WuXi PharmaTech Looks Toward U.S. IPO

Filed in archive IPOs on July 26, 2007

China's largest drug research contractor, WuXi PharmaTech, announced plans today to float an IPO on the New York Stock Exchange later this year, according to In-Pharma Technologists. Credit Suisse, Jefferies & Co, and JP Morgan will underwrite the offering.

WuXi Pharma does almost all of its clinical testing work for American pharmaceutical companies. According to a Bloomberg article on WuXi Pharma earlier this week, U.S. drug companies are allowed to outsource a growing percentage of research and development on drugs they are developing. In 2009 that will be 41 percent; that's in the neighborhood of $24 billion worth of contract work for companies outside the U.S. Drug companies often use that option for overseas outsourcing to send animal testing work that would be expensive or politically sensitive in the U.S. to other countries. The amount of outsourcing U.S. drug companies do is up - from 33 percent in 2005 and only 10 percent in 1997.

Shanghai-based WuXi Pharma was created in 2001. Two private equity funds, Fidelity Asia Ventures (Fidelity International's venture capital unit for Asia) and Connecticut-based General Atlantic LLC, have invested in WuXi Pharma. WuXi Pharma hopes to raise about $200 million from the IPO. It plans to use part of the money to build "a preclinical drug safety evaluation centre" in Suzhou, according to the In-Pharma Technologists report.

The IPO will be the latest in a long list of medical research and technology companies in China that have gone public over the last few years.