WuXi PharmaTech, a Chinese drug-research company that provides scientists-for-hire to conduct research and development (R&D), hopes to become a global player in the next five to 10 years, a corporate executive said yesterday.

The Shanghai-based company said it will do so by expanding into biotech, safety evaluation and manufacturing, thereby providing an array of outsourcing services that are cheaper yet of equal quality to their foreign counterparts.

"The majority of our clients are big international firms, with Pfizer and Merck ranking as the top two. As business expands, we want to win more clients, big or small, and get more orders from current customers," said Edward Hu, chief operating officer of WuXi PharmaTech.

From 2005 to 2008, the firm's revenue grew by over 100 percent annually as a growing number of international firms outsourced their pharmaceutical R&D business to developing nations like China, where the talent pool is abundant and labor costs are comparatively lower.

"In 2006, the R&D cost of a new drug for an American pharmaceutical company was $1.5 billion, five to 10 times the cost of a similar drug developed in China or India. It is estimated in 2009, US pharmaceuticals firms outsourced 41 percent of their R&D business, valued at $24 billion worldwide," said Zheng Yufen, senior manager for healthcare at the investment banking division of Zero2IPO.

But last year's growth was slow thanks to the financial crisis. "We expect revenue to land at $265 million to $275 million, up from 2008's $253.5 million," Hu said.

Strong growth allowed WuXi PharmaTech to outperform its American counterparts, the majority of which made job cuts and witnessed negative growth over the last year.

Hu predicted WuXi's 2010 revenue will increase "above last year's level".

New York Stock Exchange-listed WuXi has pharmaceutical R&D facilities in Shanghai and Tianjin focusing on drug chemistry. Late last year, a pre-clinical drug safety evaluation center came into operation in Suzhou, Jiangsu province, with investment of $40 million.

Recently, WuXi signed an agreement with the local government to set up a large-scale biologicals manufacturing facility in the city.

This year, "the company expects to invest at 2009 levels - some $55 million to $60 million - to strengthen the firm's R&D capabilities", said Hu.

China is attracting more international pharmaceuticals to either establish R&D centers or outsource R&D business here, and the world's leading Contract Research Organizations (CROs) including Covance have also decided to settle here.

"By 2020, China will be the world's leading pharmaceutical R&D outsourcing center," Hu said.

It is estimated R&D spending by the world's major pharmaceutical firms in the next five years will see annual growth of 3 to 4 percent, while their R&D outsourcing spending will grow by 6 to 8 percent during the same period.

"Growth for China's CRO market will be far above the global average," said Hu.

The global CRO market has enjoyed annual growth of 14 percent, 4 percentage points lower than China. In 2010, the global CRO market will reach $36 billion, according to global research consultancy Frost & Sullivan.

(China Daily 02/24/2010 page16)