Form F-1

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliest effective registration statement for the same offering. ¨

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

WuXi PharmaTech (Cayman) Inc., or WuXi, is offering 4,264,400 American depositary shares, or ADSs, representing 34,115,200 ordinary shares, and our selling shareholders are selling 5,862,400 ADSs, representing 46,899,200 ordinary shares. Each ADS represents eight of our ordinary shares. The public offering price is $ per ADS. The ADSs will be evidenced by American depositary receipts, or ADRs.

Our ADSs are listed on the New York Stock Exchange under the symbol “WX.” On April 2, 2008, the last reported sale price for our ADSs was $23.45 per ADS.

A selling shareholder has granted the underwriters an over-allotment option for a period of 30 days from the date of this prospectus to purchase up to 1,519,020 additional ADSs.

Investing in our ADSs involves a high degree of risk. See “ Risk Factors” beginning on page 15.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The ADSs are expected to be delivered against payment in New York, New York on , 2008.

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the ADSs offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information in this prospectus is current only as of the date of this prospectus.

In connection with this offering, the underwriters or any person acting on their behalf may over-allot or effect transactions with a view to supporting the market price of the ADSs at a level higher than that which might otherwise prevail for a limited period of time after the issue date. However, there is no obligation on the underwriters or their respective agents to do this. Such stabilization, if commenced, may be discontinued at any time, and must be brought to an end after a limited period.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs discussed under “Risk Factors” before deciding whether to buy our ADSs.

Our Business

We are a leading pharmaceutical, biotechnology and medical device research and development, or R&D, outsourcing company, with operations in China and the United States. We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the R&D process to pharmaceutical, biotechnology and medical device companies. Our services are designed to assist our global customers in shortening the time and lowering the cost of drug and medical device R&D by providing cost-effective and efficient outsourcing solutions. We group our operations into two segments:

•

laboratory services, consisting of discovery chemistry, service biology, toxicology, pharmaceutical development, analytical services, biopharmaceutical and medical device testing, and other related contract R&D services; and

•

manufacturing services, focusing on advanced intermediates, active pharmaceutical ingredients, or APIs, and biologics-based manufacturing, testing and related services.

Prior to the acquisition of AppTec Laboratory Services, Inc., or AppTec, in January 2008, we focused primarily on our chemistry operations, providing services to more than 80 pharmaceutical and biotechnology customers, and each of WuXi’s top ten customers over the last three years continues to be our customer today. The AppTec acquisition expands our operations to include biopharmaceutical and medical device testing and other related contract R&D and biologics manufacturing services. We now offer our customers a fully-integrated service platform that we intend to continue expanding, particularly in the preclinical development, formulation and manufacturing areas. We have increasingly developed broader and more integrated relationships with our customers through our expanded capabilities and services. Most of our customers return to us for additional and often larger and longer-term projects.

Headquartered in Shanghai, China, we are well-positioned to capitalize on the advantages of conducting R&D in China, while emphasizing quality, responsiveness, protection of customer intellectual property and reliability. Our primary China-based facilities include a 630,000 square-foot R&D center in Shanghai Waigaoqiao Free Trade Zone, a 220,000 square-foot process development and cGMP-quality manufacturing plant in Jinshan area of Shanghai, and a 130,000 square-foot R&D center in Tianjin, which is mainly focused on discovery chemistry services. The AppTec acquisition provides us with a U.S. presence and know-how in biologics, including three FDA-registered, U.S.-based facilities. These U.S. facilities include a 63,000 square-foot R&D and manufacturing facility in St. Paul, Minnesota, a 46,000 square-foot testing facility in Atlanta, Georgia, and a 75,000 square-foot R&D, testing and manufacturing facility in Philadelphia, Pennsylvania.

Our net revenues increased from $33.8 million in 2005 to $69.9 million in 2006 and $135.2 million in 2007, representing a two-year 100.0% compounded annual growth rate, or CAGR, and 93.3% year-over-year growth from 2006 to 2007. Our net income increased from $6.1 million in 2005 to $8.9 million in 2006 and $33.9 million in 2007, representing a two-year 135.7% CAGR and 283.0% year-over-year growth from 2006 to 2007. Our historical growth is attributable primarily to an increased customer base and resulting projects, expanded capacity, increased service offerings, and the continued focus on obtaining long-term, integrated customer service contracts. On an unaudited pro forma basis to give effect to the AppTec acquisition as if it had occurred on January 1, 2007, our 2007 net revenues would have been $205.5 million and our net income would have been $34.7 million.

Our Services

We provide a broad and integrated portfolio of laboratory and manufacturing services to pharmaceutical, biotechnology and medical device companies with the objective of shortening the time and lowering the cost of drug and medical device R&D. Our service offerings initially consisted of discovery chemistry services. As we established a track record of customer satisfaction, we have expanded our service offerings extensively. Together with the AppTec acquisition, we now provide a comprehensive range of services, including:

•

discovery chemistry, such as lead generation, lead optimization and synthetic chemistry;

•

service biology, such as assay development and compound screening, drug metabolism and pharmacokinetic, or DMPK, services, which involve the analysis of how drug candidates act in the body over time, in vitro and in vivo absorption, disposition, metabolism and excretion, or ADME, profiling, and metabolite identification;

•

toxicology, including services that conform to “good laboratory practice,” known as GLP, and some that do not;

•

pharmaceutical development, focused on formulation development for new chemical entities;

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analytical services, including support of our laboratory and manufacturing services, as well as external services such as assay development and validation;

•

process development, including process research and process optimization services to assist customers to manufacture their drug candidates more efficiently and in larger scale;

•

medical device testing and development, including biocompatibility testing, custom implantation and materials testing, environmental monitoring, packaging validation testing and sterilization validation;

•

advanced intermediates manufacturing, which are drug materials prior to refinement into APIs, and APIs; and

•

biologics-based manufacturing and testing, including cell banking and cell bank characterization, process development, drug substance manufacturing and final product formulation and fill, biologics testing services, in process and final product testing and viral clearance testing and validation.

We believe our customers value our ability to offer a wide breadth of quality services to meet their R&D needs, and we expect to continue expanding our preclinical and clinical development service offerings. See “Industry” and “Business” for a detailed description of our services.

