2. 1
Cautionary Note Regarding Forward-Looking Statements
Statements in this presentation contain "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform
Act of 1995, including, among others, our ability to reach our business and financial goals for the full year 2013, our financial guidance for
full-year and first-quarter 2013 (including, as applicable, estimated total revenues, estimated GAAP and non-GAAP diluted earnings per
ADS, capital expenditures, and other trends), overall ongoing and future investment in talent and facilities, laboratory services’ ongoing and
future investment, the growth of our small-molecule manufacturing business pipeline, our ability to continue achieving substantial free cash
flow, building a comprehensive and integrated technology platform, the ability of this platform to enable anyone and any company to discover
and develop new products efficiently and cost-effectively, our future delivery of drug candidates, pricing pressure in synthetic chemistry, our
productivity and future operating costs, the build-up of clinical development service capabilities, the growth of our biologics drug discovery
and development capabilities, our expected biologic services project portfolio, the growth and growth drivers in our manufacturing services,
the expected variability of commercial manufacturing revenue, research manufacturing revenues, expected growth across China-based
laboratory services, increasing utilization of our integrated drug development services, revenue growth in U.S.-based laboratory services,
growth in manufacturing services, expansion of our clinical development platform, lower capital expenditures, and more efficient use of
existing facilities. These forward-looking statements are not historical facts but instead represent only our belief regarding future events,
many of which, by their nature, are inherently uncertain and outside of our control. Our actual results and financial condition and other
circumstances may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking
statements. Among other factors, the state of the global economy may continue to be uncertain; pharmaceutical companies may not change
their business models as expected or in a manner favorable to us; we may fail to capitalize on the opportunities presented; the pressures
being felt by our customers and pharmaceutical industry consolidation may adversely impact our business and the trends for outsourced and
offshored R&D and manufacturing for longer than expected or more severely than expected; we may not enjoy the anticipated benefits of our
acquisitions and joint ventures or other planned investments and capital expenditures (including investments made through our corporate
venture fund) on a timely basis or at all; we may need to modify the nature and level of our investments and capital expenditures; we may
not maintain our preferred provider status with our clients and may be unable to successfully expand our capabilities to meet client needs;
our intellectual property protection policies may be breached, harming our customers and us; and we may face increased margin pressure
as a result of renminbi appreciation and increased labor inflation in China and the company’s investment. In addition, other factors that
could cause our actual results to differ from what we currently anticipate include failure to generate sufficient future cash flows or to secure
any required future financing on acceptable terms or at all; failure to retain key personnel; our reliance on a limited number of customers to
continue to account for a high percentage of our revenues; the risk of payment failure by any of our large customers, which could
significantly harm our cash flows and profitability; our dependence upon the continued service of our senior management and key scientific
personnel, and our ability to retain our existing customers or expand our customer base. You should read the financial information contained
in this release in conjunction with the consolidated financial statements and related notes thereto included in our 2011 Annual Report on
Form 20-F filed with the Securities and Exchange Commission and available on the Securities and Exchange Commission's website at
http://www.sec.gov. For additional information on these and other important factors that could adversely affect our business, financial
condition, results of operations and prospects, see "Risk Factors" beginning on page 6 of our 2011 Annual Report on Form 20-F. Our
results of operations for fourth-quarter 2012 are not necessarily indicative of our operating results for any future periods. All projections in
this release are based on limited information currently available to us, which is subject to change. Although these projections and the factors
influencing them will likely change, we undertake no obligation to update or revise these forward-looking statements, whether as a result of
new information, future events or otherwise, after the date of this press release, except as required by law. Such information speaks only as
of the date of this release.
3. 2
Use of Non-GAAP and Pro-Forma Financial Measures
We have provided the fourth-quarter 2011 and 2012 gross profit, gross
margin, operating income, operating margin, net income, net margin, and
earnings per ADS on a non-GAAP basis, which excludes share-based
compensation expenses, the amortization and deferred tax impact of
acquired intangible assets, impairment charges for goodwill and intangible
assets, and revaluation of contingent consideration. We believe both
management and investors benefit from referring to these non-GAAP
financial measures in assessing our financial performance and liquidity
and when planning and forecasting future periods. These non-GAAP
operating measures are useful for understanding and assessing underlying
business performance and operating trends. We expect to continue to
provide net income and earnings per ADS on a non-GAAP basis using a
consistent method on a quarterly basis.
You should not view non-GAAP results on a stand-alone basis or as a
substitute for results under GAAP, or as being comparable to results
reported or forecasted by other companies, and should refer to the
reconciliation of GAAP measures to non-GAAP measures for the indicated
periods attached hereto.
