Q2 2026 Wuxi Biologics Cayman Inc Earnings Call
Speaker #3: Thank you, Yang. Good morning, good afternoon, good evening, global investors. The title of our talk is "Innovation, Execution, and Global Scale Driving Sustainable High Growth." I want to highlight all three aspects: innovation—our innovation on multi-specifics and ADCs; our execution—our speed to deliver projects, our quality; and our ability to quickly scale from 200 projects to 300 projects for our D programs.
Speaker #3: And on a global scale, we see more and more manufacturing coming to our sites—in Ireland, in Germany, in the US. So our dual site strategy, using China to launch the product and then having our global sites as a backup, as secondary suppliers, now really works for our global clients.
Speaker #3: So, this is following the standard deck, and I think I always want to open up the slide with this one page to highlight all the business key metrics.
Speaker #3: So, we see a number of projects. One of the key metrics for our growth is growing 23%. It's an unbelievable number. I think now we actually have more than 1,000 projects—1,064 projects.
Speaker #3: When I started the company, I was dreaming—you know, if we could get 500 or 800 projects, it would be unbelievable. So now, I have more than 1,000 projects.
Speaker #3: Look at the pace we're going right now. It took us 15 years to go from zero to 1,000 projects. It probably only takes us the next 4 to 5, or 5 to 6 years.
Speaker #3: So, the next five to six years—six years to achieve another 1,000 assets. So the first 1,000 assets took us 15 years. The next 1,000 assets may only take five to six years.
Speaker #3: That's the pace of our growth. Look at organic project growth from 86 in the first half of last year to 123—again, that's 43% growth.
Speaker #3: Among them, a majority are new modalities, like ADCs and multi-specifics. Right. I have always seen that commercial manufacturing will be a key growth driver.
Speaker #3: We have seen 17% growth in the number of projects, from 24 to 28. So, as we have more and more PPQs, phase 3 programs, and commercial manufacturing, our backlog is also growing very nicely.
Speaker #3: Historically, I always said our backlog is so big, it's very hard to grow. But our backlog only moved when we signed $100 million, $500 million deals.
Speaker #3: That can move the needle because it's so big already. As I mentioned earlier, we are actually increasing our capacity to 300 INDs a year.
Speaker #3: This is five to ten times the capacity of our peers. This shows we really can scale our business. We can capture all the tailwinds from the new modalities— from ADCs, from bispecifics, from the new AI-enabled molecules, and from mRNA modalities.
Speaker #3: And on the manufacturing side, we can do 40 PPQs—that essentially means 20 BLAs a year. For the past three years, we have grown our revenue in the teens without a meaningful addition of headcount.
Speaker #3: So that's why our present productivity increased by about 10% a year. As our team is fully booked, both in Q2 and in Q3, right now we're already more than 120% booked.
Speaker #3: In manufacturing, next year we'll probably be 100% booked. So, as a result of this tight labor usage already, we are increasing our headcount significantly.
Speaker #3: You see, year over year, our headcount increased by about 17%. Certainly, a majority comes from the XTC business, but the Wuxi Bio—the other business—is also adding headcount seriously.
Speaker #3: So, that again shows our confidence in our accelerated growth. Our key talent retention rate is still very strong—98.7%. That's one of the key reasons we can scale our business, you know, from 200 INDs to 300 INDs in about two years.
Speaker #3: And right now, we want to do—we can do 20 BLAs. If our industry needs us to do 30 BLAs, give us a year or two; we can scale the business.
Speaker #3: So, as Yang mentioned, we have very strong revenue growth. Our revenue growth in RMB terms is about 18.4%. But as you know, the US dollar versus RMB has had quite a change this year.
Speaker #3: Our impact is about 500 bps. So, if you use US dollar terms, or our customer currency terms, our growth is actually 23.4%. You know, for the past four years, this is the first time we see growth of more than 20%.
Speaker #3: And that really shows what I promised to global investors at JP Morgan three years ago. I said Wuxi Biologics is points, points for accelerated growth.
Speaker #3: We go from low teens to high teens, now hopefully to the 20s. Our revenue growth is significant. Our profit growth is even more phenomenal.
Speaker #3: Right. Look at just EBITDA growth, profit growth. What's more striking is actually our margin growth. Our adjusted gross margin grew 100, 280 basis points. As I mentioned already, R&D also appreciated 500 basis points.
Speaker #3: That translates into a 300 bps downturn—downward impact to our adjusted gross profit margin. So, had the RMB not appreciated, our margin growth would actually be almost 600 bps.
Speaker #3: And that's how impactful, you know, our first half of business is. As most of you know, in the second half of last year, we had very strong revenue growth.
Speaker #3: That actually made our margin significantly better. But this time, R was actually right, right on target. So this margin expansion did not come from R, but came from our execution, came from our business product mix, came from our WBS—essentially, our more thorough, much better management.
Speaker #3: I think Min was highlighting all those margin growth drivers in his talk, I mean, in the next 20 minutes or so. So, looking at it now, our profitability is already at a record high, or near record high, in the company's history.
Speaker #3: You know, it's comparable to five years ago, when we had a very high utilization rate because of COVID. But the difference is, now we have a global site.
Speaker #3: You know, we have a site in Ireland, we have a site in the US. That's actually much more higher cost base. So essentially this can demonstrate even with carrying US side, Ireland side, and the future German side, Singapore side, our margin can still be as good as we're fully we're our peak time in the past couple of years.
Speaker #3: So, as the company continues to evolve, I also still promise investors our margin will continue to improve by about 100 to 150 basis points, as it did last year.
Speaker #3: We promised 100 bps last year; we delivered 500 bps. And this year, we delivered another 250 to 280 bps, despite the 300 bps negative pressure from the currency wind.
Speaker #3: So I think the company is actually doing very well in terms of managing our growth. Our growth is continuing very fast, with actually an improving margin profile.
Speaker #3: So, all our investors are familiar with this funnel. I call this funnel the gold funnel—a golden funnel, a gold funnel. Today, I'm actually going to call it the diamond funnel.
Speaker #3: So, because our funnel already reached 1,000 molecules, it's unbelievable, right? So, you see, we added 123 projects organically, and then through acquisition, we added another 46.
Speaker #3: Among the projects added, actually, two-thirds come from the US and Europe. We are a lot more selective in China in terms of adding new projects.
Speaker #3: So, as I mentioned earlier, our D team is already swamped. They are already 120% booked. So, as a result, we're actually very selective in China.
Speaker #3: We are only picking very profitable, very promising projects in China. So, among the new projects signed, two-thirds come from the US and Europe, and one-third come from China.
Speaker #3: Among the older projects we signed, actually more than 70%, more than two-thirds, are actually new modalities—they are ADCs and multi-specifics.
