WuXi Bio's business model is not CXO/CDMO, but CRDMO [WuXi Bio 2025H1 Financial Results Analysis]
**I. Core Insights**
**1. Business Data Highlights: All Metrics Reach Historical Highs**
1) Project count increased 16% year-over-year to 264 projects. New project additions reached a historical high with 86 projects secured in the first half (majority from the US), with 70% of these 86 projects being ADC and bispecific antibodies. In the most exciting therapeutic areas, WuXi Bio has captured significant market share.
2) M-stage projects increased from 16 to 24, with MD-stage revenue growing 24.9%.
3) Backlog, which has been substantial and difficult to grow, showed notable increase due to M-stage momentum, rising from $18.5 billion USD in 2024 annual report to $20.3 billion USD in 2025 interim report.
4) During the reporting period, 44 regulatory inspections were conducted, including FDA, EU, Japan, Germany, Brazil, and China, with WuXi Bio achieving 100% pass rate.
5) Key talent retention rate reached 98.8%.
**2. Financial Data Highlights:**
1) Revenue reached RMB 9.95 billion during the reporting period, up 16.1% year-over-year; adjusted EBITDA was RMB 4.31 billion, up 20.6% year-over-year; adjusted net profit was RMB 2.84 billion. Growth was primarily driven by successful execution of the "Follow and Win the Molecule" strategy, along with leading technology platforms, industry-best project delivery timelines, and excellent project execution track record, driving revenue growth for the group. Based on rapidly developing technology platforms such as ADC (antibody-drug conjugates) and bispecific antibodies, the group expanded its service offerings to the biologics industry, including research discovery, pre-IND development, and clinical and commercial manufacturing services. Revenue growth from research services generated by multiple advanced technologies; utilization of existing and new capacity, including capacity ramp-up at European manufacturing facilities.
2) While profit margins are not at historical highs (slightly lower compared to peak COVID period full capacity utilization), there is confidence that margins can return to historical peaks. Gross margin increased to 42.7%, showing significant improvement, mainly attributable to cost savings and efficiency improvements achieved through WuXi Bio's lean operations management system (WBS) and digital solutions.
**II. 2025H1 Performance Overview**
**1. Revenue Distribution by Stage**
R-stage (preclinical) revenue grew 35%, representing WuXi Bio's strongest revenue segment, accounting for over 40% of company revenue. This 35% growth on a high base was primarily driven by research services and revenue conversion from preclinical development projects.
Commercial revenue grew 24.9% year-over-year, reflecting early-stage projects entering mature phases and continued ramp-up of existing commercial projects.
Both early and late-stage segments showed strong growth, while mid-stage (Phase I and II clinical projects) growth was relatively slower. Several large-scale CMO projects have progressed from Phase II to Phase III and are approaching market launch, accelerating M-stage growth.
**2. Continued Momentum Across R, D, M Segments**
Preclinical new project additions totaled 77, with 9 projects "Won," including 2 Phase III clinical projects - all representing near-historical highs. Last year's record was 151 projects, and this year's first half achieved 86 projects despite last year's strong momentum. Over the past 18 months, new project count approached 240, with market share exceeding 50%.
M-stage will continue steady growth in coming years, driven by 24 commercial production projects and 67 Phase III clinical projects. With a 70% success rate, this translates to 40-50 additional commercial production projects over the next 5-6 years. By 2030, commercial production projects could potentially reach over 70.
**3. Strong Backlog Growth**
Backlog growth is reflected in R-stage outstanding potential milestone payments increasing from $7 billion to $9 billion USD, and outstanding service orders growing from $10 billion to $11.3 billion USD. Both R-stage and D/M-stage backlogs are showing robust growth. Outstanding orders within 3 years, which remained flat for the past 3-4 years, now show significant growth, currently at $4.21 billion USD.
**4. Rich R&D Pipeline**
In terms of growth rates, bispecific antibodies grew 36.6% year-over-year, with 168 bispecific and multi-specific antibody projects. WuXi Bio's R&D pipeline includes the hottest global bispecific antibodies, whether PD-1/VEGF or CD bispecific antibodies. Most of the world's best and most promising bispecific antibodies are in WuXi Bio's portfolio.
ADC projects increased from 167 to 225, up 34.7% year-over-year. WuXi Bio has strong participation rates in the two most exciting therapeutic areas (bispecific & multi-specific antibodies and ADC). Of the 86 projects signed in the first half, 70% were ADC and bispecific antibodies.
