WuXi PharmaTech makes its first acquisition

WuXi PharmaTech, China's contract research titan, has orchestrated its first acquisition, gaining biologics capabilities and a base in the US.

The firm has agreed to pay $151m for US-based AppTec Laboratory Services in addition to taking on $11.7m of AppTec's debt.

The transaction already has the approval of all required parties and is expected to close in the first quarter of 2008.

AppTec offers contract testing, research and development, and biologics manufacturing services from FDA-registered facilities in Philadelphia and Atlanta and WuXi PharmaTech said its chemistry services will be complemented by AppTec's biologics testing and manufacturing capabilities to create a "broader and deeper scope of services".

In addition, the firm said that AppTec brings "established customer relationships with many leading pharmaceutical, biotech and medical device companies in the US and around the world".

Dr Ge Li, WuXi PharmaTech chairman and CEO, said the purchase was a step towards its goal of becoming a "global R&D outsourcing leader".

A company spokesperson indicated that further acquisitions may be on the cards in the near future.

To date, WuXi PharmaTech has only employed a strategy of organic growth, however, after going public four months ago it has doubled in value and is now in a position to begin spreading its tentacles beyond China's borders.

With its global expansion plans it may also be planning to take on the US-based contract research organisations (CROs) who are setting up operations and/or establishing business partnerships in China and in doing so, encroaching on its market share.

China has been actively trying to create a name for itself in the preclinical arena and is fast becoming a popular destination to outsource preclinical work, which is often highly specialised, difficult to perform and costly.

According to a recent Bloomberg report, WuXi Pharmatech, China's largest preclinical services provider, will this year overtake Pfizer, the world's largest pharmaceutical company, in the number of chemists it employs - currently the number sits at 2100.

The annual cost of a Chinese scientist is around $30,000 a year - a saving of up to nine-tenths on hiring a US scientist, according to a report by Jinsong Du, a health-care analyst with Credit Suisse in Hong Kong.