waters Chief Executive Officer Udit Batra said China is emerging as a key source of innovation in the global pharmaceutical industry, even though some investors remain cautious about the region.
“They’re basically leading the biotech industry globally right now,” he said on “Mad Money.” “Currently, approximately one-third of the molecules introduced by major pharmaceutical companies are made in China.”
Waters on Tuesday reported adjusted earnings per share of $2.70, beating expectations of $2.31. Revenue also exceeded expectations, coming in at $1.27 billion versus the expected $1.2 billion.
This strength was primarily driven by the company’s pharmaceuticals division, which grew 14% due to widespread demand across large pharmaceutical companies, contract manufacturers, and Chinese biotech companies. By region, the growth was strongest in Asia.
“Growth was broad-based, with high-single-digit growth in the Americas and Europe,” Batra said on an earnings call. “Asia grew by nearly 30%, led by more than 50% growth in China, low-teen growth in India, and low-teen growth in Japan.”
Batra said the performance reflected deeper changes underway in China’s pharmaceutical market, with innovation offsetting weaknesses in other areas.
“The generic pharmaceutical sector in China has been in decline for many years due to price controls,” he said. “But innovation pays off.”
As more innovative medicines are developed in China, Batra noted that contract manufacturers are rapidly scaling up, and are increasingly handling the entire process from discovery to development, rather than just manufacturing drugs.
“They’re trying to make their own version of Pfizer or AstraZeneca,” he said.