4. 3
Overview
WuXi is succeeding on three fronts: growing, investing, and returning
capital to shareholders
We achieved strong double-digit revenue growth in the fourth quarter
and full year of 2012
We also achieved double-digit EPS growth in 2012 despite margin
pressure
We continue to invest to build capabilities and capacity in order to
sustain revenue growth and EPS growth for the long term
We are making progress toward our dream of building an open-access
technology platform and integrated service offerings that will enable
anyone and any company to discover and develop medicines more
efficiently and cost-effectively
While growing and investing, we are generating strong free cash flow
that allows us to purchase our shares, which we believe are undervalued
5. 4
WuXi’s Integrated R&D Service Platform Today
Synthetic
Chemistry
Discovery Clinical/Commercial
Research
Manufac-
turing
Discovery
Biology
Medicinal
Chemistry
ADME/
DMPK
Formulation Toxicology
Clinical
Testing
Bio-
analytical
Services
Preclinical/Development
Commercial
Manufac-
turing
Small Molecules
Biologics
Medical Devices
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Revenues ($ millions)
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Headcount
~7,000 ~500
Toxicology
Combo
Product
Testing/
Manufacture
Package
Testing
Biocom-
patibility
Tissue-
Based
Product
Testing
Lot
Release
Testing
Micro-
biology
Novel
MAb
Discovery
Discovery
Biology/
Drug
Screening
Cell Line
Engineering/
Construction
Toxicology
Assay/For-
mulation/
Process
Devel.
Cell Bank-
ing/Cell
Line Char-
acterization
Viral
Clearance
Validation
Lot
Release/
Stability
Testing
Research
Manufac-
turing
Genomics
Manufac-
turing
Process
Research
cGMP
Manufac-
turing
Clinical &
Bioanal.
Testing
Bio-
analytical
Services
Preclinical
Efficacy
Materials
Character-
ization
Risk
Assess-
ment
Research
Reagents
6. 5
Fourth-Quarter 2012 Financial Results
Strong, broad-based year-over year revenue growth of 15.8%,
driven by continued growth in demand for WuXi’s
comprehensive, integrated services platform
22.2% year-over-year growth in China-based Laboratory
Services revenue, led by growth in integrated drug discovery
and drug development services
Higher GAAP and non-GAAP gross margin and operating
margin versus first three quarters of 2012
Met or exceeded financial guidance
7. 6
Full-Year 2012 Financial Results
22.8% revenue growth, with double-digit growth from each of our
three businesses
26.8% revenue growth in China-based Laboratory Services, led by
25% growth in integrated drug discovery services (medicinal
chemistry, biology, DMPK/ADME) and 75% growth in drug
development services
10.8% GAAP EPS growth, 13.3% Non-GAAP EPS growth in spite of
margin pressure
Invested $67.8 million in capital expenditures for new facilities and
equipment
Purchased 7% of our ADSs outstanding at the beginning of 2012
Met or exceeded financial guidance
8. 7
2012 Operational Highlights
Opened new chemistry facility in Wuhan
Opened cGMP drug-substance biologics manufacturing facility
in Wuxi
Formed joint venture with MedImmune to develop MEDI5117,
an anti-IL6 antibody for rheumatoid arthritis and other
autoimmune disorders for the China market
Entered into an agreement to form joint venture with PRA to
offer clinical research services in China
Performed numerous integrated drug development projects
from API synthesis to GLP toxicology studies for IND filings in
China and globally
Increased workforce to about 7,000 people worldwide
9. 8
Revenue Summary*
(US$ in millions)
Fourth Quarter Full Year
2012 2011 Δ 2012 2011 Δ
Total Net Revenue $125.7 $108.5 15.8% $499.9 $407.2 22.8%
China-Based Laboratory
Services
$81.5 $66.7 22.2% $293.2 $231.3 26.8%
U.S.-Based Laboratory
Services
$22.3 $20.8 7.2% $89.7 $80.3 11.6%
Total Laboratory Services $103.8 $87.5 18.6% $382.9 $311.6 22.9%
Manufacturing Services $21.9 $21.0 4.0% $117.0 $95.5 22.5%
*Classifies Process Chemistry in Manufacturing Services for all periods
10. 9
Total Net Revenues
(US$ in Millions)
4Q11 1Q12 2Q12 3Q12 4Q12
Manufacturing
Services
China-Based
Laboratory
Services
