Chinese company helps boost Philadelphia as biotech sector

When WuXiPharmaTech acquired AppTecLaboratory Services Inc in Philadelphia for $151 million in 2008, it became one of the biggest foreign investors in a city where biotech was becoming a hot sector.

Since the acquisition, WuXiAppTec — as the company is now known — has become one of the biggest job creators in the city with a staff of approximately 400, which will increase to 600 in a few years. The company has three buildings in the Philadelphia Navy Yard, a former naval shipyard for almost two centuries, and has additional offices in St. Paul, Minnesota, and Atlanta.

“We’ve had quite a bit of impact economically in Philadelphia — we’ve added at least 200 jobs since acquiring AppTec,” said Felix Hsu, senior vice-president of WuXiAppTec. “The other thing is that Philadelphia is starting to think of itself as a biotech hub, part of the reason is that there are academic centers for gene therapy, and there’s academic expertise [here in the area].”

That’s leading to companies coming into the city to do business, and companies like WuXiAppTec’s to further invest in the area by setting up infrastructure, said Hsu.

The company provides a range of research services, from biologics — like gene therapy, which is the manipulation of missing or defective cells to correct genetic disorders — to supporting the development of medical device products, like testing for material and product efficacy.

Hsu said that this biotech research that WuXiAppTech conducts also is a booming sector in China because the country’s middle class creates more demand for medication and health services and an aging population requires more medical attention.

“There is huge investment in China in this area, where companies are setting up testing and biologics,” he said. “The Chinese market is growing much faster. The US is already a developed market, but in China, as a new market, fast growth is possible.”

Most of the company’s research and expertise is still US-based, which is why Shanghai-based WuXiPharmaTech found value in investing in AppTec and acquiring it, said Hsu.

In a statement announcing the acquisition nearly a decade ago, WuXiPharmaTech touted the purchase as a way for it to gain a “significant US operational footprint” and that it will ultimately be able to provide chemistry and biology services to global pharmaceutical and biotechnology clients.

“Most of the expertise in advanced therapy is US-based. A few years down the line, that expertise might be more global. China, for one, is getting much better with R&D,” said Hsu.

“WuXi is willing to work in the US for strategic advancements. We think globally — where is the expertise located? If it’s in Europe, we’ll go to Europe. If it’s in the US, we go to the US.”

AppTec’s established brand was also important to WuXi, especially in a highly sensitive field like biotechnology, where scientific patents and research are closely guarded. China may suffer due to perceptions of counterfeits and being tied to the AppTec brand was an important consideration for WuXiPharmaTech when it was looking to acquire AppTec, Hsu said.