Our Strengths and Strategies

Our competitive strengths principally include the following:

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integrated, scalable and expanding services;

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proven quality and customer satisfaction;

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experienced management and talented pool of scientists;

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commitment to protection of our customers’ intellectual property and confidential information;

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world-class facilities; and

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advantages of doing business in China.

We plan to continue to grow our business by pursuing the following strategies:

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expand service offerings to include additional value-added preclinical development and manufacturing;

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increase capacity and expand facilities;

•

grow through selective, complementary strategic partnerships and acquisitions; and

•

attract, train and retain quality talent.

Risks and Uncertainties Related to Our Business and Industry

We face risks and uncertainties, including those related to our ability to:

•

adapt our business to industry trends, such as fluctuations in the R&D budgets of pharmaceutical, biotechnology and medical device industry participants and changes in government regulation or in practices relating to the pharmaceutical, biotechnology and medical device industries;

•

diversify our customer base and adapt to potential loss of sales to, or significant reduction in orders from, any of our major customers;

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retain senior management and key scientific personnel, as well as attract, train, motivate and retain other skilled scientists and mid-level personnel;

•

continue to compete effectively in our industry, which may subject us to increasing pricing pressure and reduce the demand for our services;

•

adapt to the discontinuation or phase-out of any of the preferential tax treatments and/or other financial incentives currently available to us in the PRC and potential increases in PRC taxes;

•

manage our current and potential future growth;

•

expand our capacity and ramp up our operations as anticipated;

•

integrate AppTec and future acquisitions; and

•

establish effective internal controls over financial reporting.

See “Risk Factors” for a detailed discussion of these and other risks that we face.

Our Corporate Structure

We are a Cayman Islands holding company and conduct substantially all of our business through our operating subsidiaries in China and the United States. We indirectly own 100% of the equity of our operating subsidiaries.

The following diagram illustrates our corporate structure and the place of formation and affiliation of each of our subsidiaries as of the date of this prospectus:

Our Offices

Our principal executive offices and corporate headquarters are located at 288 Fute Zhong Road, Waigaoqiao Free Trade Zone, Shanghai 200131, People’s Republic of China, and our telephone number is (86-21) 5046-1111. Our website address is www.wuxipharmatech.com. The information on our website does not form a part of this prospectus. Our agent for service of process in the United States is CT Corporation System located at 111 Eighth Avenue, 13^th Floor, New York, New York 10011.

Conventions That Apply to This Prospectus

Unless we indicate otherwise, all information in this prospectus assumes no exercise by the underwriters of their option to purchase up to 1,519,020 additional ADSs from a selling shareholder representing 12,152,160 ordinary shares.

Except where the context otherwise requires and for purposes of this prospectus only:

•

“we,” “us,” “our company” and “our” refer to WuXi PharmaTech (Cayman) Inc., or WuXi, and its consolidated subsidiaries, WuXi AppTec (BVI) Inc., formerly named WuXi PharmaTech (BVI) Inc., or WXAT BVI, WuXi AppTec Co., Ltd., formerly named WuXi PharmaTech Co., Ltd., or WXAT, WuXi AppTec (Shanghai) Co., Ltd., formerly named Shanghai PharmaTech Co., Ltd., or WASH, Shanghai SynTheAll Pharmaceutical Co., Ltd., or STA, WUXIAPPTEC (Tianjin) Co., Ltd., formerly named Tianjin PharmaTech Co., Ltd., or WATJ, WuXi AppTec (Suzhou) Co., Ltd., formerly named Suzhou PharmaTech Co., Ltd., or WASZ, WuXi AppTec Holding Company, Inc. and WuXi AppTec, Inc., or AppTec.

•

“China” or “PRC” refers to the People’s Republic of China, excluding, for purposes of this prospectus only, Taiwan and the special administrative regions of Hong Kong and Macau;

•

all references to “Renminbi,” or “RMB,” are to the legal currency of China, all references to “U.S. dollars,” “dollars,” “$” or “US$” are to the legal currency of the United States;

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“ordinary shares” refers to our ordinary shares, par value $0.02 per share;

•

“ADSs” refers to our American depositary shares, each of which represents eight ordinary shares;

•

“ADRs” refers to American depositary receipts, which, if issued, evidence our ADSs; and

•

Unless otherwise indicated, all historical share and per-share data contained in this prospectus has been restated to give retroactive effect to a one-for-fifty forward share split that became effective on July 27, 2007.

THE OFFERING

The following assumes that the underwriters will not exercise their option to purchase additional ADSs in the offering, unless otherwise indicated.

ADSs offered by us

4,264,400 ADSs

ADSs offered by the selling shareholders

5,862,400 ADSs

ADSs outstanding immediately after this offering

21,051,907 ADSs

Ordinary shares outstanding immediately after this offering

533,715,502 shares, excluding 72,960,532 ordinary shares issuable upon the exercise of outstanding options and nonvested restricted shares, 37,128,318 ordinary shares reserved for issuance under our employee share incentive plans and 22,771,002 ordinary shares reserved for issuance pursuant to outstanding convertible notes.

ADS to ordinary share ratio

1:8

New York Stock Exchange symbol

“WX”

The ADSs

Each ADS represents eight ordinary shares, par value $0.02 per share. ADRs will evidence the ADSs.

•

The depositary will hold the ordinary shares underlying your ADSs and you will have the rights provided in the deposit agreement.

•

Although we do not expect to pay dividends or make distributions in the foreseeable future, if we do, the depositary will pay you dividends or distributions it receives, after deducting its fees and expenses.

•

You may exchange your ADSs with the depositary for the underlying ordinary shares. The depositary charges exchange fees.

•

The deposit agreement may be amended or terminated without your consent. If you continue to hold ADSs after amendment, you will be bound by the amended deposit agreement.

You should carefully read prospectus section “Description of American Depositary Shares” to better understand the ADS terms. You should also read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus.

Depositary

JPMorgan Chase Bank, N.A.

Overallotment option to purchase additional ADSs

A selling shareholder has granted the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to an additional 1,519,020 ADSs.

