WuXi Biologics (02269), the world's leading biopharmaceutical CDMO, handed in its 2024 report. The 2024 financial report shows that the company achieved annual revenue of 18.675 billion yuan, a year-on-year increase of 9.6%; net profit of 3.945 billion yuan, a year-on-year increase of 10.5%.

After excluding COVID-19-related revenue, WuXi Biologics' non-COVID-19 business achieved a year-on-year growth of 13.1%, showing the resilience of its fundamentals. It is worth noting that preclinical research service revenue increased by 30.7% year-on-year, accounting for 37.8% of total revenue, becoming the main force driving growth.

In terms of regional revenue, North American market revenue increased by 32.5% year-on-year, contributing 57.3% of total revenue. But the other side of the coin is that the revenue in China fell by 9.6%, exposing the continued impact of the cold winter of local biotech financing.

In 2024, WuXi Biologics' gross profit margin increased by 0.9 percentage points year-on-year to 41%, thanks to the WBS lean management system. More than 260 improvement projects achieved labor efficiency improvement and cost optimization, but the exchange loss of 180 million yuan, combined with the loss of 138 million yuan in equity investment, eroded part of the profit margin. Cash flow management showed pressure. Although the net cash from operating business for the whole year was 1.3 billion yuan, the net cash from investment and financing were both negative, at -383 million yuan and -1.476 billion yuan respectively.

From the perspective of the three expenses, the company's sales and marketing expenses will reach 470 million yuan in 2024, a year-on-year increase of 61.1%, and the proportion of revenue will increase from 1.7% to 2.5%, due to continued investment in talent recruitment, increased market publicity frequency and scale, and expanded regional layout; administrative expenses will be 1.67 billion yuan in 2024, a year-on-year increase of 11.9%, mainly due to increased employee costs, facility depreciation, and the expenditure of enhancing independent functions after the listing of WuXi Helian; R&D expenses will be 766 million yuan in 2024, a year-on-year decrease of 2.5%, thanks to WBS and digitalization to promote automation and enhance operational efficiency.

The progress of the technology platform injects bright colors into the financial report

The WuXiBody bispecific antibody platform has reached a total of 50 collaborations, the TCE cell adapter technology has won international orders such as GSK, and the microbial platform has successfully established an inclusion body production process. These innovation engines have driven the continuous expansion of the R&D pipeline, with 151 new comprehensive projects and an increase of approximately 106.91% in XDC business revenue year-on-year.

As of the end of the year, the company had a total of 817 comprehensive projects, including 87 late-stage clinical and commercial production projects, an increase of 13 from the previous year. This "funnel-shaped" pipeline structure lays the foundation for future commercial revenue.

The global layout of production capacity shows strategic depth. The Irish base completed the production of 16,000 liters of PPQ, the Worcester plant in the United States introduced a highly automated production line, and the Singapore base started modular construction. However, overseas expansion is not a smooth road. The revenue in the European region fell by 15.91% due to the high base of the new crown, indicating a growth ceiling under geopolitical risks.

The proportion of orders that can be converted within three years is low

Data shows that the company's total unfinished orders by the end of 2024 are US$18.5 billion.

This figure seems sufficient, but the convertible orders within three years are only US$3.7 billion, mainly affected by the termination of the Merck vaccine contract.

According to the announcement on January 6, 2025, after the company's Irish vaccine facility asset transaction with MSD International GmbH, the relevant unfinished orders of approximately US$3 billion have been removed.

Management acknowledges that there are differences in the timing and probability of realizing revenue from potential milestone payment orders, as they are affected by factors such as project success rate and project progress that the Group may not be able to fully control.

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