Revenue Performance by Services*
U.S.-Based
Laboratory
Services
$108.5
21.0
20.8
66.7
$118.0
22.2
64.4
31.4
*Classifies Process Chemistry in Manufacturing Services for all periods
$130.4
70.3
23.3
36.8
77.0
21.9
26.9
$125.8
81.5
22.3
21.9
$125.7
11. 10
GAAP Financial Summary
(US$ in millions)
Fourth Quarter Full Year
2012 2011 Δ 2012 2011 Δ
Net Revenue $125.7 $108.5 15.8% $499.9 $407.2 22.8%
Gross Profit $48.8 $42.6 14.6% $183.2 $156.4 17.1%
Gross Margin 38.8% 39.2% 36.7% 38.4%
Operating Income $23.6 $20.2 16.5% $89.4 $83.8 6.7%
Operating Margin 18.7% 18.6% 17.9% 20.6%
Net Income $23.8 $23.5 1.4% $86.6 $81.0 6.9%
Effective Tax Rate 15.9% 14.3% 16.7% 17.0%
Weighted Average
ADS Outstanding—
Diluted
71,688,426 75,233,086 (4.7%) 72,797,344 75,439,734 (3.5%)
Diluted Net Earnings
Per ADS
$0.33 $0.31 6.5% $1.19 $1.07 10.8%
15. 14
Capital Resources and Cash Flow
Cash and short term investments of $229.4 million at
December 31, 2012
Total debt of $64.8 million at December 31, 2012
Operating cash flow of $33.8 million for fourth-quarter 2012,
$131.2 million for full-year 2012
Capital expenditures of $15.6 million for fourth-quarter 2012,
$67.8 million for full-year 2012
16. 15
Share Purchases
While investing aggressively in our growing business, we
are also returning capital to shareholders
In 2012, we spent $67 million to purchase about 7% of our
ADSs outstanding at the beginning of 2012
Today, we announce a new share purchase authorization for
$100 million over the next 18-24 months
17. 16
Full-Year 2013 Financial Guidance
Total revenues of $565-$575 million, up 13-15% year
over year
GAAP diluted earnings per ADS of $1.26-$1.30, up 6-9%
Non-GAAP diluted earnings per ADS of $1.49-$1.53, up
6-9%
Capital expenditures of about $60 million
18. 17
Factors Expected to Impact 2013 Diluted Earnings Per ADS
$1.19
$1.26-$1.30
~$.30
(~$.04)
(~$.13)
(~$.07)
2012
Diluted EPS
Estimated 2013
Diluted EPS
Foreign
Exchange
Business
Growth
Investment* Share
Purchases
Labor
Inflation
~$.03
* Investment includes biologics R&D, losses from biologics manufacturing facilities, JVs with MedImmune
and PRA and risk sharing projects
$1.40
$1.49-$1.53
~$.32
GAAP
Non-GAAP
GAAP
Non-GAAP
Non-GAAP
GAAP
19. 18
First-Quarter 2013 Preview
Estimated total revenues of $129-$131 million, up 9-11% year
over year
Estimated GAAP and Non-GAAP diluted earnings per ADS of
26-27 cents and 31-32 cents, respectively
Accelerating quarterly revenue growth throughout 2013,
particularly in discovery, biologics, and development services
Accelerating diluted EPS growth throughout 2013, driven by
this accelerating revenue growth, slower sequential expense
growth, and share purchases
20. 19
Strong Revenue and Profit Growth
(US$ in Millions, except per-share amounts)
Revenues
$270.0
$334.1
$407.2
$565-575
$499.9
GAAP EPS
Non-GAAP EPS
2009 2011 20122010 2013 Est.
$1.49-1.53$1.40$1.24$1.09$0.89
$1.26-1.30$1.19$1.07$1.22*$0.72
• Reflects activity relating to proposed Charles River Laboratories transaction, including
receipt of termination fee and payment of transaction costs and employee bonuses
21. 20
Major Drug Discovery and Development Services
Drug Discovery Services
Synthetic chemistry
Medicinal chemistry
Biology
DMPK/ADME
Peptide synthesis
Biological reagents
Drug Development Services
Formulation
Analytical development services
Toxicology
Bioanalytical services
Biologics development
Clinical research
Genomics
22. 21
Revenue Distribution by Service Offering
Manufacturing
23.5%
Development**
8.6%
U.S. Lab
Services
17.9%
U.S. Lab
Services
19.7%
Medicinal
Chemistry
And Other
Discovery*
26.6%
Synthetic
Chemistry
21.6%
Manufacturing
23.4%
Development**
12.3%
Medicinal
Chemistry
And Other
Discovery*
28.1%
Synthetic
Chemistry
18.3%
*Includes Medicinal Chemistry, Radio Chemistry, Biology, DMPK/ADME, Peptide Synthesis, and
Biological Reagents
**Includes Formulation, Analytical Development, Toxicology, Bioanalytical Services, Biologics,
Clinical, and Genomics
China Based
Lab Services
23. 22
China-Based Laboratory Services: History of Growth
Drug
Discovery
Drug
Development
2009 2010 2011 2012 2013 Est.