Timing and settlement for ADSs

The ADSs are expected to be delivered against payment on , 2008. The ADRs evidencing the ADSs will be deposited with a custodian for, and registered in the name of a nominee of, The Depository Trust Company, or DTC, in New York. In general, beneficial interests in the ADSs will be shown on, and transfers of these beneficial interests will be effected only through, records maintained by DTC and its direct and indirect participants.

Use of proceeds

Our net proceeds from this offering are expected to be approximately $ million, after deducting underwriting discounts and the estimated offering expenses payable by us, based on an assumed offering price of $23.45 per ADS, which was the last reported sales price of our ADSs on April 2, 2008. We anticipate using the proceeds as follows:

•

up to approximately $33.0 million for our Jinshan facility expansion;

•

up to approximately $37.0 million for the construction of a preclinical drug safety evaluation center in Suzhou; and

•

the balance for general corporate purposes, including working capital, acquisitions and service offering expansion.

We will not receive any proceeds from ADS sales made by the selling shareholders. See “Use of Proceeds.”

Risk factors

See “Risk Factors” and other information included in this prospectus for a discussion of risks you should carefully consider before deciding to invest in our ADSs.

Lock-up

We, the selling shareholders, our directors, executive officers and their affiliated funds and trusts, and each of our 5% shareholders, other than FMR LLC and its related entities, have agreed not to sell, transfer or otherwise dispose of any of our ordinary shares or ADSs representing our ordinary shares, subject to certain exceptions, for 90 days after the date of this prospectus. See “Underwriting.”

WUXI SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated income statement data for the years ended December 31, 2005, 2006 and 2007, and the summary consolidated balance sheet data as of December 31, 2006 and 2007 have been derived from WuXi’s audited consolidated financial statements included elsewhere in this prospectus, which have been audited by Deloitte Touche Tohmatsu CPA Ltd., an independent registered public accounting firm. You should read this summary consolidated financial data in conjunction with WuXi’s audited consolidated financial statements and the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” WuXi’s audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP. WuXi’s historical results are not necessarily indicative of our future China-based results.


	Year Ended December 31,
	2005			2006			2007
	(in millions of dollars, except share and per share data)
WuXi Consolidated Income Statement Data:
Net revenues:
Laboratory services	$	29.4		$	59.8		$	102.4
Manufacturing services		4.4			10.1			32.8

Total		33.8			69.9			135.2


Cost of revenues:
Laboratory services		(12.8	)		(26.5	)		(52.4	)
Manufacturing services		(2.7	)		(9.1	)		(19.9	)

Total		(15.5	)		(35.6	)		(72.3	)

Gross profit		18.3			34.3			62.9


Operating expenses:
Selling and marketing expenses		(1.0	)		(1.9	)		(2.4	)
General and administrative expenses		(8.5	)		(22.3	)		(30.3	)

Total		(9.5	)		(24.2	)		(32.7	)

Operating income		8.8			10.1			30.2

Other income		0.3			0.5			2.7
Other expenses		(0.6	)		(0.5	)		(0.3	)
Interest expense		(1.3	)		(1.1	)		(1.2	)
Interest income		*			0.3			4.0

Income before income taxes		7.2			9.3			35.4
Income tax expense		(1.1	)		(0.4	)		(1.5	)

Net income⁽¹⁾	$	6.1		$	8.9		$	33.9


Basic earnings (loss) per share⁽²⁾	$	(0.00	)	$	(0.15	)	$	0.07

Diluted earnings (loss) per share⁽²⁾	$	(0.00	)	$	(0.15	)	$	0.05

Shares used in calculating basic earnings (loss) per share		267,708,750			238,506,600			308,050,216

Shares used in calculating diluted earnings (loss) per share		267,708,750			238,506,600			515,147,489

Dividends declared per ordinary share	$	0.01		$	0.02		$	—

Dividends declared per preference share	$	—		$	0.00		$	—

*	Less than $50,000.

⁽¹⁾	Includes total share-based compensation expenses of $3.1 million in 2005, $8.4 million in 2006, and $10.7 million in 2007, allocated as follows:


	Year Ended December 31,
	2005		2006		2007
	(in millions of dollars)
Cost of revenues	$	0.4	$	0.5	$	2.1
General and administrative expenses		2.7		7.9		8.6

⁽²⁾	The following table sets forth the computation of basic and diluted earnings (loss) for the years indicated:


	Year Ended December 31,
	2005			2006			2007
	(in millions of dollars)
Net income	$	6.1		$	8.9		$	33.9
Deemed dividend on issuance and repurchase of preference shares		(4.0	)		(24.1	)		(7.6	)
Deemed dividend for beneficial conversion feature		(2.2	)		(19.2	)		—
Dividends on preference shares		—			(0.7	)		—
Amounts allocated to preference shares for participating rights to dividends		—			—			(4.6	)

Income (loss) attributable to holders of ordinary shares — basic	$	(0.1	)	$	(35.1	)	$	21.7

Income (loss) attributable to holders of ordinary shares — diluted	$	(0.1	)	$	(35.1	)	$	27.3


	As of December 31,
	2006			2007
	(in millions of dollars)
WuXi Consolidated Balance Sheet Data:
Cash and cash equivalents	$	9.7		$	213.6	⁽¹⁾
Total current assets		36.7			261.9
Total assets		85.7			343.8
Total current liabilities		30.6			45.6
Total liabilities		37.5			92.4

Mezzanine equity		49.1			—
Total shareholders’ equity (deficit)		(0.9	)		251.4
Total liabilities, mezzanine equity and shareholders’ equity (deficit)		85.7			343.8

⁽¹⁾	On January 31, 2008, we used $137.3 million of our cash and cash equivalents in connection with the AppTec acquisition, excluding acquisition-related costs.

APPTEC SUMMARY FINANCIAL DATA

The following summary income statement data for the years ended December 31, 2005, 2006 and 2007, and the summary balance sheet data as of December 31, 2006 and 2007 have been derived from AppTec’s audited financial statements included elsewhere in this prospectus, which have been audited by PricewaterhouseCoopers LLP, independent accountants. You should read this summary financial data in conjunction with AppTec’s audited financial statements and the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” AppTec’s audited financial statements are prepared and presented in accordance with U.S. GAAP. AppTec’s historical results are not necessarily indicative of our future U.S.-based results.


