On April 28, the domestic CXO giant WuXi AppTec announced its double-digit growth for Q1. According to the financial report, the company achieved operating revenue of 9.655 billion RMB in Q1 2025, a year-on-year increase of 20.96%. Net profit attributable to the parent company was 3.672 billion RMB, a year-on-year increase of 89.06%. Net profit attributable to the parent company excluding non-recurring items was 2.329 billion RMB, an increase of 14.50%. Adjusted non-IFRS net profit attributable to the parent company was 2.68 billion RMB, a 40% year-on-year increase. Even more astonishing, the company’s orders on hand, which represent future business, surpassed 50 billion RMB, reaching 52.33 billion RMB, a year-on-year increase of 47.1%!
The CRDMO business model drives continuous growth. In Q1 2025, revenue grew by 32.9%, with the TIDES business seeing a revenue increase of 187.6%, contributing the main incremental growth. As new capacity added last year ramped up quarter by quarter, TIDES revenue reached 2.24 billion RMB. By the end of March 2025, the TIDES order book grew by 105.5% year-on-year. The number of customers served by TIDES D&M services increased by 14%, and the number of molecules serviced grew by 25%. The company is continuing to expand its peptide production capacity in Taixing, and by the end of 2025, the total volume of solid-phase peptide synthesis (SPPS) reaction vessels is expected to exceed 100,000L.
In Q1, revenue reached 1.29 billion RMB, with an adjusted non-IFRS gross margin of 23.4%. Laboratory analysis and testing services revenue was 880 million RMB, reflecting a 4.9% year-on-year decrease, influenced by market and pricing factors as orders converted into revenue. The adjusted non-IFRS gross margin also declined. Among them, the drug safety evaluation business saw a 7.8% decrease in revenue, but it maintained its leading position in the Asia-Pacific industry.
Revenue for the biological business in Q1 reached 610 million RMB, a year-on-year increase of 8.2%. This segment continues to efficiently funnel new customers to the company’s CRDMO business model, accounting for over 20% of new customers.
Considering that WuXi AppTec had maintained its performance guidance last year without any changes, even under unprecedented pressure from the U.S., the company’s performance ended up falling within the guidance range. It is expected that the strong performance growth in 2025 will be stable.
Maintaining the year-end guidance is a reflection of a company’s dual confidence in its business and management abilities: the business model significantly expands revenue, and refined management helps with cost control. Of course, the success of both depends on the company’s strong internal execution. These three factors are closely linked, and none can be overlooked.
WuXi AppTec’s CRDMO business model has become its public "secret" to winning numerous customers and orders. Simply put, this "integrated, end-to-end" model provides a full-service process from early drug discovery and research (R), development (D), to manufacturing (M), and WuXi AppTec’s services cover various types of innovative molecules.
For pharmaceutical companies, the benefits of choosing an integrated CRDMO are obvious. If a biotech company today needs a CXO for toxicology testing, another for bioanalysis, and another for clinical trials, by the time the drug is approved, they would need yet another CXO... not only is it difficult to manage, but project transition risks and quality control issues also arise. More importantly, these CXOs do not proactively coordinate or plan, making it hard to push the project forward collaboratively. This process would be time-consuming and costly.
Previously, Morgan Stanley interviewed 108 global pharmaceutical company leaders and summarized seven key CXO capabilities, with "integration, end-to-end" ranking first.
WuXi AppTec’s data clearly demonstrates the industry’s preference for this model. More and more molecular pipelines are being funneled down through WuXi AppTec’s "funnel":
in Q1, small molecules in R, D, and M stages increased by 6%, 3%, and 17%, respectively. Among them, there were 460,000 small molecules in the R stage, and 3,393 new molecules were added in the D&M stages, including 5 new projects in the commercialization and clinical Phase III stages by Q1 2025.
In Q1, WuXi AppTec’s D&M pipeline added 203 new molecules, of which 75 molecules came from R to D conversions. Looking at data disclosed since 2024, the conversion rate from R to D has been increasing each quarter. From Q1 to Q3 of 2024, approximately 29% of new D&M pipeline molecules came from internal conversions, while by Q1 2025, this proportion had increased to nearly 37%.
