WuXi AppTec has completed one of its largest acquisitions, buying control of a UK-based contract research and development team to help the Shanghai pharmaceutical company get into the US$2.6 billion global market for cell and gene therapy.

WuXiAppTec paid US$135 million cash for Oxgene, based in the township of Oxford, turning it into a wholly owned subsidiary of WuXi Advanced Therapies (ATU) for developing, manufacturing and testing biotech services, according to an announcement.

The takeover is a "perfect match" between the two companies because WuXi ATU needs advanced technology to plug its gaps in offering end-to-end solutions, while Oxgene requires the manufacturing prowess, said the Chinese company's chief executive David Chang.

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

"Based on the industrial needs that we are seeing, we will continue to grow as the demand out there is just so high, either internally and organically or externally through M&As or other kinds of in-licensing agreements," said Chang, who added the firm will pursue an "aggressive" growth approach.

WuXiAppTec's senior management during the company's initial public offering press conference in Hong Kong on November 30, 2018. (L-R): Board secretary Chi Yao, chairman and chief executive Dr. Ge Li and chief financial officer Edward Hu. Photo: Edward Wong

Globally, the cell and gene therapy market is poised to see a compound annual growth rate of 33.8 per cent from 2021 to 2027, according to a forecast by the market intelligence firm BIS Research.

One-stop solutions are being sought after by customers in China's fast-growing biotech industry, which has fuelled consolidation among drug discovery players, Chang said.

"Many early-stage cell and gene therapy companies have their research from university labs, and lack the CMC (chemical, manufacturing and control) capability," Chang said. "It is hard for those start-ups to find multiple suppliers and manage a value chain effectively."

Image of WuXi AppTec logo. Photo: Handout

Founded in 2011, Oxgene develops gene therapy technologies, including patented systems that could produce gene therapy vectors more affordably and at a higher quality.

Oxgene remains independent and will retain its brand name. The company will be led by its founder and former chief executive officer Ryan Cawood and its management team remains in place unchanged.

Oxgene will be WuXi ATU's first facility in Europe, out of its four based in Philadelphia where it is based, and two in mainland China. Tapping into the European markets would mean being more attuned to local needs, but Chang is casting a wider net to expand globally in future.

"We create technologies for the cell and gene therapy manufacturers, but not manufacture it ourselves. Last year, we were looking to raise capital and the decision was either to go through with the acquisition or to build our own manufacturing capabilities," said Cawood in a phone interview with the Post.

The merger would scale up Oxgene's technology and improve the capacity to expand the production of gene therapy, which remains an expensive, inefficient bottleneck in the industry, said Cawood. Oxgene's immediate priorities following the acquisition would be to see its technology manufactured and introduced into the market.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.