	Year Ended December 31,
	2005			2006			2007
	(in millions of dollars)
AppTec Income Statement Data:
Net revenues:
Laboratory services	$	19.0		$	25.5		$	35.0
Manufacturing services		13.7			25.5			35.3

Total		32.7			51.0			70.3


Cost of revenues:
Laboratory services		(11.7	)		(15.7	)		(21.7	)
Manufacturing services		(15.1	)		(23.2	)		(29.6	)

Total		(26.8	)		(38.9	)		(51.3	)

Gross profit		5.9			12.1			19.0


Operating expenses:
Sales and marketing expenses		(3.5	)		(4.2	)		(5.3	)
General and administrative expenses		(5.2	)		(6.6	)		(8.3	)

Total		(8.7	)		(10.8	)		(13.6	)

Operating (loss) income		(2.8	)		1.3			5.4

Other income (expenses)
Interest income		0.1			*			—

Financing (expenses) income:
Interest expense		(0.6	)		(0.7	)		(0.9	)
Amortization of debt issuance costs and debt discount		*			(0.1	)		*
Gain on debt extinguishment		0.5			—			—

Total		(0.1	)		(0.8	)		(0.9	)


Income (loss) before income taxes		(2.8	)		0.5			4.5
(Benefit) provision for income taxes		*			*			(0.9	)

Net income (loss)	$	(2.8	)	$	0.5		$	5.4

*	Less than $50,000.


	As of December 31,
	2006			2007
	(in millions of dollars)
AppTec Balance Sheet Data:
Cash and cash equivalents	$	*		$	*
Total current assets		13.6			21.0
Total assets		43.9			53.5
Total current liabilities		13.3			17.4
Total liabilities		21.9			25.9

Mezzanine equity		35.8			38.8
Total stockholders’ deficit		(13.8	)		(11.2	)
Total liabilities, mezzanine equity and stockholders’ deficit		43.9			53.5

*	Less than $50,000.

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following summary unaudited pro forma condensed combined financial information has been derived by the application of pro forma adjustments to the historical consolidated financial statements of WuXi and financial statements of AppTec as of and for the year ended December 31, 2007. WuXi’s historical information has been derived from its audited consolidated financial statements. AppTec’s historical information has been derived from its audited financial statements. The unaudited pro forma condensed combined income statement data give effect to WuXi’s acquisition of AppTec as if it had been completed on January 1, 2007. The unaudited pro forma condensed combined balance sheet data give effect to the acquisition as if it had been completed on December 31, 2007.

Assumptions underlying the pro forma adjustments necessary to present fairly this summary pro forma data are described in the accompanying unaudited pro forma condensed combined financial information and accompanying notes in this prospectus, which you should read in conjunction with this summary pro forma combined condensed financial data. The pro forma adjustments described in the accompanying notes have been made based on available information and, in the opinion of management, are reasonable. The pro forma combined condensed financial data is not necessarily indicative of actual results that would have been achieved had the acquisition occurred on January 1, 2007 and December 31, 2007 and do not purport to indicate future results of operations. The assumptions used in the preparation of the pro forma condensed combined financial data may prove to be incorrect.

The AppTec acquisition will be accounted for using the purchase method as prescribed by Statement of Financial Accounting Standards, or SFAS, No. 141, “Business Combinations,” with intangible assets, if any, to be recorded in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” The preliminary allocation of the total purchase price of AppTec’s net tangible and identifiable intangible assets was based on their estimated fair values as of January 31, 2008. The excess of the purchase price over the fair values of the net assets acquired, if any, will be allocated to goodwill. The final purchase price allocation and the resulting effect on operating income may differ from the pro forma amounts presented below.


	Year Ended December 31, 2007
	WuXi			AppTec			Acquisition Pro Forma Adjustments			Pro Forma
	(in millions of dollars, except share and per share data)
Unaudited Pro Forma Condensed Combined Income Statement Data:
Net revenues:
Laboratory services	$	102.4		$	35.0		$	—		$	137.4
Manufacturing services		32.8			35.3			—			68.1

Total		135.2			70.3			—			205.5

Cost of revenues:
Laboratory services		(52.4	)		(21.7	)		(2.3	)		(76.4	)
Manufacturing services		(19.9	)		(29.6	)		(2.0	)		(51.5	)

Total		(72.3	)		(51.3	)		(4.3	)		(127.9	)

Gross profit		62.9			19.0			(4.3	)		77.6

Operating expenses:
Selling and marketing expenses		(2.4	)		(5.3	)		—			(7.7	)
General and administrative expenses		(30.3	)		(8.3	)		—			(38.6	)

Total		(32.7	)		(13.6	)		—			(46.3	)

Operating income		30.2			5.4			(4.3	)		31.3

Other income		2.7			—			—			2.7
Other expenses		(0.3	)		—			—			(0.3	)
Interest expense		(1.2	)		(0.9	)		—			(2.1	)
Interest income		4.0			—			(1.9	)		2.1

Income before income taxes		35.4			4.5			(6.2	)		33.7
Income tax benefit (expense)		(1.5	)		0.9			1.6			1.0

Net income	$	33.9		$	5.4		$	(4.6	)	$	34.7

Income attributable to holders of ordinary shares:
Basic	$	21.7					$	0.8		$	22.5

Diluted	$	27.3					$	0.8		$	28.1

Basic earnings per share	$	0.07								$	0.07

Diluted earnings per share	$	0.05								$	0.05

Shares used in calculating basic earnings per share		308,050,216						4,120,526			312,170,742

Shares used in calculating diluted earnings per share		515,147,489						4,120,526			519,268,015



	As of December 31, 2007
	WuXi		AppTec			Acquisition Pro Forma Adjustments			Pro Forma
	(in millions of dollars)
Unaudited Pro Forma Condensed Combined Balance Sheet Data:
Cash and cash equivalents	$	213.6	$	*		$	(141.3	)	$	72.3
Total current assets		261.9		21.0			(142.0	)		140.9
Total assets		343.8		53.5			(8.4	)		388.9
Total current liabilities		45.6		17.4			—			63.0
Total liabilities		92.4		25.9			4.0			122.3
Mezzanine equity		—		38.8			(38.8	)		—
Total shareholders’ equity (deficit)		251.4		(11.2	)		26.4			266.6
Total liabilities, mezzanine equity and shareholders’ equity (deficit)		343.8		53.5			(8.4	)		388.9

*	Less than $50,000.

