Last week was a big week for earning announcements from China life science enterprises: a total of eight companies announced their results. Earnings reports far overshadowed almost any other kind of news from the China life sciences sector. For the most part, the eight companies posted incredible increases in revenues, though many times each enterprise’s net income was not as spectacular. Perhaps this is the adolescent phase of China biopharma development: spectacular growth spurts, but often accompanied around the edges by adjustment difficulties as young enterprises grow into adulthood, almost as we watch.

WuXi PharmaTech Inc. (NYSE: WX), the Shanghai CRO that can lay legitimate claim to the highest profile of any China life science company, reported a very solid 80% increase in revenues and 134% jump in net income (see story). The results also beat expectations, but there was little surprise in them. The growth was there, as was the small but necessary increase over the forecasts. In short, it was almost too predictable. Much of the big increase was due to its new AppTec division, which was not part of the company a year ago. Here are the numbers: revenues up 134% at $70.8 million and net income higher by 81% at $15.5 million or 21 cents per ADS (non-GAAP). WuXi dangled the prospect of a major contract in front of analysts, but the company will not divulge details until it has a contract in hand. Similarly, the Covance contract is still being worked out, so the company was similarly reluctant to speak about it. WuXi also refused to break out specific numbers on AppTec. Chairman Ge Li said the integration is going well and that the two sides of the company will be able provide each other with added business. But WuXi admitted that revenues from AppTec were down from last year. The entire picture caused one brokerage house, Jefferies & Co., to lower WuXi to Hold status.

American Oriental Bioengineering (NYSE: AOB) used the occasion of its Q2 earnings report to announce that it will soon finalize a huge acquisition (see story). AOB intends to purchase an unnamed China pharmaceutical distribution company with $550 million of revenues at a price of $110 million. Margins in the distribution business are very low (usually below 5%), which is just the opposite of biopharma, where they are very high. American Oriental refused to disclose the profitability of the company, but did say that its margins are “above the industry standard.” Overshadowed by the acquisition news, the earnings report revealed that AOB continues to grow: Q2 revenues rose 74% to $59.0 million, while net income lagged slightly: it climbed 43% to $13.9 million. Fully diluted EPS were 18 cents. 

Sinovac Biotech (AMEX: SVA) enjoyed a substantial increase in its Q2 revenues: they were up 73% to $16.5 million (see story). However, the company admitted the increase included a $4.6 million government vaccine order after the May earthquake in Sichuan province. Without the government order, Sinovac’s revenues would have been higher by only 25%. Thus, the growth may not be sustainable. Net income in Q2 was $3.3 million, which was almost equal to profit in the first six months of 2007.