+15.8%
+6.9%+29.6%
+76.4%
+76.6%
+13.7%
+17.0%
China-Based
Laboratory
Services
Note: All periods exclude Process Chemistry , which is included in Manufacturing Services
+26.8%
+18.1%
+75.4%
+13-15%
+~30%
+~10%
24. 23
Synthetic Chemistry
Competition in synthetic chemistry in China and India is
producing pricing pressure
WuXi achieved single-digit revenue growth in 2012 through
volume growth that more than offset this pricing pressure
Lean Sigma program helped control costs, improve
productivity, and increase margins
The new Wuhan facility offers attractive prices through lower
operating costs and government subsidies, delivers good
margin
We anticipate single-digit revenue growth in 2013
While once the entire company, synthetic chemistry is now
about 18% of company revenues
25. 24
Medicinal Chemistry and
Other Drug Discovery Services
Medicinal chemistry and other discovery services are now
WuXi’s largest function, with differentiated capabilities and
good profitability
We delivered nine small molecule preclinical drug candidates
and one proof of concept compound for customers in 2012
41 lead-optimization programs were ongoing at year-end 2012
Mid-teen revenue growth expected from these combined
functions in 2013, particularly strong growth in biology
Certain integrated drug discovery programs are eligible for
success-based bonuses when compound enters first-in-
human clinical trials
26. 25
Toxicology
Continuing to build our position as the #1 toxicology CRO in China for
domestic and international clients
Re-certified in 2012 by Belgium (OECD) regulators and SFDA for GLP
compliance, including broadened scope of both certifications to cover
all preclinical studies needed to support small and large molecule
safety studies
More than doubled annual revenues in 2012, targeting > 40% increase
in revenues in 2013; ~30% of revenues from domestic Chinese clients
Currently at 50-60% capacity utilization, expect to reach full (80-85%)
capacity in built-out rooms within a year and will consider building out
the remainder of the facility early next year
Expanding small- and large-molecule bioanalytical capability
27. 26
Biologics Services
WuXi is the partner of choice for biologics services in China, with few
competitors
Deep understanding of Chinese regulations, which require that biologics
used in clinical trials either be approved in other markets or manufactured in
China
Expected project portfolio to be a mix of biosimilars and novel molecules,
with both multinational and Chinese customers
Highly capable team of about 300 people, including about 30 returnees with
US/EU industry experience
About $30 million in capital expenditures to date, $16-$18 million more
planned in 2013
Current backlog at about $33 million, with about 50 customers now and
growing
Operating at a loss currently reducing company margins by about 2
percentage points, expected to turn to an operating profit within two years
with strong revenue ramp-up
28. 27
Clinical Research – Forming JV with PRA
Complementary strengths of both companies to accelerate the buildup of a
leading clinical CRO in China
• WuXi’s existing clinical research organization with talented employees,
strong China operational experience, integrated drug discovery and
development capabilities, and strong management team
• PRA’s proven track record as a leading global clinical CRO, with operations
in over 80 countries; strong capabilities to conduct Phase I-IV clinical trials
globally
WuXi’s existing clinical research organization of about 90 people and PRA’s 11
China- and Hong Kong-based employees will join forces to form the JV initially,
with rapid hiring of additional staff planned in 2013
The JV will offer a broad platform of Phase I-IV clinical trial services in China,
including clinical trial monitoring, project management, regulatory strategy and
submissions, data management/biostatistics services, pharmacovigilance/
safety reporting, and medical monitoring
Starting in second quarter, clinical research business will not be consolidated
into WuXi’s P&L and will be accounted for as Equity Investment Income/Loss
29. 28
Small Molecule Manufacturing Services
Overall small molecule manufacturing revenue to grow at mid-
teen rate in 2013
Commercial manufacturing revenue declined moderately in
2012, will be relatively flat for 2013 as we continue to diversify
our portfolio beyond one large product