You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below, before investing in our ADSs. Any of the following risks could have a material adverse effect on our business, financial condition, results of operations and prospects. The trading price of our ADSs could decline due to any of these risks, and you may lose all or part of your investment.

Our limited operating history and recent acquisition may make it difficult for you to evaluate our business and future prospects.

We commenced operations and began offering our pharmaceutical and biotechnology R&D outsourcing services in 2001, and in January 2008, we acquired AppTec, which commenced operations in 2001, which expands our services to include biopharmaceutical and medical device testing and biologics-based manufacturing and related services. Accordingly, our operating history upon which you can evaluate the viability and sustainability of our business and its acceptance by industry participants is limited. Our business model evolved significantly with our acquisition of AppTec and continues to evolve in conjunction with the evolution of the pharmaceutical, biotechnology and medical device R&D outsourcing market in China and globally. These circumstances may make it difficult for you to evaluate our business and future prospects, and you should not rely on our past results or our historic growth rate as an indication of our future performance.

A limited number of our customers have accounted and are expected to continue to account for a high percentage of our revenues. The loss of or significant reduction in orders from any of these customers could significantly reduce our revenues and have a material adverse effect on our financial condition, results of operations and prospects.

WuXi’s three largest customers in 2007, Pfizer Inc, or Pfizer, Merck & Co., Inc., or Merck, and Vertex Pharmaceuticals Incorporated, or Vertex, accounted for 15.0%, 12.2% and 11.2% of our net revenues in 2007, respectively. No other customer accounted for more than 10% of our net revenues in those years. WuXi’s top ten customers, which varied in each of the last three years, accounted for approximately 73%, 69% and 74% of our net revenues in 2005, 2006 and 2007, respectively. Furthermore, we generated substantially all of our total net revenues over the last three years from sales to customers located in the United States. Our existing customers may not continue generating significant revenues for us once our engagements with them conclude and our relationships with them may not present further business opportunities. Due to our customer concentration, any of the following events, among others, may cause material revenue fluctuations or declines and have a material adverse effect on our financial condition, results of operations and prospects:

Furthermore, if we fail to build new customer relationships or continue to develop relationships with our existing customers, we may be unable to expand our customer base or maintain or increase our revenues.

A payment failure by any of our large customers could adversely affect our cash flows and profitability.

Historically, we have not experienced any significant bad debt or collection problem, but such problems may arise in the future. The failure of any of our customers to make timely payments could require us to write off accounts receivable or increase provisions made against our accounts receivable, either of which could adversely affect our cash flows and profitability.

The loss of services of our senior management and key scientific personnel could severely disrupt our business and growth.

Our success significantly depends upon the continued service of our senior management and key scientific personnel. In particular, we are highly dependent on Dr. Ge Li, our Chairman and Chief Executive Officer, who has managed our business, operations and sales and marketing activities and maintained personal and direct relationships with our major customers since our inception, as well as Dr. Shuhui Chen, our Chief Scientific Officer, Dr. Suhan Tang, our Chief Manufacturing Officer, Mr. Xiaozhong Liu, our Executive Vice President, and other senior management members and key scientific personnel. The loss of any one of them, in particular Dr. Li, would have a material adverse effect on our business and operations. Although each member of our senior management and key scientific personnel has signed a noncompete agreement with us, we may be unable to successfully enforce these provisions in the event of a dispute. If we lose the services of any senior management members or key scientific personnel, we may be unable to locate suitable or qualified replacements, and may incur additional expenses to recruit and train new personnel, which could severely disrupt our business and growth.

Our ability to execute projects, maintain, expand or renew existing customer engagements and obtain new customers depends largely on our ability to attract, train, motivate and retain highly skilled scientists and mid-level personnel.

Our success largely depends on the R&D efforts of mid-level personnel and their ability to keep pace with continuing changes in drug and medical device R&D technologies and methodologies. In particular, our customers value Western-trained scientists, preferably with large pharmaceutical and/or biotechnology company experience. Our success also depends on the depth and quantity of our scientists and mid-level personnel. Any inability to attract, train, motivate and retain qualified scientists and mid-level personnel, or keep these employees updated and capable of keeping pace with industry changes, may have a material adverse effect on our business, financial condition, results of operations and prospects.

We face challenges in attracting and maintaining a consistent quality standard throughout our employee base at our current growth rate. Our employee base increased from 252 in 2003 to 2,647 in 2007, and further increased by 516 employees with the AppTec acquisition. We expect to significantly increase our employee base in 2008. We compete vigorously with pharmaceutical, biotechnology, medical device and contract research firms and academic and research institutions for qualified and experienced scientists and mid-level personnel, particularly in the areas of chemistry, biology and pharmaceutical manufacturing. To effectively compete, we may be required to offer higher compensation and other benefits which could materially and adversely affect our financial condition and results of operations. We may be unable to hire and retain enough skilled and experienced scientists to replace those who leave. Additionally, we may be unable to redeploy and retrain our professionals to keep pace with technological changes, evolving standards and changing customer preferences.

We face increasingly intense competition. If we do not compete successfully against new and existing competitors, demand for our services and related revenues may decrease and subject us to increasing pricing pressure.

The global pharmaceutical, biotechnology and medical device R&D outsourcing markets are highly competitive, and we expect competition to intensify. We face competition based on several factors, including

quality, ability to protect confidential information and intellectual property, timeliness, good manufacturing practices, depth of customer relationship, pricing and geography. We compete with contract research and manufacturing companies and research and academic institutions, typically in particular service areas. For example, we compete with Charles River Laboratories International, Inc., which recently partnered with Shanghai BioExplorer Co., Ltd., in the preclinical services area, and Shanghai ChemPartner Co., Ltd. in the discovery chemistry area. As a result of the AppTec acquisition, we also compete with other companies in the biologics area, including BioReliance Corporation and Lonza Group Ltd. However, we believe that we do not compete with any single company across the breadth of our service offerings. We expect to increasingly compete against multinational companies, both domestically and internationally, as we continue to offer more complex and sophisticated laboratory and manufacturing services. Several major pharmaceutical, biotechnology and medical device companies have made in-house research investments in China, and we expect this trend to continue. These in-house investments may reduce demand for our services and result in increased competition for qualified personnel.