These conversion figures hide even more impressive information:
The increasing R to D pipeline conversion rate not only gives CRDMO an additional "traffic entry" but more importantly, the additional "R" allows CRDMO to identify innovation trends earlier, allowing D&M services to detect and address emerging needs quickly, ensuring projects are well-prepared for the later stages and can scale quickly.
For example, WuXi AppTec’s efficient peptide capacity expansion in 2024 attracted industry attention, but the company had already recognized the potential of peptides as early as 2011, setting up peptide research and testing capabilities, and preparing early for D&M.
In 2024, the total volume of solid-phase peptide synthesis (SPPS) vessels at WuXi AppTec increased from 32,000 liters at the beginning of the year to 41,000 liters by year-end, and by Q1 2025, some of these results were visible in the financial report: the TIDES business, which includes peptides and oligonucleotides, generated 2.24 billion RMB in revenue, up 187.6% year-on-year. As of March 2025, the TIDES order backlog had doubled, growing by 105.5% year-on-year! WuXi AppTec’s SPPS capacity is expected to further expand to over 100,000 liters by the end of 2025, significantly enhancing the predictability of business growth.
In fact, as long as WuXi AppTec continues to focus on the CRDMO model, we have reason to believe that the success of WuXi TIDES will not be a one-time occurrence. No matter where the next wave of new molecules emerges, WuXi AppTec is unlikely to miss it.
An excellent business model can drive a company to expand its revenue, but high-quality development also requires refined and efficient management. In other words, within CRDMO, the RDM services must operate optimally with "O" — Operation.
As mentioned earlier, Q1 2025 has not been an easy time for the pharmaceutical industry. With tariff barriers rising, the FDA focusing on cost-cutting, and numerous high-volume drugs facing patent cliffs, companies are cutting pipelines and reducing costs to improve efficiency. During such challenging times, WuXi AppTec actively repurchased shares. On March 18, the company disclosed its first 1 billion RMB share repurchase plan, and just three weeks later, it announced the second 1 billion RMB repurchase plan for 2025.
In fact, since last year, WuXi AppTec has implemented three repurchases, totaling 3 billion RMB. On the surface, share repurchases reduce circulating shares, increase earnings per share, and create value for shareholders. But at a deeper level, these actions reflect WuXi AppTec’s high-level management and strategic decisions.
According to the Q1 report, WuXi AppTec’s adjusted non-IFRS gross profit and net profit attributable to the parent company increased by 31% and 40%, respectively. In addition to revenue and profit growth, operating cash flow in Q1 reached 3.03 billion RMB, a year-on-year increase of 41.8%, matching the growth rate of profits. This means that WuXi AppTec has not sacrificed profit or cash flow for revenue numbers; its business development is genuinely stable.
Ample funds can be used for the company’s development in various areas, and WuXi AppTec’s strategic choices are clear.
On one hand, due to the forward-looking nature of the CRDMO model, WuXi AppTec will continue to increase capacity and build production facilities globally, including two large production bases in Middleton, USA, and Singapore. The Middleton base is expected to be operational by the end of 2026, and the Singapore base by 2027.
WuXi AppTec expects capital expenditures to reach 7-8 billion RMB in 2025. It is foreseeable that as long as the company continues to focus on the CRDMO model, these investments will eventually yield returns.
On the other hand, WuXi AppTec’s management team has the ability and willingness to reward investors with real money. According to the 2024 profit distribution plan, more than 60% of the company’s profits will be returned to shareholders through "cash dividends + share repurchases." Over the past three years, WuXi AppTec has returned over 11.3 billion RMB to shareholders, while free cash flow during the same period was approximately 15.3 billion RMB, meaning over 70% of the free cash flow went to investors.
By "making money" efficiently and "spending it wisely," these figures not only show that WuXi AppTec is in a healthy positive cycle but also reflect the confidence and optimism of the company’s management in long-term development.
In the face of the current macroeconomic environment, the only certainty we can be sure of is that uncertainty will not disappear, and sudden changes will always happen. However, a high-quality company should be able to create more predictable value for its partners, the industry, investors, and even the public through solid business and meticulous management.