Speaker #3: Where we have higher margin, where there is a lot less competition, where actually our technology can really help, making huge, complex modalities is actually much higher than our traditional, overall, our traditional maps or overall portfolio.
Speaker #3: So, as more and more projects are newer modalities, looking at the overall portfolio with 1,000 assets, actually more than 50% are ADCs and multi-specifics.
Speaker #3: Again, that basically means our per-project pricing is higher, our profit margin is higher, and we have a greater opportunity to capture this to maintain the programs.
Speaker #3: In the portfolio, because they're much tougher to work on. So the D-to-M conversion ratio is also higher. So our funnel, our diamond funnel, is getting healthier and healthier.
Speaker #3: And stickier and stickier. That basically means the project, once they come into the funnel, they don't leave, right? So, "win the molecule" has always been our strategy. We have seen almost 80% growth of "win the molecule" projects.
Speaker #3: We want 16 projects in the first late phase and 1 commercial directly. Right. I think so. Among the late stage, among them, 2 of them are actually about similars.
Speaker #3: I'll talk about similar topics later on. This will be a new driver for our manufacturing growth. So overall, with this funnel, we now have 78 late-stage programs and 28 CMO projects.
Speaker #3: It's already comparable to the global leaders in CMO. The other reason they call this a diamond funnel now—if you look, we have more than 500 programs in preclinical, 300 programs in phase one, and 130 programs in phase two.
Speaker #3: If you do a probability adjust, amazingly, almost every line gives us about 60 commercial programs when their fate was determined. So, essentially, for the 525 preclinical programs, after 6, 7, 8 years—when some of them failed, some of them became approved.
Speaker #3: So that will give us about 60, 60 to 70 commercial programs. For the 300 phase one, it gives us the same 60. 130 gives us the 60. 78 with an 80% success rate gives us the 60.
Speaker #3: So it's actually amazing. So almost every line here gives us about 60 commercial programs. If you add this together, it becomes almost 280 commercial projects.
Speaker #3: Right. So that’s why I call this a diamond funnel. Currently, we only have 28, but when the fate of all those molecules is determined, our commercial project will grow by 10x.
Speaker #3: Right. So even if you are, that's a normal basis. Even if you assume a worst-case industry failure rate is higher, and some projects did not leave us for other manufacturing CMOs.
Speaker #3: We still be at the bottom — 200 manufacturing projects. It's unbelievable, right? If you think, this is 200 manufacturing projects. If you think every manufacturing project gives us 500 million RMB revenue, which is not very high — which is $70–80 million US dollars.
Speaker #3: That means this will be 100 billion RMB revenue—100 billion RMB revenue—$15 billion U.S. dollar revenue when all the manufacturing are realized. And again, as you know, biologics has a lifecycle of 30, 40 years.
Speaker #3: So the programs we're manufacturing today, you know, 10 years, 10, 20 years, 10 years from now, when every program—when their fate was determined—all the programs will still stay.
Speaker #3: So our manufacturing will go from 28 programs to 200 programs, and even 280 programs with the current portfolio. That's how powerful this funnel is.
Speaker #3: That's how powerful our CRDMO model is. I think that's why, for our— that's why I have told investors even back in 2017, when we IPO'ed, I said, everything you want to know about WuXi Biologics, you only need to look at the funnel.
Speaker #3: The funnel tells you everything. That's the beauty of the CRDMO model. So again, I want to highlight this. With this funnel, and with our stickiness of the funnel, we can really see strong, sustainable, high growth that is inherent in the Wuxi Biologics business model.
Speaker #3: So I already mentioned the project growth. Let me just give you a number, right? During COVID, our project addition was very strong, and post-COVID it dipped a little bit, but now it's actually at an all-time high.
Speaker #3: All-time high. So, in the first half of this year, the overall project grew by 46%, while the molecule grew by 78%. Why are we so successful with the molecule?
Speaker #3: When the molecule is traditionally very difficult—so, biologics manufacturing, biologics development is very hard. I use marriage as an example, almost as an analogy.
Speaker #3: Right. It's almost like getting married. So, when someone works with us, it's almost like getting married because it's a long-term relationship. And we want to manufacture the drug; you know, development takes about eight years.
Speaker #3: Manufacturing another 30 years. You're talking about a 40-year relationship. That's why I use marriage as an example. So the stickiness, basically, that's basically, you know, the marriage of stickiness.
Speaker #3: The reason why we are still able to win the molecule is sometimes our peers actually stumble. And then our client needs to divorce them and then remarry.
Speaker #3: And then the new choice they have is actually WuXi Biologics. That's how hard it is to win the molecule. But over the past 8 years, we have won more than 128 programs.
Speaker #3: When the molecule is also very difficult because it's not your cell line, it's not your format, it's not your process per se, you have to learn about them.
Speaker #3: In another analogy, it's almost like an adopted child. You don't know about them; they have their own character. You have to be very careful with them.
Speaker #3: So, when the molecule is actually very, very difficult. But so far, I'm very pleased to share with the global investors, we have won 128 projects.
Speaker #3: Every project comes to Wuxi with delivery. So, as I mentioned, most of the projects—actually, you know, those are global peers—stumbled. They failed the program.
Speaker #3: And then they pick Wuxi; Wuxi delivered. And some of the other programs are actually done in-house by large pharma. Then, when they have limited in-house capacity, they want to find the best home for their program.
Speaker #3: So, they actually come to Wuxi. The 128-window molecule program is a strong demonstration of our capabilities. Among the window molecule programs, we have already contributed to 13 manufacturing projects.
Speaker #3: So we only have 28 so far. Almost half of them come from Follow the Molecule. Half of them come from Window Molecule. Last year, we announced our new cell line, which is truly a revolutionary change to our industry.
Speaker #3: Right. We can do the cell line faster, do the mixed productivity twice as well as our industry standard. So now our cell line has actually become a differentiator and helped us win more programs.
Speaker #3: So if my client, if my potential client has a program that's only getting 1 gram per liter, or 2 grams per liter, or even 3 grams per liter at a competitor, we can tell them to come to Wuxi.
Speaker #3: We'll give you eight or ten. Your cost of goods for manufacturing will be 50% or less, and now your drug will be a lot more competitive.
Speaker #3: In the market, your margin will be significantly higher. I think that's how, you know, technology has really translated into a technological advantage. Now it's translated into commercial advantage.
Speaker #3: Because we want to use our technology to actually win more programs. So when the molecule is the same, following the molecule is definitely the same as well.
Speaker #3: So now, every Follow the Molecule client started with the best technology in the industry. So I want to share with you the overall revenue growth.
Speaker #3: I mean, see, if you look at the revenue growth of different segments on the R and early D, it's actually amazing. It's a 27% year-over-year growth.
