Waters CEO Udit Batra said China is emerging as a critical source of innovation in the global pharmaceutical industry, even as some investors remain cautious on the region.
“They basically are the leading biotech industry right now, globally,” he said on “Mad Money.” “Roughly one-third of the molecules that are in-licensed by large pharma today come from China.”
On Tuesday, Waters reported adjusted earnings per share of $2.70, topping estimates of $2.31. Revenue also beat expectations, coming in at $1.27 billion versus a $1.20 billion forecast.
The strength was driven in large part by the company’s pharmaceutical segment, which grew 14%, with broad-based demand across large drugmakers, contract manufacturers, and Chinese biotech firms. Regionally, growth was strongest in Asia.
“Growth was broad based, with high single-digit growth in Americas and Europe,” Batra said on the earnings call. “Asia grew nearly 30%, led by over 50% growth in China, low-teens growth in India, and low-teens growth in Japan.”
Batra said that performance reflects a deeper shift underway in China’s pharma market, where innovation is offsetting weakness in other areas.
“The generic segment of pharma in China has been declining for many years due to price restrictions,” he said. “But innovation is rewarded.”
As more innovative drugs are developed in China, Batra noted that contract manufacturers are scaling up rapidly — not just producing medicines, but increasingly handling the full process from discovery through development.
“They’re trying to build their own version of a Pfizer or an AstraZeneca,” he said.