This means in the industry's most exciting segments and the most challenging CMC areas, WuXi Bio's market share is higher than in traditional antibody markets. When news emerges about breakthrough ADC or bispecific antibody developments, there's a 60-70% probability that WuXi Bio is behind the effort. When news reports exceptional biologics efficacy, there's a 40% probability that WuXi Bio is working on that project.
Excluding WuXi Bio affiliate revenue, non-affiliate business still grew 9% in the first half, demonstrating that WuXi Bio's growth isn't dependent on a single track but multiple therapeutic areas.
**5. Regional Revenue Distribution**
North America: Accounted for 60% of revenue in the first half, with revenue growing 20% year-over-year. Despite potential fluctuations in the financing environment, WuXi Bio continues to capture higher market share.
Europe: Revenue performance is strong, representing 20% of total revenue. While European revenue growth isn't as rapid as North America, many new projects are entering from Europe.
China: Revenue accounts for only 13%, with slight year-over-year decline, mainly due to continued market weakness in China and many promising Chinese projects going overseas, shifting revenue to North America and Europe. Including overseas Chinese projects would show single-digit growth.
Other regions: Efforts in Japan and South Korea over recent years are showing significant results, with revenue doubling and accounting for 6% of total revenue. Japan and South Korea may achieve revenue scale comparable to China and Europe in coming years.
**6. Business Model**
WuXi Bio is not a traditional CMO or CDMO, but a CRDMO. For example, for an R-stage molecule transferred to clients, WuXi Bio may receive up to $30 million in upfront payments, with potential milestone payments of $200 million. If the drug achieves $1 billion in sales, annual royalties could reach up to $100 million (3-10% sales royalty).
This component wasn't prominent in previous years but became an important contributor to company revenue and profits last year and this year, with margins exceeding 80%.
For D-stage, each ADC project is approximately $10 million, each bispecific antibody project $7-8 million, and each monoclonal antibody project $4-5 million. The 86 new projects bring at least $600-700 million in new orders.
Each D-stage project is essentially WuXi Bio's IP. By year-end, 600 projects will be eligible for potential cell line royalties. Projects produced 100% at WuXi Bio facilities can waive cell line royalties, while those produced elsewhere are subject to cell line royalty payments.
IP-generated revenue and profits may even exceed manufacturing profits themselves. WuXi Bio's intellectual property revenue and profits are increasing annually.
**7. Global Expansion**
The company has established strong presence in Ireland, Germany, and Singapore, making WuXi Bio an international company. Complete R, D, M supply chains exist in China, Singapore, and Europe/US - three separate supply chains. Regardless of geopolitical factors or tariffs, WuXi Bio's global network allows clients to choose where to conduct R&D, manufacturing, and quality testing.
1) Ireland represents WuXi Bio's first major overseas investment, with three operational facilities completing 4 PPQs with 100% success rate. The first product from Ireland facilities has received EU approval and begun commercial production.
2) US investment is expanding, with the Massachusetts facility designed as the world's most technologically advanced, near-fully automated production line. The New Jersey R&D facility is also operational.
3) China continues capacity expansion with a new 15,000L production line in Hangzhou.
4) Singapore's drug product facility has begun construction, with drug substance facility in design phase. This represents WuXi Bio's most successful overseas project, completed on time and under budget.
**8. Quality System**
Beyond execution capabilities, quality represents WuXi Bio's core competitive advantage. The company achieved 100% pass rate on 44 regulatory inspections, including 22 FDA and EU inspections, with no critical deficiencies or data integrity issues.
**9. Digital Solutions**
WuXi Bio has launched multiple digital systems this year, including DaVinci customer portal providing comprehensive project and financial data access, BioFoundry laboratory systems with predictive capabilities, and advanced EBR and planning systems for manufacturing.
**10. Technology Platforms**
In the industry's hottest areas - bispecific antibodies and ADC - WuXi Bio has developed the WuXiBody platform since 2018 (7 years, 50 projects) and WuXi Bio affiliate's proprietary conjugation technology enabling site-specific conjugation and dual payload capabilities.
WuXi Bio utilizes single-use production technology, achieving 110 g/L expression levels in continuous production runs, compared to industry standard 3-5 g/L. The high-concentration formulation platform can achieve concentrations up to 150 mg/mL or higher, with maximum reaching 230 mg/mL, enabling convenient patient self-administration.
*Special Note: This article shares investment logic and does not constitute investment advice.*