Speaker #3: US dollar term is 32%. The phase one and phase two program, in the past two years, because of a few big programs moved from D to M, we see a dip. I promise you, message: it will come back.
Speaker #3: So this time, it's already come back. And then the PPQ and commercial, we grew 11% in RMB and then 16% in US dollar terms.
Speaker #3: The reason the growth is slower is because last year there were significant highs. And then we only added two programs early this year. So as we add more programs, as the programs move forward, our manufacturing growth will still accelerate.
Speaker #3: So, I still anticipate that over the next three years, our manufacturing growth trigger would be 30%. That basically means that next year will grow much faster than this year.
Speaker #3: The year after, in ’28, it would be even faster. So I think that’s the growth dynamics of the company. If you look at the region, it’s actually very similar—it’s actually very exciting that we see China and the rest of the world now have the fastest growth.
Speaker #3: Yeah. Traditionally, North America has been the largest market with very strong growth. This year continued to be the same. North America accounted for almost 60% of revenue, with 14% growth.
Speaker #3: Very, very decent. Fourteen percent, because the basis is so big. Right? It's already 60% revenue. Europe: 17% revenue, as big as China. And with a flat growth this year, mostly because we diversified our Ireland site.
Speaker #3: And China, as I said in the past years, has had flat, sometimes even negative growth. But now we see a 51% growth. This is actually under the condition that we are picking projects in China.
Speaker #3: We're very selective. We only identify high-potential projects in China, and we work with them. So the Chinese market's contribution is now as strong as Europe's.
Speaker #3: And then, as I mentioned earlier, the rest of the world—we see significant growth. It's now getting close to 10% of revenue. So, we have four engines, all firing at a different rate.
Speaker #3: And that gives us a very strong, balanced growth. So I already mentioned years and years of backlog. Our backlog is so big, it's actually very hard to grow.
Speaker #3: But fortunately, as we sign more and more R&D projects, the milestone backlog will grow. And then as we sign more and more manufacturing projects, our service backlog will grow.
Speaker #3: So, for the first time, we see significant growth in the service backlog and the backlog within three years, all because of manufacturing projects.
Speaker #3: Because we have 78 PPQ, 78 Phase Three programs, and 28 commercial programs, the backlog growth gives us more assurance. Again, if you look at the funnel, you know our manufacturing will grow.
Speaker #3: But backlog gives you more assurance that near-term growth is already there. So, look at the distribution of the different projects. As you see, bispecifics are growing at a very fast—very fast—32% rate.
Speaker #3: But the AUC is growing even faster at 46%. So now, bispecifics and ADCs are already more than half of the company portfolio. Again, that's because they are harder to do.
Speaker #3: They have less competition. That basically means our project is even stickier—once they get into the funnel, they don't leave. So I've been telling investors, for traditional map, maybe there are 10 companies that are as good as us.
Speaker #3: But once you go to ADCs, maybe only four to five. But if you go to multi-specifics, only two or three. So with multi-specifics and ADCs, you know, globally there are only two or three, or two to five players that are as good as us.
Speaker #3: That's why there's less competition. That's why there's higher premium pricing. That's why the margins are also better. That's one of the main drivers for us to continue improving our margin, because the margin profile for those newer modalities is significantly better than for the traditional, quote-unquote, commodity maps or vanilla maps.
Speaker #3: So, mentioning bispecifics—now, this is already 20% to 30% of the company's revenue. It grew from a few percent to 20% in about three years.
Speaker #3: And still, last year was more than a doubling of this growth—more than 100% growth. Right. So, that’s why growth was about 18% last year.
Speaker #3: Now, this year it is almost 20% of revenue, and it's still growing at 30%. And multi-specifics really show the entire strength of WuXi's CRDMO model. I've been telling you over and over again, we have a very strong CD3 platform.
Speaker #3: That will give us upfront payment and milestone royalties. On our part, our multispecific platform is the strongest. On the BD part, we have the largest portfolio.
Speaker #3: Even in the manufacturing part, we have three projects already. Globally, there are only 20 commercial programs approved. So we expect these three to be generating—for all three programs to be generating—$100 million in revenue for us in the next couple of years.
Speaker #3: The earliest one may be even as early as next year. So, one of the bispecifics will achieve $100 million in revenue for us starting in 2027.
Speaker #3: And hopefully the other one will be 2028 or 2029. So essentially, all the current three programs will be generating $100 million in revenue for us each.
Speaker #3: And that, to us, is a very large-volume manufacturing project. We have three PPQs scheduled this year. I think I already mentioned that the multi-specific is very, very hard to do.
Speaker #3: On the right side, it's all the technical details. I don't want to highlight them because I already mentioned that to global investors last year. So with that, I'll hand over to Min for a more detailed financial review.
Speaker #1: Thank you, Chris. So now I'm going to present our financial results for the first half of 2026. This slide here gives us the highlights of our financial performance in this reporting period.
Speaker #1: First, revenue—thanks to the strong biotech funding environment and also our share gains. Our revenue continued to grow at an accelerated pace. As you can see, our revenue reached RMB 11.8 billion, an 18.4% increase over the prior reporting period.
Speaker #1: The average US dollar to RMB conversion rate declined from 7.18 in the first half of last year to about 6.83 in the first half of this year.
Speaker #1: If we adjusted for the five points after FX impact, our revenue growth on a constant currency basis reached 23.4%. Our revenue increase in the first half was driven by RDM, all three cylinders.
Speaker #1: In R&D, our research and discovery services segment, we were able to sustain the momentum from last year and continue to reap the fruits from our innovative platforms of bispecific, multi-specific, and ADC.
Speaker #1: Milestone income from the past discovery projects almost reached 40 million US dollars in the first half. At the same time, our research protein production services delivered a 40% of the growth year over year.
Speaker #1: We also have a full pipeline of new discovery projects ongoing. The momentum of R will accelerate in the second half of this year and continue into the foreseeable future.
Speaker #1: On the development side, thanks to the strong biotech funding environment and also our share gain, we achieved a revenue growth of about 32% year-over-year on a constant currency basis.
Speaker #1: Thanks to the 123 new projects we scored in the first half, among which 107 were in the pre-R&D phase. This is a new record for any half-year reporting period, representing over 60% of the global presence in the space.
Speaker #1: Our process optimization and productivity improvement also enabled us to shorten the DNA-to-R&D conversion cycle to about six months. Early phase revenue also increased 15% year over year on a US dollar basis, as more pre-R&D projects moved through the diamond funnel.
Speaker #1: At an accelerated pace, our manufacturing side—with the successful execution of our 'Follow' and 'Wing the Molecule' strategies—saw more and more projects advancing into the later stages.