We also expect increased competition as new companies enter our market and more advanced technologies become available. Our services and expertise may be rendered obsolete or uneconomical by technological advances or new approaches or technologies. Our competitors’ existing or new approaches or technologies they develop may be more effective than those we develop. Furthermore, increased competition exacerbates pricing pressure on our services, which could reduce our margins and profitability.

If we fail to effectively manage our anticipated growth and execute on our growth strategies, our business, financial condition, results of operations and prospects could suffer.

Pursuing our growth strategies, including integrating and expanding our facilities and service offerings to meet our customers’ needs, has resulted in and will continue to result in substantial demands on our management and resources. Managing this growth and our growth strategies will require, among other things:

Any failure to effectively manage our anticipated growth and execute on growth strategies could adversely affect our business, financial condition, results of operations and prospects.

We may be unable to expand our capacity and scale up our operations as anticipated, possibly resulting in material delay, increased costs and lost business opportunities.

We are engaged in a substantial capacity expansion program. Major projects include the expansion of our Jinshan facility to quadruple its manufacturing capacity that is currently expected to commence operations in late 2008, and the construction of a preclinical drug safety evaluation center with a broad range of toxicology services in Suzhou that we are planning to inaugurate in 2009. These facilities may not be constructed on the anticipated timetable or within budget. Any material delay in bringing these facilities on-line or scaling up operations, or any substantial cost increases to complete them or scale up operations, could materially and adversely affect our financial condition and results of operations, and result in lost business opportunities.

We are making significant capital investments to scale up our services to meet our customers’ needs and, as a result, we depend on the success of our customers’ projects and their continued business.

We are expanding our Jinshan facility primarily to serve the process development and manufacturing needs of Vertex, one of our major customers, related to a single Phase III clinical trial drug candidate. We expect that manufacturing of this drug candidate will occupy a significant portion of the facility’s capacity. Vertex accounted for 11.2% of our net revenues in 2007, and we expect Vertex to continue to be a significant customer for the foreseeable future. As a result, any downturn in Vertex’s business that affects its ability to continue the drug development project we are servicing could disrupt our growth plan and may harm our financial condition. If the FDA does not approve this candidate or if its development is delayed, Vertex may terminate or significantly reduce its orders with us. Consequently, we may be required to reallocate our resources, which could cause delays in our service offerings and result in lower than expected revenues. As we develop our manufacturing services further, we may become more dependent on the success of specific drug candidates that are in development by one or more of our major customers.

We may fail to effectively develop and market new services, which may harm our growth opportunities and prospects, possibly resulting in related losses.

We intend to continue to expand our existing laboratory and manufacturing services and offer new services in preclinical development, formulation and manufacturing areas. In 2007, we began to offer preclinical development services, pharmaceutical development services and clinical trial materials manufacturing. We are currently establishing discovery biology services. To successfully develop and market our new services, we must:

If we are unable to develop new services and create demand for those newly developed services, or expand our service offerings through acquisitions, our future business, results of operations, financial condition, prospects and cash flows could be materially and adversely affected.

Our acquisition of AppTec and any future acquisitions we undertake may divert our management’s attention and resources and harm our ability to effectively manage our business.

Our recent acquisition of AppTec is part of our strategy to acquire new technologies, businesses and services and create strategic alliances. If we are presented with appropriate opportunities, we may acquire additional businesses that are complementary to our existing business. Our integration of AppTec has required, and will continue to require, significant attention from our management. Future acquisitions will likely present similar challenges. The diversion of our management’s attention and any difficulties encountered in the integration of AppTec could have an adverse effect on the ability to effectively manage our business. Our recent acquisition of AppTec, as well as any future acquisitions, could require that our management develop expertise in new areas, manage new business relationships and attract new types of customers. These activities may divert significant management attention from existing business operations.

We may experience difficulties in managing and integrating AppTec’s business and the business of any future acquisitions and may not realize the acquisition’s anticipated benefits.

Realizing the benefits of our acquisition of AppTec will depend in substantial part on the successful integration of technologies, operations and personnel. Prior to the acquisition, WuXi and AppTec operated independently, each with its own operations, corporate culture, employees and systems. We now operate as a combined organization and have begun integrating or utilizing common business, information and communication systems, operating procedures, financial controls and human resource practices, including benefits, training and professional development programs. We face significant challenges integrating the technologies, operations and personnel in a timely and efficient manner. Some of the challenges and difficulties involved in this integration include:

We may experience similar difficulties for any future acquisitions. Completed acquisitions may also expose us to potential risks, including risks associated with unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, our inability to generate sufficient revenues to offset the costs, expenses related to the acquisitions and potential loss of, or harm to, relationships with employees or customers as a result of our integration of new businesses, any of which could significantly disrupt our ability to manage our business.

As a result of the AppTec acquisition, we are a larger and more geographically diverse organization. The inability to manage successfully the geographically more diverse organization could have a material adverse effect on our operating results.

As a result of the AppTec acquisition, we had approximately 3,139 full-time employees as of February 29, 2008 located in China and the U.S. We will face challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs. The inability to manage successfully the geographically more diverse organization could have a material adverse effect on our operating results.

There may be unknown risks inherent in our acquisition of AppTec, which could result in a material adverse effect on our business.

Although we have conducted due diligence with respect to our acquisition of AppTec, we may not be aware of all of the risks associated with the acquisition. Any discovery of adverse information concerning AppTec since the acquisition could have a material adverse effect on our business, financial condition and results of operation. While we are entitled to seek indemnification in certain circumstances, successfully asserting indemnification or enforcing such indemnification could be costly and time consuming or may not be successful at all.

We expect that our overall gross margin may face downward pressure due to the AppTec acquisition, as manufacturing services become an increasingly large component of our service mix, and employee compensation costs rise.

