued)[7] | |||
Year Ended | Year Ended | Year-over- | |
Weighted average number of ordinary | |||
– Basic | 2,327,839,704 | 2,281,036,867 | 2.1% |
– Diluted | 2,348,623,012 | 2,287,088,730 | 2.7% |
Earnings per share attributable to | |||
– Basic | 1.27 | 0.81 | 56.8% |
– Diluted | 1.25 | 0.80 | 56.3% |
[7] If the sum of the data below is inconsistent with the total, it is caused by rounding. | |||
[8] In 2020, pursuant to the 2019 Profit Distribution Plan considered and approved by the shareholders' general | |||
Consolidated Statement of Financial Position[9] | ||
RMB Million | December 31, | December 31, |
2020 | 2019 | |
Non-current Assets | ||
Property, plant and equipment | 10,137.1 | 7,666.0 |
Right of use assets | 1,519.9 | 1,564.4 |
Biological assets | 418.9 | 360.3 |
Goodwill | 1,391.8 | 1,362.2 |
Other intangible assets | 585.3 | 495.9 |
Interest in associates | 712.3 | 768.3 |
Interest in joint ventures | 52.5 | 25.2 |
Deferred tax assets | 300.9 | 262.2 |
Financial assets at fair value through profit or | 6,717.2 | 4,009.1 |
Other non-current assets | 1,395.6 | 62.4 |
Amount Due from Related Parties | 0.4 | 0.2 |
23,231.8 | 16,576.1 | |
Current Assets | ||
Inventories | 1,933.8 | 1,208.3 |
Biological assets | 501.7 | 354.0 |
Contract costs | 250.3 | 180.2 |
Amounts due from related parties | 56.9 | 13.3 |
Trade and other receivables | 4,337.9 | 3,555.9 |
Contract assets | 542.0 | 379.4 |
Income tax recoverable | 19.1 | 6.3 |
Financial assets at FVTPL | 4,617.7 | 1,701.6 |
Derivative financial instruments | 562.8 | 36.8 |
Pledged bank deposits | 9.1 | 4.0 |
Bank Balances and Cash | 10,228.1 | 5,223.3 |
23,059.3 | 12,663.0 | |
Total Assets | 46,291.2 | 29,239.1 |
[9] If the sum of the data below is inconsistent with the total, it is caused by rounding. | ||
Consolidated Statement of Financial Position (continued)[10] | ||
RMB Million | December 31, 2020 | December 31, 2019 |
Current Liabilities | ||
Trade and other payables | 4,550.3 | 3,392.8 |
Amounts due to related parties | 23.8 | 24.8 |
Derivative financial instruments | 0.9 | 86.4 |
Contract liabilities | 1,581.0 | 897.1 |
Borrowings | 1,230.0 | 1,809.9 |
Income tax payables | 340.4 | 261.4 |
Financial liabilities at FVTPL | 16.5 | 19.5 |
Lease liabilities | 177.4 | 142.5 |
7,920.3 | 6,634.4 | |
