WuXi Biologics (HKG: 2269) experienced a 22% decline in its share price on Monday, December 4, 2023, following an investor presentation that disclosed the contract development manufacturing organization (CDMO) industry’s growth has slowed to single digits, down from over 15% in recent years. The company’s business update revealed that its original revenue forecasts for 2023 had overestimated the market by approximately USD 400 million. This revenue shortfall was primarily due to a downturn in China’s biotech activities, attributed to tightened financial and macroeconomic conditions, which reduced the number of new development projects, resulting in a USD 300 million deficit from forecasts. WuXi has also faced significant impacts from the loss of COVID-19-related business and delays in manufacturing revenues related to three commercial-stage projects for multinational corporations (MNCs) due to regulatory holdups, leading to a USD 100 million shortfall in manufacturing revenues.
WuXi noted that the biotech sector’s general downturn reached its lowest point in Q1 2023, with signs of recovery now appearing, albeit unevenly. The company predicts that single-digit growth for the CDMO sector will persist for the next two years, with a recovery expected to begin in H2 2024. Despite the industry downturn, WuXi still anticipates a revenue expansion of over 36% in 2023, excluding COVID-19 related sales, and maintains a positive outlook on the industry’s long-term trends beyond 2024.- Flcube.com