Speaker #1: With the molecule strategy, we also added 16 projects to our portfolio, with about five in the late stage, including one CMO project from a global big pharma and also a couple of biosimilar projects.
Speaker #1: Now we have 78 projects in phase three and 28 in the commercial manufacturing stage. The volume of these late-stage projects is ramping up steadily with the growth of our clients' drug sales.
Speaker #1: Overall, late-phase and commercial manufacturing revenue grew over 16% in the reporting period, and now represents over 40% of our total portfolio in the first half.
Speaker #1: From a modality perspective, bispecific, multi-specific, and ADC continue to be the key growth pillars in our portfolio, contributing 55% of our overall revenue in the first half and over 70% of our new orders.
Speaker #1: Moving over to gross profit, which increased by about RMB 1.2 billion to over RMB 5.4 billion in the first half. The whopping 28.1% growth in GP also gave us a 350 bps lift in the IFRS GP margin and a 280 bps expansion in the adjusted GP margin.
Speaker #1: We have been talking about FX headwind since the second half of last year. The US dollar continued its precipitous fall in the first half of this year.
Speaker #1: For every percentage point of the US dollar devaluation, we'll see roughly about 60 basis points of gross margin impact. So, we absorbed roughly three points of the FX headwind.
Speaker #1: So, on a constant currency basis, our GP margin could have expanded over six points in the first half. The key drivers behind the GP margin expansion were from volume leverage.
Speaker #1: As we increased our top line by 23.4%, we were able to keep our headcount growth at a slower pace. We also continued to tap into our existing capacities with much improved utilization in the first half.
Speaker #1: The four points of the volume leverage here more than offset the three points of the FX-induced margin compression. Secondly, the productivity improvement from WBS, our lean manufacturing implementation, also gave us about 150 bps of margin improvement.
Speaker #1: The margin rate from the Development sector also expanded one point, largely driven by productivity improvement and the higher margins delivered by the complex modalities, as bispecifics and ADC now represent more than half of the pre-R&D portfolio.
Speaker #1: At the same time, the profitability from late phase and manufacturing sectors continued to meet or exceed our expectations, as the overall plant utilization continued to improve throughout the first half of 2026.
Speaker #1: Excluding share-based compensation, our adjusted gross profit margin stood at 48.4%, a 280 basis point improvement year over year, defying the three points of FX headwind and retaining our leading positions in the global CDMO industry.
Speaker #1: Moving on to adjusted EBITDA, which is a proxy for our operating cash generation capabilities, it increased by about 24.9% to approximately RMB 5.4 billion during the reporting period.
Speaker #1: This, together with our working capital and capex management, enabled us to generate $1.5 billion of positive free cash flow. The adjusted EBITDA margin rate also expanded by 230 bps to 45.6%, one of the highest in the global CDMO industry.
Speaker #1: Adjusted net profit is the IFRS-based net profit excluding the impact of foreign exchange gains and losses, share-based compensation, and fair value gains and losses from our investment portfolios. This is the proxy for our business profitability under continuous operations.
Speaker #1: As you can see from the chart, our adjusted net profit increased a whopping 38.6% year over year, exceeding $3.9 billion. This also gave us a margin expansion of almost five points, to 33.4%.
Speaker #1: The adjusted net profit margin expansion was largely driven by the $1.2 billion of adjusted GP increases, partially offset by the increase in SG&A as we continue to expand our global coverage in business development and also invest in R&D and digitization.
Speaker #1: Chris, next page please. This slide here shows our strong profitability growth over the past five years and also in the first half of this year.
Speaker #1: As you can see, all these financial metrics are improving year over year despite the unprecedented FX headwind. Our IFRS-based net profit has grown at a rate of 13.1% during the past five years and has now exceeded $5.7 billion in 2025.
Speaker #1: In the first half of this year, IFRS net profit increased 5.8% to reach $2.9 billion. There are several cross-currents here. First, we recorded $600 million of the gain from our investment in a biotech company, Alpha's IPO, in April last year.
Speaker #1: This gave us a very difficult comparison year-over-year. Secondly, we also had about $500 million of unrealized FX loss in the first half due to the U.S. dollar devaluation, which negatively impacted the translation of our U.S. dollar cash and also U.S. dollar-denominated accounts receivable.
Speaker #1: On the flip side, our gross margin increased by $1.2 billion year over year, more than offsetting the negative comparisons on investment gains from the last reporting period and also the unrealized FX translation losses, and still enabled us to deliver 5.8% IFRS net profit growth.
Speaker #1: IFRS net profit attributable to the owners of the company grew by 4.3% in the first half, slightly lower than the IFRS net profit, due to the minority interest pickup from XDC and also our 51% subsidiary, Baskram.
Speaker #1: Basic EPS grew from $0.58 to $0.60 per share, a 340 bps increase, largely in line with the IFRS net profit attributable to the owners of the company.
Speaker #1: The quantum leap here is in the adjusted EPS, which grew 37.3% year over year, from $0.59 in the first half of last year to $0.81 in the first half of this year.
Speaker #1: After we excluded share-based compensation, investment gains and losses, and also unrealized FX translation impacts, the most important metric here is the adjusted EPS, as it strips out the one-time non-cash impacts. It is the best profitability indicator of our continuous operations.
Speaker #1: Next page, please, Chris. This slide here gives us more detail into our gross profit and cost components. As we talked about, in the first half of this year our gross profit margin was 46.2%—a 350 bps expansion from the same period last year—a multi-year high post-COVID.
Speaker #1: Excluding the $300 million of share-based compensation, our adjusted gross margin stood at 48.4%, a 280 bps improvement year over year. All these gross margin metrics were reported on an R&D basis, with 3% of the FX headwind fully absorbed.
Speaker #1: In other words, our GP and also adjusted GP margin could have expanded by six points on a constant currency basis. As we discussed earlier, the remarkable gross margin expansion in this reporting period was primarily driven by the operating leverage from the 23.4% top-line growth on a U.S. dollar basis, improved capacity utilization, and also the ongoing productivity gains through WBS and digitization initiatives.
Speaker #1: You can see the composition of our cost components in the stack box below, with roughly 16% in labor costs, 19% in material, and 18.8% in overhead, which includes maintenance, utilities, and also depreciation of the manufacturing facilities.
Speaker #1: Labor costs component continues its downward trend, as it was a couple of percentage points lower than our historical average as we focus on labor productivity improvement.
Speaker #1: Per capita revenue generation has been a crucial KPI for all our business units. As I mentioned earlier, the total number of employees increased at a slower pace in this reporting period than our top-line growth year over year.
Speaker #1: The material cost as a percent of revenue also improved 60 bps due to productivity gains, yielding improvements, and also the mix impact from the higher growth from the development sector in our portfolio.