We manufactured advanced ingredients for five commercial
products in 2012
Seven additional commercial product opportunities are in the
near-term pipeline starting in 2014, including some with large
revenue potential for WuXi
30. 29
U.S.-Based Laboratory Services
Revenues have grown at a 9.2% CAGR since 2008, with
substantial improvement in profit margins
2012 revenue growth of 11.6% was driven by double-digit
growth in both medical device and biologics testing services
Broad-based, high-single-digit revenue growth is expected in
2013, with stable profitability
Revenue and net income expected to grow sequentially
throughout the year, driven by seasonality of business in both
2012 and 2013
31. 30
Key Drivers of Revenue Growth
Continued revenue growth across China-based Laboratory
Services, driven by our ability to deliver high-quality services and
drug candidates for our customers
Increasing utilization of our integrated drug development services
for API manufacturing, IND-enabling toxicology studies and IND
filings with the China SFDA and global regulatory authorities
Steady growth in revenues in U.S.-based Laboratory Services
Continuing growth in Manufacturing Services driven by research
manufacturing and growing commercial-manufacturing pipeline
Ramp-up of biologics drug discovery, development, and
manufacturing services
Expansion of our clinical development platform with the WuXi PRA
joint venture
32. 31
Conclusion
We are confident that our dream will become a reality—to build an
open-access technology platform of integrated services that will
enable anyone and any company to discover and develop products
to benefit patients
We believe this because:
• An open-access platform is the most effective and efficient
way to allow researchers to capitalize their knowledge and
experience and help solve the problem of low productivity in
the pharmaceutical industry
• Health care spending will continue to grow globally because
the world’s patients will demand, and be willing to pay for,
high-quality medical products and a better quality of life
• Operational strength in China is important to capitalize on the
rising demand by a large and rapidly growing Chinese middle
class for the same treatments prescribed for Western patients
34. 33
4Q2012
(US$ in millions)
GAAP
Share-
Based
Compen-
sation
Expenses
Amortization of
Acquired
Intangible
Assets and
Deferred Tax
Impact
Impairment
Charges for
Goodwill and
Intangible
Assets
Revaluation of
Contingent
Compensation
Non-
GAAP
Net revenues 125.7 125.7
Cost of revenues (76.9) 0.8 0.4 (75.7)
Selling & marketing expense (4.7) (4.7)
General & administrative exp. (18.0) 2.6 (15.4)
Research & development exp. (2.5) (2.5)
Impairment charge (3.4) 3.4 --
Revaluation of contingent comp. 3.4 (3.4) --
Other income/(exp.), net 4.7 4.7
Income tax expense (4.5) (0.1) (4.6)
Net income 23.8 3.4 0.3 3.4 (3.4) 27.5
Fourth-Quarter 2012 GAAP to Non-GAAP Reconciliation
35. 34
FY2012
(US$ in millions)
GAAP
Share-
Based
Compen-
sation
Expenses
Amortization of
Acquired
Intangible
Assets and
Deferred Tax
Impact
Impairment
Charges for
Goodwill and
Intangible
Assets
Revaluation of
Contingent
Compensation
Non-
GAAP
Net revenues 499.9 499.9
Cost of revenues (316.7) 3.9 2.0 (310.8)
Selling & marketing expenses (15.4) (15.4)
General & administrative exp. (70.3) 10.4 (59.9)
Research & development exp. (8.1) (8.1)
Impairment charge (3.4) 3.4 --
Revaluation of contingent comp. 3.4 (3.4) --
Other income/(exp.), net 14.6 14.6
Income tax expense (17.4) (0.7) (18.1)
Net income 86.6 14.3 1.3 3.4 (3.4) 102.2
Full-Year 2012 GAAP to Non-GAAP Reconciliation
36. 35
Share Count Information
(As of December 31, 2012)
ADS Shares
ADS issued and outstanding 70,140,125
Share options and equivalents granted and outstanding 2,815,196
ADS available for future grants under employee incentive plan 4,806,549
37. 36
ADS Shares for Earnings-per-ADS Calculation
Date Activities
Weighted
Average ADS
Shares
October 1, 2012 Ordinary share balance1
67,725,673
October 1, 2012 RSUs vested and not exercised 2,263,946
Fourth Quarter 2012 Share options exercised and RSUs vested 69,703
December 31, 2012 ADSs outstanding – basic 70,059,322
December 31, 2012 Share options and equivalents 1,629,104
December 31, 2012 ADSs outstanding – diluted 71,688,426
1 541,805,384 ordinary shares, with each ADS representing eight ordinary shares
