When he disembarked from the plane at Dublin Airport, Chris Chen (PhD) Chief Executive Officer of WuXi Biologics (02269.HK) was surprised to find officials from Ireland IDA on the runway waiting to greet him.
In fact, Ireland IDA had even organized a special banquet for their guest coming from afar. Chris, who had much experience conducting business in Europe and America, but who had never been treated to such a warm official welcome, remembers that day clearly.
On 30th April 2018, a spring day in the previous year, WuXi Biologics announced that it planned to invest €325 million in the construction of a new vaccines manufacturing facility in Dundalk, only 45 minutes from Dublin Airport.
The 65-acre ‘Factory of the Future’ will become the largest construction site in Ireland, with delivery slated for 2021. Once construction is complete, the site will directly lead to the creation of 400 high-tech jobs and 700 construction-related roles. The facility is the first of its kind invested in by WuXi Biologics outside China, and is the first large-scale investment on a greenfield site by a Chinese biologics company.
Ireland, the “Celtic Tiger”, is also famous for its beautiful countryside, which reflects its other nickname, the “Emerald Isle”. Since the 1960s, Ireland has invested heavily in biologics, which has become the first port of call for investors in the new biotechnology and facilities sector. The country has attracted industry talent from all around the globe. There are around 90 bioprocessing facilities in Ireland, some of which been here for half a century.
Thanks to the current global biotechnology revolution, biomedicine has become a strategic choice for development this century. Chris Chen explains that after the facility is complete, it will “lead the application of next-generation biologics manufacturing technology” (continuous manufacturing) when it begins commercial manufacturing. The site will become a global leader in biologics as the ‘Factory of the Future’.
But why Ireland? Chris Chen explains that Ireland has mature biologics and other knowledge-intensive industries, with 1% of the population involved in pharmaceuticals. With its pool of experienced talent and production facilities, Ireland is one of the first choices for investors in biologics.
Ireland is open to investment, and IDA Ireland is serious about welcoming new businesses to the country. The rolling out of the red carpet for Chris Chen by the IDA Ireland officials was just a small part of this effort.
IDA Ireland focuses not just on acts of kindness to individuals; it has a clear plan to attract investment. “They knew what they wanted to do on this plot of land ten years ago,” says Chen.
Ireland also benefits from a relatively stable political and economic environment. There are many business-friendly tax incentives, with corporate tax at just 12.5%, far lower than the average rate of corporate tax in the European Union (22.5%) and the global average (21.4%). IDA Ireland also led the creation of the National Institute for Bioprocessing Research and Training (NIBRT), which has become the equivalent of “West Point” for Ireland’s biologics industry.
Eight years ago, WuXi Biologics was a small biologics and bioprocessing business unit under WuXi AppTec, with just a few dozen staff. In 2016, the unit was incorporated and began moving at ‘WuXi speed’: the company was listed on the Hong Kong Stock Exchange in 2017, where its market cap soared past HKD100 billion in under 300 days, becoming a “legend” in the Hong Kong stock market back then.
In 2018, WuXi Biologics moved to consolidate its gains and expand its production capacity. Building on its Follow-the-Molecule strategy, the company realigned to a global dual-sourcing strategy. As part of the new strategy, WuXi Biologics will establish 20 labs around the world producing living cell culture and preparations. The Dundalk facility is an important component in this global lab network.
On 22nd November 2019, WuXi Biologics announced that WuXi Vaccines, its vaccines contract development and manufacturing organization (CDMO) subsidiary, would invest USD240 million in a vaccine production facility. The investment would be the second major investment by the company at its Dundalk campus and would be the first vaccine CDMO facility in Ireland.
Given the scale of the project, WuXi Biologics would need significant financial support. HSBC stepped in to become the company’s chief financial partner.
HSBC’s involvement was no surprise, as HSBC’s extensive network and global RM system allow it to mobilise resources for its customers worldwide. “It’s not just in Ireland, Singapore or the US – we go wherever WuXi Biologics needs us,” explains Frank Fang, Executive Vice President and Head of Commercial Banking at HSBC China, who knows Chris Chen fairly well. HSBC’s branch network in Ireland is staffed with an overseas customer team who are experts in local business customs. “Our RMs are familiar with Chinese culture and ways of thinking. They are also experts in local customs of their host countries, which allows them to help advise Chinese businesses on how to better integrate into local markets.”
Frank Fang notes that collaborations between medicine and biotechnology companies are driving advances in cutting-edge medicine along the Belt and Road, improving living standards and providing commercial opportunities. In 2018, HSBC created a specialist team to handle business with the medicine and health industry. The team’s work involved everything from analysis of industry segment demand, to designing financing packages for clients in China and abroad, improving credit approvals to driving collaborations between businesses and investors, and providing assistance to clients like WuXi Biologics as they upgrade their capacity and develop global strategies.
Chris Chen says that enhancing the company’s international production via upgrading its biologics technology and its quality of service is an important step to consolidating the company’s gains. The company’s Dundalk facility is a key part of that effort.
WuXi Biologics projected in its interim report that, with the rollout of the global strategy, the company’s total production capacity would surpass 280,000L by 2022.
After the establishment of the Dundalk facility, the company will continue to employ its advanced single-use disposable bioprocessing technology and will lead the application of next-generation biologics manufacturing technology (continuous manufacturing) when it begins commercial manufacturing. The site will become a global leader in biologics as the ‘Factory of the Future’.
Chris Chen adds that empowering local partners to accelerate the development of biologics, and empowering the local life sciences industry, will become a key part of WuXi Biologics’ international strategy. In the future, the strategy may also expand to Belt and Road countries.
A report by China Securities projects fast-paced growth for WuXi Biologics over the next few years. Its global strategy focusing on production capacity and continuous culture technology has the potential to sustain highly efficient commercial projects. In view of the fast growth of the biologics industry and WuXi Biologics’ need to balance the development and production needs of customers in China and overseas in future, the company’s production expansion plan is a prudent choice.
Slowly but surely, WuXi Biologics’ “Factory of the Future” is taking shape on the Emerald Isle.