Speaker #1: The composition of overhead component decreased about 240 basis points year over year, largely due to the impact of volume leverage as we grew our top line by 23% by tapping into our existing capacities with a much improved utilization rate.
Speaker #1: Hence, the overhead composition within our revenue decreased year over year. Also, in 2025, as part of our ongoing initiatives to optimize our global manufacturing footprint to improve the return on assets, we divested our vaccine facility in Ireland and also our DP facilities in Germany.
Speaker #1: These divestitures also helped us to reduce the fixed overhead costs in the first half. Next page, please, Chris. Page 18 here is about liquidity.
Speaker #1: At Wuxi Biologics, we have a strong balance sheet and a solid cash position. As of the end of the first half, we had about $13.7 billion cash on hand, sufficient funds to support our accelerated growth globally.
Speaker #1: Compared to the beginning of the year, our overall cash balances decreased about $2 billion in this reporting period, largely due to the $1.3 billion share buyback program as a return to our investors.
Speaker #1: XDC's acquisition of Biodlink for $1.2 billion and also XDC's retirement of $700 million of the onshore loans—all these cash outflows were partially covered by our $1.5 billion of free cash inflow from the operation cycle.
Speaker #1: In the second half of this year, we're going to have more cash inflows from our balance sheet optimization, such as the divestiture of the BASKRAM that Dr. Chen will present later.
Speaker #1: So, all these cash inflows here will also let us focus more on our core CRDMO business to support our global capacity expansion, share buybacks, and potentially M&A activities.
Speaker #1: At Wuxi Biologics, we also always have a conservative funding strategy. For our 65 billion RMB balance sheet, we only have about 700 million of debt, most of which are working capital facilities.
Speaker #1: And our gearing ratio, which is defined as interest-bearing debt over equity, is nearly 1.2%, 80 bps lower than the end of last year. At the same time, we have close to $7 billion of bank facilities to tap into if we need to.
Speaker #1: Our CapEx spending in the first half was about $2.8 billion, mainly for our capacity expansion in Singapore and in the US, and also XDC's new facility in China.
Speaker #1: Subtracting working capital occupation and also tax payments, our free cash inflow in the first half was $1.5 billion, a new record in our history for the first half of any fiscal year.
Speaker #1: Overall, our capital projects this year are still on track, with some optimization. Our capex spending for the fiscal year 2026 will be about $7.1 billion, but to meet the surge in demand, we will allocate more capital to capacity expansion next year.
Speaker #1: So our CapEx projection in 2027 will be approximately $8 billion. With our operating cash generation capabilities from the business growth, our focus on working capital management, and CapEx prioritization, we are committed to delivering positive free cash flow in a meaningful way in 2026 and also in the foreseeable future.
Speaker #1: Now, I'm going to pass the stage back to Chris to share more insight into our business operations and the technology innovations in the first half.
Speaker #2: Yep. Yep. Thank you, Min. Really, I want to give a global investor an update on our DNM, but our most exciting part of the business is essentially our licensing business, right?
Speaker #2: We receive upfront payments, milestone payments, and royalties. I think this total payment already reached more than $100 million last year. We'll still be more than $100 million this year.
Speaker #2: And I also mentioned that this was one of the main reasons our margin improved significantly in the second half of last year. But in the first half of this year, margin improvement came from the product mix, from better utilization of the assets, and from our own management, WBS, right?
Speaker #2: So, look at the potential exciting milestone payments and royalties down the road. All the key programs are listed here. I think that, in terms of the milestones, quite a few CD3 bi-specific programs from GSK, the Merck CD3/CD19 programs, and the BioNTech B7H3 ADCs—those are near-term catalysts for our receiving payment, both in terms of milestone payments and eventually royalties.
Speaker #2: I think we continue to work on more and more programs. I think every year we want to license additional programs to global large pharma and biotech companies so that we can receive them.
Speaker #2: So, these 50 programs—these 50 royalty-bearing programs—will generate a significant amount of royalties, potentially in 2030 in the range of $100 million, and eventually maybe even more than $500 million.
Speaker #2: So, this will be a significant profit booster for us down the road. As I mentioned, WuXi has a very exciting CRDMO model, or funnel, or diamond funnel—I'll tell you everything about WuXi.
Speaker #2: Our economics at Wuxi is also very different because we have the R component—we have the royalty component. So our profit margin from the assets is significantly better than the traditional CMO.
Speaker #2: So even with the manufacturing alone, because we have a cell line—we're a very high-producing cell line—we carry cell line royalties. So, our economics are also better than a traditional CMO.
Speaker #2: So the R part brings us a significant royalty component. The D part—even the D part—gives us a very meaningful sell-line royalty.
Speaker #2: So I think that what I listed here are different scenarios where you can see the profitability of Wuxi versus our peers. Again, I use a $1 billion product as an example.
Speaker #2: If the royalty is 5%, then actually I'm you know if this is for Merck, BioNTech, , Vertex, Lily, Gilead, GSK, you know for all the program, when they receive a billion-dollar sales, they actually give me 50 million dollars next year right away, right?
Speaker #2: And then if they give us 100% manufacturing, my manufacturing revenue is also $50 million. So basically, it means the profit coming from the royalty is actually three or four times higher than the profit from manufacturing.
Speaker #2: 100% manufacturing, right? So certainly, if you give us less manufacturing, the profitability is even higher. This again showcases the greatness of the Wuxi CRDMO model. If we have R for a billion-dollar sales stock, our net profit is actually $53 million.
Speaker #2: Right? And versus traditional CMO, right? You know, most of our industry peers are traditional CMO. Their profit is actually $13.2 million. If you look at the bottom, the column furthest to the right at the bottom—it’s $13.2 million for traditional CMO for a billion-dollar drug.
Speaker #2: But for Wuxi, our profit could be as high as $53.2 million. So maybe four times higher in terms of profitability. And that's how exciting our business model is.
Speaker #2: So, you know, even if the program is 100% manufactured by someone else, my profit margin is still three times higher than a traditional CMO.
Speaker #2: That's the beauty of the Wuxi CRDMO model. So even if they, you know, in a worst-case scenario where someone decides not to manufacture with Wuxi, our sell line royalty still gives us about 30% of the profit from manufacturing alone.
Speaker #2: I think this, again, all those are the beauties of our business model. That's a very quick update on R. On the D part, I think the most significant message I want to share with you is actually we increased our capacity from 200 to 300 in just two years.
Speaker #2: Again, last year our capacity was only 150, right? Yeah. Two years ago, it was only 150. Last year, we increased it to 200.
Speaker #2: Now we're going to increase it to 300, because we see the pie is getting bigger and bigger. We also get a bigger slice of the pie.
Speaker #2: And also, with AI-enabled molecules, we potentially see more and more molecules come our way. We are getting ready for a new wave of more and more projects.