Our overall gross margin has faced downward pressure, decreasing from 54.1% in 2005 to 49.1% in 2006 and 46.5% in 2007, and we expect this trend to continue in the foreseeable future. The expected decline in our gross margin is driven, in part, by the anticipated growth of our manufacturing services segment, which typically has a significantly lower gross margin, as a larger component of our service mix. In 2006 and 2007, our manufacturing services segment accounted for 14.5% and 24.3% of our net revenues, respectively, and we expect it to continue to be a significant revenue contributor in 2008 and beyond as the expansion of our manufacturing services capacity comes online. Employee compensation is also a substantial component of our costs and therefore an important factor in determining our gross profit and margin. We may need to increase wages to remain competitive with the market. Our pricing policies and mechanisms may not completely account for the potential wage increases which could negatively impact our gross margin. Our acquisition of AppTec will apply additional pressure on our overall gross margin, as AppTec’s overall gross margin in 2007 was 27.0%.

Because many of our fee-for-service based contracts are contingent on successful completion and are of a fixed price nature, we may bear financial risk if we do not successfully or timely develop a service or invoke below-cost pricing of our contracts due to competitive pressures or strategic objectives or overrun cost estimates.

A significant portion of our net revenues, including part of our laboratory segment revenues and all of our manufacturing services segment revenues, are based on fee-for-service contracts, which are contingent on successful completion and are often structured as fixed price or fee-for-service with a cap. Therefore, we bear financial risk if we do not successfully or timely develop a product or if we intentionally price our fee-for-service based contracts below our cost estimate or otherwise overrun our cost estimates. We also face pricing pressures from some of our competitors, with whom we often compete for new customers. To capture market share and establish cost competitiveness, we have, in the past, intentionally priced some fee-for-service based contracts below our cost estimate. Below-cost pricing or significant cost overruns could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our customer agreements contain provisions that are against our interests or expose us to potential liability.

Our agreements with our customers generally provide that the customers can terminate the agreements or reduce the scope of services under the agreements with short or no notice. For a majority of our customer agreements, our customers have the unilateral right to terminate for convenience upon prior notice ranging from 30 to 90 days. Although we have not been materially and adversely affected by contract cancellations or modifications in the past, if a customer terminates a contract with us, we are only entitled under the terms of the contract to receive revenue earned until the date of termination. Therefore, cancellation or modification of a large contract or proximate cancellation or modification of multiple contracts could materially and adversely affect our business, financial condition, results of operations and prospects.

In some of our customer agreements, we have assumed indemnification obligations for intellectual property infringement by the customer deliverables that we provide to the extent that we create the infringing aspect of the deliverables. Our liability is usually not capped under these agreements. As a result, if any aspect of customer deliverables that we create infringes a third party’s intellectual property rights, and particularly if such deliverable ultimately becomes a commercially successful product, we could be potentially exposed to substantial liability.

In addition, in some of our customer agreements, we agree, either by ourselves or together with third parties, not to compete with the customer. We are required to seek the customer’s prior written consent before making compounds chemically similar to those made for the customer. For some customers, our noncompete obligation is onerous. For example, we have agreed that, for up to ten years after termination of the agreement, any employee who has worked on the customer’s projects may not work on any other project whereby the knowledge gained from such customer’s projects would be relevant. Complying with these noncompete obligations may restrict our ability to expand certain service offerings, and failure to comply could significantly harm our business and reputation, as well as expose us to liability for breach of contract.

We depend on a limited number of supply sources for several of our service offerings, which, if interrupted, could cause disruption or delay to our services, reduce our sales and force us to use more expensive supply sources.

We depend on a limited number of international sources for our supply of certain reagents and other chemicals required in our product and service offerings, and particularly in connection with our manufacturing services. Disruptions or delays to their continued supply may arise from health problems, export or import restrictions or embargoes, foreign government or economic instability, severe weather conditions, disruptions to the air travel system, contract disputes or other disruptions. If the supply of certain materials were interrupted, our services would be delayed. We also may not be able to secure alternative supply sources in a timely and cost-effective manner. If we are unable to obtain adequate supplies of required materials that meet our standards or at acceptable costs, or at all, our ability to accept and fulfill customer orders in the required quality and quantity and at the required time could be restricted, which in turn could harm our reputation, reduce our sales, cause us to lose market share, force us to use more expensive sources of supply, and ultimately could materially and adversely affect our business, financial condition, results of operations and prospects.

Our principal laboratory and manufacturing facilities may be vulnerable to natural disasters or other unforeseen catastrophic events.

We conduct our primary R&D activities at our headquarters located in the Shanghai Waigaoqiao Free Trade Zone. We also conduct R&D activities at our other three facilities in China, located in the Jinshan area of Shanghai, Tianjin and Suzhou, and at our three United States facilities in St. Paul, Minnesota, Philadelphia, Pennsylvania and Atlanta, Georgia. We depend on these facilities for the continued operation of our business. Natural disasters or other unanticipated catastrophic events, including power interruptions, water shortage,

storms, fires, earthquakes, terrorist attacks and wars, or, as occurred in December 2006, the disruption of sea-floor fiber optical cables due to earthquakes, could significantly impair our ability to operate our business in its ordinary course. Our facilities and certain equipment located in these facilities would be difficult to replace in any such event and could require substantial replacement lead time. The occurrence of any such event could materially and adversely affect our business, financial condition, results of operations and prospects.

If we fail to protect the intellectual property rights of our customers, we may be subject to liability for breach of contract and may suffer damage to our reputation.

Protection of intellectual property associated with drug and medical device R&D services is critical to all our customers. In our business of providing drug and medical device R&D services, our customers generally retain ownership of all associated intellectual property, including those they provide to us and those arising from the services we provided. Our success therefore depends in substantial part on our ability to protect the proprietary rights of our customers. This is particularly important for us because a large part of our operation is based in China, and China, as well as Chinese companies, has not traditionally enforced intellectual property protection to the same extent as the United States. Despite measures we take to protect the intellectual property of our customers or our own, unauthorized parties may attempt to obtain and use information that we regard as proprietary. Any unauthorized disclosure of our customers’ proprietary information could subject us to liability for breach of contract, as well as significant damage to our reputation, which could materially harm our business, financial condition, results of operations and prospects.

