Wuxi Apptec (603259.SH) has announced the sale of two clinical service subsidiaries for a base price of 2.8 billion yuan, continuing its strategic adjustments. On October 27, the company disclosed plans to divest 100% equity in Kanton Hongyi and Jinshi Pharmaceutical to two newly established entities under Hillhouse Capital’s investment fund—Shanghai Shihe Rong and Shanghai Shihe Mu. The deal coincides with Wuxi Apptec’s Q3 2025 earnings release.

The company’s A-share price opened higher but closed at 106.64 yuan per share, up 2.73%.

**Divesting Clinical CRO Business** Kanton Hongyi, a full-service clinical research organization (CRO), specializes in oncology and autoimmune diseases, offering end-to-end solutions from Phase I to IV trials. Jinshi Pharmaceutical, founded in 2009, operates a 5,300-strong team across 150 Chinese cities, managing over 4,700 clinical projects in diverse therapeutic areas.

In January–September 2025, the two subsidiaries generated combined revenue of 1.16 billion yuan (unaudited), accounting for 3.5% of Wuxi Apptec’s total, with net profit at 90 million yuan (0.7% of group earnings).

This follows Wuxi Apptec’s earlier divestments, including the 2024 sale of U.S.-based WuXi ATU and UK-based Oxford Genetics (cell and gene therapy CDMO businesses) for 980 million yuan in revenue. The company also reduced stakes in WuXi XDC (2268.HK) twice in 2024–2025, cashing out 4.77 billion HKD.

Co-CEO Yang Qing stated the move aligns with CRDMO strategy, sharpening focus on drug discovery, lab testing, and manufacturing.

**Net Profit Surges 85%** Wuxi Apptec’s Q3 report showed robust growth: revenue rose 18.6% YoY to 32.86 billion yuan, while net profit jumped 84.8% to 12.08 billion yuan. Q3 revenue and net profit grew 15.3% and 53.3%, respectively.

Key drivers included the chemistry segment (up 29.3% to 25.98 billion yuan) and U.S. market sales (22.15 billion yuan, +31.9%). Backlog orders surged 41.2% to 59.88 billion yuan, prompting an upward revision of full-year revenue guidance to 43.5–44 billion yuan.

**Strategic Rationale** Analysts cite four reasons for the divestments: 1. CRDMO core focus 2. Mitigating overseas policy risks (e.g., U.S. Biosecurity Act scrutiny) 3. Financial optimization 4. Countering domestic competition (e.g., price wars with Pharmaron and Asymchem)

By expanding R&D and global production (Switzerland, U.S., Singapore), Wuxi Apptec aims to consolidate market leadership and maximize shareholder value.