Speaker #2: That's why we increase the capacity by 50% in two years. This again show our strong execution. If you ask Wuxi to do manufacturing for you, you're almost like a you're almost like you buy you bought you got an insurance policy, right?
Speaker #2: Look at our success rate: 99% for the past—this is the past 80 years. But for the past 10 years, it's almost the same number, right?
Speaker #2: So that's why companies trust us despite all this noise about geopolitics, tariffs, and trade issues, right? And then if you look at the number of PBQs, which is a leading indicator of manufacturing growth, right?
Speaker #2: We have had our PBQ number grow significantly in the past couple of years, right? If you—2022 was a local peak, was a peak because of COVID.
Speaker #2: We have many, many COVID projects. So half of them are COVID projects. If you take, if you divide, if you remove the COVID projects, 2022 was only about 10, 12, 10, 11.
Speaker #2: And then 23, 16, 24, 16. But 25 became 28. And this year we are already doing 34. As of now, next year we're doing 30.
Speaker #2: As you know, we have another 18—another 14 months to sign new projects. So most likely, next year this number will be a record high as well.
Speaker #2: So this number of PBQ really gives us, again, strong evidence our manufacturing revenue will grow substantially and will become a bigger contribution to the company.
Speaker #2: The other amazing fact is that 100% of PBQs so far are successful. That's our quality. I think I mentioned to investors last time: every PBQ, if you look at the next 10 years, the total contract from that PBQ could be $100 million, could be even $200 million.
Speaker #2: And if you look at the the 30 PBQ, that basically 34 PBQ done this year, that basically means about 3.4 billion dollar backlog or 3.4 to 6 million dollar backlog once those PBQ program become successful and once they then they become a commodity product.
Speaker #2: That's why we are so confident about our manufacturing growth, because all the leading indicators tell us it's going to be a hockey stick growth for manufacturing.
Speaker #2: Last year, without—I mentioned earlier that our technology leadership is now starting to translate into commercial leadership, commercial success, and a higher winning rate of projects.
Speaker #2: So, our cell line technology now proven, gives us an even much stronger opportunity in biosimilars. Traditionally, biosimilars was not a big chunk of our business.
Speaker #2: Among the more than a thousand projects, we have 17. So essentially less than 2%. But this 2% will probably become 4% or 5% in two or three years.
Speaker #2: And maybe even become six or seven percent of the portfolio in the next couple of years, right? That's because with a new cell line, we can develop a product that's 30 to 50% less costly compared to our peers.
Speaker #2: And then maybe half the scale. So traditionally, previously, if you needed to use a 12,000-liter stainless steel reactor, now you can use a 5,000-liter disposable bioreactor.
Speaker #2: So this actually makes our bio disposable bioreactor more and more competitive. So I already mentioned that we have—you know, we have fewer than 20 programs right now, but we already have 20 programs committed over the next three years.
Speaker #2: We're talking an additional 10. We have an additional opportunity of 30. So essentially, we have 20 programs right now. Over the next five years, we may go for 60.
Speaker #2: And that's a 3x increase, 3x increase. So the biosimilar segment in a couple years can give us a $1 billion revenue, $1 billion revenue, and that's actually comparable to our total M size as of today.
Speaker #2: So, this new segment will give us almost double our manufacturing revenue in the next couple of years, right? I think that's how exciting our technology leadership is—translating into commercial success—and it's very, very meaningful.
Speaker #2: So, as you know, a novel product going from D to M to commercial is eight years. For biosimilars, it's probably four years—cut in half.
Speaker #2: So that's why our manufacturing growth will be faster and faster. Since we're talking about manufacturing, we think we have four key pillars that can really give us strong conviction that our manufacturing will grow.
Speaker #2: Follow the molecule, you know, starting next year, every year we have more than five programs get approved. And that's a program, you know, novel molecules that will treat different diseases—cancer, autoimmune, CNS, right?
Speaker #2: So if you add the next three years together, it will be 20 approvals. So far, we only have 28 programs. So the next three years will give us about 20.
Speaker #2: So then, basically, that means by 2029, we will actually have almost 50 commercial programs. By 2026, it's 30, and we may have 60 commercial programs. So, the number of programs will double in the next four years.
Speaker #2: That gives us evident, you know, revenue growth. Our window molecule, as I already mentioned, window molecule is stronger and stronger. With a new cell line, we can even accelerate window molecule.
Speaker #2: Window molecule already contributes to almost half of the commercial programs now, and will play a big factor in the future. Biosimilars—so each segment can give us a billion-dollar revenue growth in the next couple of years.
Speaker #2: That's why our manufacturing is so meaningful, right? And lastly, drug product currently accounts for about 10% of company revenue, but it's growing at a CAGR of 40%.
Speaker #2: So it will become will become a billion dollar franchise in the next couple years. And that again add to our manufacturing growth. So just the last line on the on the drug product side, our DP lines will increase our DP capacity will increase by fourfold in the next three years.
Speaker #2: Because we have so many programs, so much demand in there, DP, so cell line is a good technology. DP is another technology that we have technology leadership in now, and it will be converting to a commercial success.
Speaker #2: We cannot talk about the manufacturing without a very powerful quality track record. So far every every time FDA come to Wuxi every agency come to Wuxi every inspection we passed as I mentioned to global investor FDA actually waived four PLI inspection for us EMA waived more than a dozen so we have 20 time 20 20 scenarios when FDA and EMA actually trust our data they actually don't even inspect us whereas you know you know some of our peers are already getting into trouble with FDA on 483s on warning letters right on on inspection delays so so far we are the best best student in the class with 100% success on every regulatory inspection.
Speaker #2: We hope to keep it this way, and then quality will become a competitive advantage—it will become a moat for the Wuxi Biologics business.
Speaker #2: So, over the past five years, we have built an incredible network of five research centers, 10 development centers, and 18 manufacturing centers globally. We're very diversified, and if you look at manufacturing in the next couple of years, 50% of manufacturing capacity will be outside of China.
Speaker #2: Versus development, 95% of development capabilities are in China, 5% are in the US. Talking about the US, we already have a four-supply-chain scenario in the US.
Speaker #2: We can do clinical manufacturing, commercial manufacturing, DS, and DP. I think our first PPQ is ongoing in the US right now, and as we finish the PPQ, we'll have our first commercial facility in the US.
Speaker #2: Hopefully the product will be approved. It's a bispecific as well. Hopefully the product will prove itself in the next year or two, and then we'll have a, you know, first commercial product in the US.
Speaker #2: As you know, our focus has been in Singapore, and we—XTC has already opened the—the running, the XTC already turned the GMP facility into a GMP operation for both conjugation and drug product.
Speaker #2: So this is a track. This is our global site. Fastest global site readiness from beginning to now—it's only less, about two years.
