(Yicai) July 30 -- WuXi AppTec’s shares rose after the Chinese biotech company said profit jumped for the second quarter in a row and the firm stood by its full-year revenue target.

WuXi AppTec [SHA: 603259] closed 4.3 percent higher at CNY40.69 (USD5.61) a share in Shanghai today. Its Hong Kong-listed stock [HKG: 2359] rose 3.8 percent to HKD29.85 (USD3.82).

Net profit jumped 18.5 percent to CNY2.3 billion (USD316.7 million) in the three months ended June 30 from the previous quarter, the Shanghai-based firm said in a financial report released yesterday. Profit climbed 26 percent to CNY1.9 billion in the March quarter from the prior one, following two quarter-on-quarter setbacks. Revenue rose 0.3 percent to CNY9.3 billion.

WuXi AppTec also reiterated its revenue target for this year of between CNY38.3 billion and CNY40.5 billion (USD5.28 billion and USD5.59 billion), saying that after factoring out certain commercial production projects, income is expected to increase by 2.7 percent to 8.6 percent.

With lower revenue from Covid-19-related projects and the slowdown in biopharmaceutical investment and financing over the past year or so, earnings have slid at many biotech firms. Industry sources also told Yicai that a price war has started for domestic orders.

For the first half of the year, WuXi AppTec posted a 20 percent slump in net profit to CNY4.2 billion from a year ago, while operating revenue dropped 8.6 percent to CNY17.2 billion (USD2.4 billion). Excluding Covid-19 commercial projects, income fell 0.7 percent.

The biggest "grey swan" event for WuXi AppTec this year is the controversy surrounding the draft of the US Biosecure Act. The US government intends to prohibit contracts with certain biotechnology providers with ties to foreign competitors, WuXi AppTec included.

Whether the bill will be enacted remains uncertain, but the draft has already impacted WuXi AppTec, judging by the company’s semi-annual earnings report.

First-half revenue from its contract testing, development, and manufacturing business for high-end therapies fell 19.4 percent from a year earlier to CNY575 million (USD79.2 million). Regarding the drop in income, the firm noted that high-margin projects were completed last year, while commercial projects are still in the early stages of scaling up, with some delayed or canceled for client reasons, while the impact of the proposed US bill led to insufficient new orders.

Orders on hand, excluding Covid-19 commercial projects, amounted to CNY43.1 billion as of the end of last month, up 33 percent on an annual basis, WuXi AppTec said.

Editor: Martin Kadiev