China's WuXi to acquire America's AppTec for $151mn

WuXi PharmaTech Inc. announced Thursday its intention to acquire a U.S.-based medical-research firm AppTec Laboratory Services Inc., in order to capture the monster share of the surging global market for the outsourcing of drug development.

The Chinese research and development outsourcing company said it will pay $151 million to acquire the St. Paul, Minnesota-based AppTec. It will also assume about $11.7 million in debt, China's largest drug-research outsourcing WuXi said.

"We are very excited to announce the combination of WuXi PharmaTech and AppTec Laboratory Services, an important milestone in realizing our vision of becoming the global R&D outsourcing leader," said Dr. Ge Li, Chairman and Chief Executive Officer of WuXi PharmaTech.

Dr. Li continued that AppTec's biologics testing and manufacturing capabilities will compliment WuXi's chemistry services to create a fully integrated service platform that will enable the company to provide more value-added services to our customers. “With an expanded geographic footprint, and a broader and deeper scope of services, we are well positioned to drive growth and continue to increase shareholder value,” he said.

Two companies’ boards and AppTec’s shareholders have given their approval to the proposed deal. Approval of Shanghai-based WuXi’s shareholders is not required. The deal is still subject to regulatory and other customary closing conditions, and is expected to close in the first quarter of 2008.

On their merger deal with WuXi, Dr. Bonita L. Baskin, Chief Executive Officer of AppTec said, "Combining these two companies creates a unique single source platform that has the ability to transform the outsourced R&D model globally. I, along with the AppTec team, share with Dr. Li our excitement over the prospects of this combination."

AppTec has described itself on its Website as a trusted leader in providing high-value testing, contract R&D, and cGMP manufacturing services for the biopharmaceutical and medical device industries. Founded in 2001 by Bonnie Baskin, AppTec currently employs about 400 employees at its St. Paul headquarters and at facilities in Philadelphia and Atlanta.

According to WuXi, AppTec’s revenue is expected to range from $70 million to $72 million in 2007.

In a separate statement, WuXi announced that it has promoted Mr. Edward Hu from Executive Vice President of Operations to Chief Operating Officer. Hu joined the company last year in August. Before this, he was a senior vice president and Chief Operating Officer at Tanox, Inc., a NASDAQ listed company later acquired by Genentech, Inc.

Working as Executive Vice President of Operations at WuXi PharmaTech, Mr. Hu took many initiatives in the last few months to strengthen the company's operations and corporate development. He also played the key role in leading the AppTec acquisition.

Founded in 2000, WuXi PharmaTech is China's premier provider of pharmaceutical R&D outsourcing services. It has 80 customers including New York-based Pfizer Inc., the world's biggest drugmaker.

Shares of WuXi rose $1.46, or 5.1 percent, to close at $30.30 yesterday in New York Stock Exchange composite trading.