The Chinese company’s figures show net revenues increased to $93.6m (€65m), a 16 per cent increase year on year, which WuXi claims is largely due to the performance of its laboratory services segment, which saw net revenues grow by 12 per cent to $75.2m (€52.2m).
Gross margins for WuXi’s lab services division decreased year on year, however, from 41.6 per cent to 39.6 per cent. The company claims higher labour costs, coupled with the negative impact from the Chinese Renminbi’s appreciation against the US dollar, and an increase in depreciation expenses from recent investments and expansions, are to blame.
WuXi also saw net revenues in its manufacturing division increase by 35 per cent to $18.3m (€12.7m), and gross-margin improvement from 19.9 per cent to 26.7 per cent.
However, the company admits its low-margin manufacturing revenues have continued to fail to match the pace set by its laboratory services segment – a disparity WuXi previously blamed on low utilisation rates, which it claims are improving.
First quarter operating income grew by 14 per cent year on year to $19.8m (€13.7), due to a 14 per cent increase in gross profit and a 15 per cent growth in operating expenses, which WuXi claims were driven by staff hiring in SG&A functions, and higher labour costs.
“WuXi began 2011 with a strong performance,” said Ge Li, WuXi’s chairman and CEO, “We achieved double-digit revenue and EPS (earnings per share) growth, while we continued to invest in new capabilities and capacity to better serve our customers.”
Exceeding guidance
Li said WuXi had exceeded its financial guidance for the quarter, with revenue growth at 16 per cent compared to guidance figures of between 13 and 15 per cent. “All of our businesses contributed to this strong revenue and margin performance,” he said.
Speaking of WuXi’s plans for the remainder of the year, Li said: “In 2011 we will continue to invest and build a strong integrated drug R&D service platform to be the industry’s alternative R&D engine to discover and develop new drugs for our customers,” before adding, “WuXi has the right business model for long-term success.”