Speaker #2: So, we're doing the same for drug product. As I mentioned, drug product is going to be a big business for us. We invested about a couple hundred million dollars in Singapore to build a drug product facility with five lines that will eventually give us maybe around $500 million revenue from Singapore alone.
Speaker #2: As I mentioned drug product could be a franchise a billion dollar as Singapore alone could contribute to half of that. So as the number of project come in very quickly and we are also we we are also looking at buying additional facility in China with for if we can because as as you know buying a a facility is actually cost only 50 cents for a dollar but if you build one it it it cost a dollar but it also takes three years.
Speaker #2: So buying a facility and retrofit typically takes a year. So you're saving two years of time and also saving 50% of capex. So whenever possible, we're buying additional capacity in China, and if there's no high-quality facility in China, then we'll build.
Speaker #2: So we'll both be building and buying in China. That's why we're going to be spending 3 billion RMB in the next two years in China to build and buy facilities.
Speaker #2: The turnkey facility microbial is actually going to be ready by the end of this year. We already have a commercial program. This also sets us up very well for a GLP compound.
Speaker #2: So, if some company wants to use fermentation to make GLP, we are ready for that as well. So that's the GMP facility in Chengdu.
Speaker #2: So I already mentioned that WuXi has invested in digital and AI in the past couple of years to make sure we leverage all those tools.
Speaker #2: So all those are actually we are building the industry most advanced digital platform to to capture to improve our efficiency to capture all the data in one place and this including our client portal, our digital twin of the lab and digital twin of the manufacturing process.
Speaker #2: So our petrol lab is our digital twin of the manufacturing process. At one point in the next couple of years, we may be able to ask AI to run the facility on our behalf instead of running the facility with a human.
Speaker #2: So as I mentioned we we we want to focus our our capital we actually diversifying best chrome is is a is emergency backup supply chain with their six 80 years ago we did acquisition seven years ago and we now with the global supply chain fully established we don't really need this business anymore.
Speaker #2: That's why we're diversifying, and then we get a very good return on investment. This investment can then be channeled to building our new facilities, buying facilities in China, or even buying back shares.
Speaker #2: I think every time I share with the investors, I'm thrilled to give you an update on our technology. We have talked about cell line formation technology in the past.
Speaker #2: Today I want to update you on the ADC technology. I think Jimmy may have already updated you on this from the XTC teleconference. As ADC is becoming more and more important, I think the conjugation technology is also very important.
Speaker #2: We are called Wuxi Diax. We use elegant chemistry. This is actually very, very elegant. We use simple chemistry, and we don't need to use enzymes.
Speaker #2: We don't need to engineer the antibody. We can actually do a site-specific conjugation. It's called WuXi DA. We can do WuXi DA 4, DA 2, DA 1.
Speaker #2: Da 4 and Da 2 are mostly for ADC. Da 1 is for antibody-oligo conjugate, and Da 8 can be for ADC as well. So, this is our own platform technology.
Speaker #2: We have applied to more than 10 projects. Eight of them are already in clinical development. Right. We have also developed our own payload linker. This is the, this is the WuXi TCAN.
Speaker #2: The Wuxi linker novel payload on the DDR, the immune agonist—I think all those payloads. So I think XTC traditionally has been mostly focused on D and M.
Speaker #2: Now the R part from XTC will also become, essentially, the royalty-bearing component of the XTC business. It has already started last year and will become, hopefully, very, very meaningful in the years to come.
Speaker #2: The cell line have already updated you a few times. What I really want to show you is really the this is really really cool and again with this cell line we can be another couple months faster on on the process development and we are we can make our partner cost of goods about half of the industry right and then that's why biosimilar have turned out to be a perfect case case study for the for those new cell line.
Speaker #2: And this cell line is also a good case for us to win more projects win projects again if some if you know if someone else develop cell line couple years ago for a a for a for a company we can go in tell tell them that I can help you do a new cell line which is which make your cost of manufacturing half so with essentially they invest in 10 million dollars you're going to get 100 million dollar back in the next couple years that's very good return of investment.
Speaker #2: So me already mentioned the Wuxi business system essentially our way of lean manufacturing has already contributed 150 bips I think this is one of the main reasons we we said we we can do 100 to 150 bips improvement every year even though we are we are already very good and every aspect we can still improve this is the the the powerful nature of the WBS Wuxi business system we look at the material saving look at labor efficiency efficiency look at the cost saving look at how do we get higher revenue how do we improve quality with the WBS as a global company.
Speaker #2: Coming out of China, we are very proud that our ESG ratings continue to be very high. We always rank in the top 1% in almost all the ratings, in almost all the vacant—all the rating agencies, right? Dow Jones, EcoVadis, we are all global top 1%. MSCI is AAA, I think. Certain sustainability also has the best rating as well.
Speaker #2: So, in summary, I think, you know, if you divide Wuxi Biologics into three segments—you know, bispecifics where there are D and M—it’s very, very clear that that’s the best segment for us. ADC, you can see the XTC’s growth. The traditional MAb, although it’s vanilla antibody, but we’ve been doing this for 10 years, you know, and a lot of them are getting into manufacturing. So, FCRM programs: IGF1R, CD19, C1S, R23, R17, TR1A, TTRR, you know, IGEN. So, all those manufacturing programs, some of them are going to be blockbusters, even potentially mega blockbusters. This, again— all three segments—will give us a very exciting growth in the next years to come.
Speaker #2: So to summarize I think the first half you know for the first time in US dollar term we see actually 20 plus percent growth right our GP margin growth is actually 350 bips but if you look at the currency give us a 300 bips downturn so our margin actually can grow almost 650 bips and that's unbelievable and again that's with the normal R right the R contribution is normal is mostly through our product mix utilization and WBS I think this profitability is also sustainable that's why not only our margin will maintain this next year we actually wanted to improve by another 100 or 150 bips next year so because RDM are all doing very well and looking at forward look at looking forward to later part of this year we we actually raising the guidance in your your custom dollar term in custom currency term when raising revenue guidance to 20 to 23% from 16 to 20% so it's actually a very significant raise and in your R&B term we are raising it also to 15 to 18% the reason we are so confident because we see a profitable growth we see a stronger demand we see a technology differentiation becoming increasingly commercial we really see a visibility in manufacturing growth and lastly we are well positioned to capture all the incremental demand from AI and from mRNA the next generation therapeutic platforms because we have been incubating those platform for years I think you know we incubated biospecific and ADC in 2017 2018 now it's paying off so we have incubating AI enabled molecules and also mRNA platform for the past five years I think this will be beneficial for us in next couple years so again we continue to see a 20% revenue kicker over the next three years our manufacturing revenue kicker will be even as high as 30% and we'll see more and more programs that can generate 100 million dollars revenue for us even including one biospecific next year so thank you.
