China’s WuXi Biologics has announced a 10-year investment plan aimed at establishing a world-class pharmaceutical contract manufacturing center in Singapore. The Singapore Economic Development Board (EDB) is supporting the project.
EDB Chairman Dr Beh Swan Gin stated that “The investments will establish Singapore as a significant node in the company’s global research, development and manufacturing network. It is a testament to Singapore’s position as a global biopharmaceutical hub, and will strengthen our attractiveness to biotech innovators and start-ups.”
In its press release, WuXi Biologics stated that:
“This investment will establish a cutting-edge, fully integrated CRDMO center in Singapore, including a research and development service center and large-scale drug substance and drug product manufacturing facilities for biologics.”
“The investment strengthens WuXi Biologics’ global research, development and manufacturing network with more robust nodes to meet the growing demand from clients worldwide for end-to-end services…”
CRDMO stands for Contract Research, Development and Manufacturing Organization. More commonly abbreviated to CDMO, it is – as explained by Japanese pharmaceutical company Seikagaku – “a business that supplies comprehensive services in drug development and manufacturing to pharmaceutical companies, including contract drug manufacturing, pharmaceutical formulation planning at the development stage, manufacturing of investigational drugs, and optimization of manufacturing conditions.”
CDMOs are active in a wide range of pharmaceutical applications, including cardiovascular disease, oncology, respiratory disorders, neurology, metabolic disorders and infectious diseases; vaccines (Covid and non-Covid), gene therapies and other complex biologics.
WuXi Biologics is one of the world’s largest and fastest growing CDMOs, with revenues up 83% to RMB10.3 billion (US$1.5 billion at the current exchange rate) in 2021 and up 10x in the past five years. In comparison, industry leader Lonza of Switzerland reported revenues of $5.6 billion last year. Samsung Biologics generated revenues of $1.2 billion.
Other large CDMOs include Catalent and Thermo-Fisher of the US, Recipharm of Sweden, Siegfried of Switzerland, Fujifilm of Japan and Boehringer Ingelheim of Germany.
WuXi ranks itself second in the world with a revenue-based market share of 10.3% in 2021 vs. 18.9% for Lonza, but Pharma Boardroom – a website aimed at executives, consultants, regulators and vendors working in healthcare the life sciences – ranks it fourth. Revenue classification issues appear to account for the disparity.
WuXi Biologics has factories in China, the US, Germany, Ireland and Singapore, and has more than 10,000 employees worldwide. Capacity in progress nearly tripled in 2021 and is scheduled to nearly triple again by 2025.
In 2018, the company built a factory in Ireland and in 2020 it built one in Boston. In 2021, it bought production facilities from Bayer in Germany and Pfizer in China, and acquired Chinese company CMAB Biopharma.
In that year, North America accounted for 51% of revenues, China for 24%, the EU for 22% and the rest of the world for 3%. According to management, all of the world’s top 20 pharmaceutical companies are now working with WuXi Biologics.
Market research and consulting Prescient & Strategic Intelligence expects the global biologics CDMO market to expand by 2.4 times from 2021 to 2030, growing at a CAGR of 10.3% from $13.2 billion to $31.8 billion.
Several factors should contribute to this growth, including the world’s aging population, an increasing number of infections, rising investment in healthcare, the trend toward outsourcing and the proliferation of biopharma ventures without the funds or the desire to build their own factories.
The industry is also consolidating as bigger companies buy up their smaller competitors and make large investments to keep up with or ahead of the market growth rate. In 2025, WuXi Biologics expects the top 10 companies to control more than 80% of the market.
Wuxi Biologics has attracted the attention of the US government, which has expanded its efforts to hamstring the Chinese economy from cell phones and semiconductors to healthcare.
Last February, the company issued the following statement:
“We have been made aware of a recent US Commerce Department announcement that two WuXi Biologics (Cayman) subsidiaries in Shanghai and Wuxi will be added to the department’s “Unverified List” (UVL) on February 8, 2022. We understand that the reason for this action is because US government agencies have not been able to undertake required end-use verifications in order for certain equipment to be exported from US suppliers…”
“WuXi Biologics has been importing certain hardware controllers for bioreactors and certain hollow fiber filters that are subject to US export controls but have received Commerce Department approval for the last 10 years. We are in compliance with all US export control regulations. We do not re-export or resell these items to any other entity. The US Commerce Department has a routine process to verify the proper use (i.e., self-use, no resale) of these on site. This process has not been completed in the last two years due to the Covid-19 pandemic.”
“This has no impact on our business or ongoing services to global partners. There is very minimal impact to our imports as no such equipment is required after facility construction in Shanghai and Wuxi. We welcome inspection at any time for the clearance and removal from such list. We are also pursuing interim measures to remove these subsidiaries from the list prior to inspection.”
The Commerce Department’s Bureau of Industry and Security defines the Unverified List as “A list of parties whose bona fides BIS has been unable to verify. No license exceptions may be used for exports, reexports, or transfers (in-country) to Unverified parties. A statement must be obtained from such parties prior to shipping items not subject to a license requirement.”
A search of the Unverified List reveals that Wuxi Biologics Co, Ltd in Wuxi and Wuxi Biologics (Shanghai) Co, Ltd are still on it. But as the statement said, the company’s business appears to have continued to grow without hindrance.
The share price of WuXi Biologics (Cayman), which is traded on the Hong Kong Stock Exchange, dropped by almost half between February 7 and March 15 but has since recovered.
On July 5, Reuters reported that the Chinese government had allowed a US export control officer to inspect a company that informed sources said was WuXi Biologics. The share price jumped on the news as investors assumed that the company would be removed from the list, but then settled down to wait. WuXi Biologics has not commented.
It remains to be seen what impact this issue might or might not have on the company’s investment plans in Singapore. As tensions over Taiwan ratchet up, US economic policing may be at odds with Singapore’s economic development policy.
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