China Biotech Stock Soars After Tipping 245 Percent Profit Jump
(Bloomberg) -- Wuxi Biologics Cayman Inc. shares surged the most in 11 months after saying it expected 2018 profit to be more than 245 percent from a year ago, buoyed by higher interest income, healthy margins and more drugs nearing commercialization.
Shares of the Shanghai-based drugmaker advanced as much as 13 percent Wednesday, after an exchange filing with the ‘positive profit alert,’ outperforming the benchmark MSCI China Health Care Index. This extends Wuxi’s year-to-date gain to 42 percent after dropping in second half of last year amid a sell off in Chinese health-care stocks.
The Chinese maker of antibody drugs and biologics attributed the profit gains partly to a “strong growth in revenue, as a result of more projects entering into late-phase.” Foreign exchange gains compared to losses the year before, and higher interest income were the other contributors. The financial results are expected in mid-March.
Wuxi’s efforts to introduce newer drugs into the market will get a tailwind from Chinese policymakers who are pushing for cheaper and quicker access to health care for a growing middle class in the world’s second-biggest pharmaceutical market. While reining in prices of non-patented drugs, Beijing is also giving tax breaks and speeding up approvals of novel drugs.
Wuxi reported profit of about 250 million yuan ($37.2 million) in the first half of 2018, 171 percent higher from a year ago.
Only one brokerage recommends holding the stock, according to data compiled by Bloomberg, while the remaining 15 have a buy rating on the stock.
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