Speaker #1: Thank you. Thank you to Dr. Chen and our CFO for the comprehensive introduction and remarks. Now we are going to start our Q&A session. I want to remind you to please type your questions in our Q&A box, and then I will read your questions.
Speaker #1: So I will pause for 10 to 20 seconds and I see we already have have a question in Q&A.
Speaker #2: Yeah, yeah. Are you going to announce the question?
Speaker #1: Yes, I will read the question.
Speaker #2: Okay.
Speaker #1: Yeah. So, first question is from Lawrence Tan from Morgan Stanley. He would like to understand what's the difference between biosimilar contracts versus those for branded drugs or novel biologic drug contracts.
Speaker #2: That's a great question. So, Lawrence, as I mentioned earlier, we won those biologic contracts by technology, not by discount. So the terms are almost very similar to novel programs.
Speaker #2: So in terms of D, revenue is actually higher because for novel, you just develop your cell line—that's it. For biosimilar, you have to tune it to match the original program.
Speaker #2: For for for development revenue is actually 20 to 50% higher than traditional manufacturing. But for manufacturing it's almost the same. So so that's why I I I will say saying for 20 20 biosimilar program we're signing in next couple years if each program give us a 50 million dollar revenue that's a billion dollar manufacturing revenue and that also come sooner because the only only takes four or five years so so to get approved instead of eight or 10 years so the the 20 program we're signing you know this this next three years will give us a billion dollar revenue when those program become commercial so that's another four or five years down the road I think that's how powerful our this biosimilar become a really a strong driver for our near-term manufacturing growth.
Speaker #1: Okay, understood. Actually, I also have a question from my side. It looks like the company is going to have more and more commercial projects, and it's also very likely we are going to see continued growth acceleration for the next few years.
Speaker #1: So if and the company just give us guidance for the 2026 I know we are still away from you know next year and the 2028 but I would like to get understand how should we think about those kind of magnitude of potential growth acceleration in in next few years.
Speaker #2: Well, that's why we said our growth kicker on the top line side will be at least 20%. On the margin side, we want to expand our margin by 100–150 basis points a year.
Speaker #2: So at a minimum.
Speaker #1: Is there a ceiling that we are giving to the investors? We're given the bottom number, right?
Speaker #2: This is the bottom. This is—yeah, this is the baseline case. I think, as you know, if you do a model, if you see manufacturing growth really accelerate, I think the growth will probably be in the mid-20s in the next couple of years.
Speaker #2: So growth actually will accelerate. So truly, you see growth acceleration—basically, 2026 is better than 2025, 2027 is better than 2026, and then 2028 is better than 2027.
Speaker #2: So every year we hope our growth pick up a couple points points.
Speaker #1: Mm-hmm. Yes. And understood. And yeah we have Chris Tan from Goldman Sachs team he would like to ask about AIDD projects. So for AIDD projects what type of service the companies providing what who are the clients for those AIDD projects from biotech or tech companies or pharma companies?
Speaker #2: Yeah. For AIDD, we do three types of service. For AIDD, first, they need to generate data. We actually help them generate data.
Speaker #2: So they give us the sequence. We give them protein, we give them antibody, we give them the data. And those businesses are growing 40% a year.
Speaker #2: It's all very, very meaningful. So, and then this is to help them build the model, and once they have the model, they have the molecule, then they come to us for development.
Speaker #2: So that's the 30 programs we have in development, so that's already 3% of our portfolio. And then lastly, we actually offer our AIDD service to clients as well.
Speaker #2: We we have our own AIDD model. We have built we have already discovered six asset without AI. Those asset are not feasible. So essentially without AI without without our lab without manufac without scientist experience they can only overcome you know one issue and the other issue pop up with AI we're able to correct all those issue and and develop six assets successfully.
Speaker #2: So those assets are actually has been in discussion to license them to global peers global clients just like our traditional licensing model. So I think so our client profile ranging from AI companies from large pharma from biotech companies actually is so it's AI is truly a a a tailwind for us.
Speaker #1: Mm-hmm. Okay. Great. Another question and also would like to understand for the management what make you most excited about your current pipeline about the future opportunities and what's also you know keep you up in the night when you think about you know this year and the next year.
Speaker #2: I think the most exciting part is basically, again, it's the funnel continuing. That's why I call it, jokingly, the diamond funnel. The funnel is getting bigger and bigger, and then once the project gets into the funnel, it's sticky.
Speaker #2: So we're going to see many many large scale manufacturing projects biospecific programs ADC programs traditional MAP the traditional MAP I mentioned FCRN I mentioned IGAN disease I mentioned C1S so our 23 you know integrant so many many exciting programs on the ADC part right so B7H3 F40 40 recep top two 40 40 receptor alpha so so I think that's you know all those exciting commercial programs
Speaker #1: Okay. Got it. And I saw a challenge on from Mara want to ask what's a price offering difference between Wuxi and some of your overseas peers?
Speaker #2: In terms of the R&D, it's almost on par. We're on par with the global leaders. In terms of manufacturing in China, we are maybe 10% to 20% lower, but globally we are on par.
Speaker #2: On the pricing side. Yeah.
Speaker #1: Okay, so mostly on par. Maybe, let's see. Since we are almost, you know, eight minutes over our kind of one-hour limit.
Speaker #1: So, I think I will close the Q&A session for now. And for the management team, do you have any closing remarks you would like to offer to our audience?
Speaker #2: Yeah, maybe just two minutes on the closing. Sorry we took most of the time, so that you don't have too much time to answer the question.
Speaker #2: So I think as you know we are most excited you know our our our our what's what's what we are most thrilled is actually the CRDMO model right the the R&D continue to accelerate and then the M you know it's always stay there.
Speaker #2: So this nature of the business model is unbeatable, and we can also scale the business, right? So as a portfolio is becoming more and more ADC and bispecific, they are even stickier.
Speaker #2: They are more—they are more technically challenging. So, the probability for us to keep the entire development, keep the manufacturing, is even higher than traditional MAPs.
Speaker #2: So our portfolio is getting stickier. Our funnel is getting bigger. All those bode well for future growth. So that's why I want to promise investors sustainable high growth.
Speaker #2: So, every year we'll see growth expansion.
Speaker #1: Okay. Thank you again, Dr. Chen, and also thank you very much, Mr. Tu, for your remarks and the Q&A.
Speaker #2: Thank you.
Speaker #1: If you have any further questions, please reach out to company IR or to us. Good night to everyone.
Speaker #2: Thank you. Thank you.
Speaker #1: Thank you. Bye everyone.
Speaker #2: Thank you Yang.
Speaker #1: Thank you.
Speaker #2: Yep.
