Home » The industry is expected to grow by single digits in the next two years. WuXi Biologics, a Hong Kong stock market, was suspended from trading and the CRO sector collapsed again_Oriental Fortune Network

The industry is expected to grow by single digits in the next two years. WuXi Biologics, a Hong Kong stock market, was suspended from trading and the CRO sector collapsed again_Oriental Fortune Network

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The industry is expected to grow by single digits in the next two years. WuXi Biologics, a Hong Kong stock market, was suspended from trading and the CRO sector collapsed again_Oriental Fortune Network

WuXi Biologics Causes Stock Market Crash and Industry Slowdown

WuXi Biologics (2269.HK), a leader in pharmaceutical outsourcing, has sent shockwaves through the CXO sector with its recent business update. On December 4, the company’s stock price crashed, leading to a suspension of trading on the Hong Kong Stock Exchange. This news not only affected WuXi Biologics, but also brought down the entire CXO Concept (Hong Kong Stock) Index, causing a 9.88% drop in the sector.

The company, which provides end-to-end solutions for the discovery, development and production of biologic drugs, is seen as a vane of the industry. This is not the first time that WuXi Biologics has had such an impact. Back in June, the company’s stock price plummeted 17.02% after revealing a decrease in new projects for the year.

In its recent business update, WuXi Biologics attributed the downturn in revenue and profits to unexpected events in its drug development and manufacturing businesses. The company experienced a slower rate of growth in its drug development business, while the postponement of blockbuster drugs from major pharmaceutical companies affected its manufacturing revenue.

Furthermore, the company pointed to a decrease in biotechnology financing as a major challenge. The global financing for innovative drugs decreased by 40% compared to the same period last year, leading to a tight funding environment and a longer contract signing cycle for WuXi Biologics.

The impact of the reduction in global investment and financing of innovative drugs has affected other companies in the sector as well. Heyuan Biotech (688238.SH), which focuses on cell and gene therapy CDMO services, has expressed similar distress due to the continued external economic downturn and delayed financing from downstream customers.

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WuXi Biologics also cited competition from other companies in the sector, particularly Samsung Biologics, which won a significant order from Pfizer at a low price. This has led to discussions within WuXi Biologics about potentially lowering prices to grab more projects, particularly for drugs in the clinical development stage.

Despite the challenges, WuXi Biologics remains optimistic about the future, expecting that gross profit margin and growth rate will continue to resume growth in the coming years, with steady growth expected in 2024 and strong growth returning in 2025 and beyond.

The news of WuXi Biologics’ business update has had a far-reaching impact on the CXO sector, highlighting the challenges faced by companies in the pharmaceutical outsourcing industry. As the sector prepares for slower growth in the next two years, companies will need to adapt to changing market conditions and find new ways to navigate the challenges presented by decreased financing and increased competition.

The repercussions of WuXi Biologics’ business update are not limited to the company itself, but have brought attention to the broader issues affecting the pharmaceutical outsourcing industry as a whole. As companies in the sector work to overcome these challenges, the impact of WuXi Biologics’ update will continue to be felt in the months and years ahead.

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