We may be liable for contamination or other harm caused by hazardous materials that we use.

Our drug and medical device R&D processes involve the use of highly toxic and hazardous materials. Any failure by us to control the use of, restrict adequately the discharge of, or protect our employees from hazardous substances could subject us to potentially significant monetary damages and fines or suspensions in our business operations. We are subject to national, provincial and local regulations governing the use, manufacture, handling, storage and disposal of hazardous materials. We cannot completely eliminate the risk of contamination or injury resulting from hazardous materials and we may incur liability as a result of any contamination or injury, which could have a material and adverse impact on our business, financial condition, results of operations and prospects.

Any failure by us to satisfy our customers’ audits and inspections could harm our reputation and our business, financial condition, results of operations and prospects.

Our customers routinely audit and inspect our facilities, processes and practices to ensure that our services are meeting their internal standards and the regulatory standards they must meet in the drug and medical device development process. To date, we have passed all such audits and inspections; however, we may not be able to in the future, and any failure to meet these audits or inspections to our customers’ satisfaction could significantly harm our reputation and materially and adversely affect our business, financial condition, results of operations and prospects.

We have limited insurance coverage, and any claims beyond our insurance coverage may result in our incurring substantial costs and a diversion of resources.

We maintain property insurance policies covering physical damage to or loss of our equipment, facilities, buildings and their improvements, office furniture and inventory, employer’s liability insurance generally covering death or work injury of employees, product liability insurance covering product liability claims arising from the use, consumption or operation of our small molecular compounds and biologics products, public liability insurance covering certain incidents to third parties that occur on or in the premises of the company, and directors and officers liability insurance. We do not maintain key man life insurance on any of our senior management or key personnel. Our insurance coverage, however, may not be sufficient to cover any claim for

product liability, damage to our fixed assets or injury to our employees. Insurance companies in China offer limited business insurance products and do not, to our knowledge, offer business liability insurance. While business interruption insurance is available to a limited extent in China, we have determined that the risks of disruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to subscribe for such insurance. As a result, we do not have any business liability, disruption or litigation insurance coverage for our operations in China. Any business disruption or litigation, or any liability or damage to, or caused by, our facilities or our personnel beyond our insurance coverage may result in our incurring substantial costs and a diversion of resources.

The lessor of our temporary Suzhou facilities may not possess the required title certificate and a lease for our Atlanta, Georgia facility expires on April 30, 2008. We may be required to vacate these premises, causing a disruption to our operations.

We entered into a lease agreement with a Suzhou-based company for use of temporary preclinical facilities in Suzhou, which lease expires in 2012. The lessor has not obtained the relevant title certificates and therefore is unable to register the lease agreement. In June 2007, we received a letter from the competent authority in charge of the administrative district where our Suzhou facilities are located, which permits our use of the facilities within the lease term. Under Chinese law, our lease agreement may be subject to challenges from third parties, and as a result, we may be required to vacate these premises and relocate our Suzhou facility. If the lease is so terminated, we believe we can secure comparable alternative premises. Since the build-out of the alternative premises and the moving of equipment take time, a relocation may cause disruption to the services that we intend to carry out on the leased facilities. In addition, a lease covering our Atlanta, Georgia facility expires on April 30, 2008. If we are unable to renegotiate a renewal on acceptable terms or at all, we will be required to vacate the premises and relocate our Atlanta facility, causing a disruption to our operations.

Our quarterly revenues and operating results may be difficult to predict and could fall below investor expectations, which could cause the market price of our ADSs to decline.

Our quarterly revenues and operating results have fluctuated in the past and may continue to fluctuate significantly depending upon numerous factors, including:

Many of these factors are beyond our control, making our quarterly results difficult to predict, which could cause the trading price of our ADSs to decline below investor expectations.

We may need additional capital that we may be unable to obtain in a timely manner or on acceptable terms, or at all.

For us to grow, remain competitive, develop new services and expand our capacity, we may require additional capital. Our ability to obtain additional capital is subject to a variety of uncertainties, including:

Needed financing may not be available in amounts or on terms acceptable to us, if at all.

Our future capital needs may require us to sell additional equity or debt securities which may result in dilution to our shareholders or introduce covenants which may restrict our operations or our ability to pay dividends.

Our future capital needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations or our ability to pay dividends to our shareholders.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or ordinary shares.

Based in part on our estimate of the composition of our income and our estimates of the value of our assets, as determined based on the assumed public offering price of our ADSs and ordinary shares and the expected price of our ADSs and ordinary shares following the offering, we do not expect to be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our current taxable year or in the foreseeable future. However, PFIC status is tested each year and will depend on the composition of our assets and income and the value of our assets (including, among others, goodwill and equity investments in less than 25% owned entities) from time to time. Because we expect to hold a substantial amount of cash and other passive assets following this offering, and because the value of our assets is likely to be determined in large part by reference to the market prices of our ADSs and ordinary shares, which fluctuates, we may be a PFIC for any taxable year. If we are treated as a PFIC for any taxable year during which a U.S. investor holds our ADSs or ordinary shares, certain adverse U.S. federal income tax consequences would apply to the U.S. investor. For more information on the U.S. tax consequences to U.S. holders that would result from our classification as a PFIC, please see “Taxation — United States Federal Income Taxation — Passive Foreign Investment Company.”

Previously, several material weaknesses and significant deficiencies in WuXi’s internal control over financial reporting were noted. Further, material weaknesses or significant deficiencies may be identified in AppTec’s internal control over financial reporting. If we fail to maintain an effective system of internal control over financial reporting or identify material weaknesses or significant deficiencies in AppTec’s internal control over financial reporting, our ability to accurately and timely report our financial results or prevent fraud may be adversely affected.

Prior to our initial public offering, we were a private company with a short operating history and limited accounting personnel and other resources with which to address our internal control and procedures over financial reporting. In preparing WuXi’s consolidated financial statements in connection with our initial public offering, several material weaknesses and significant deficiencies in our internal control over financial reporting were identified, as defined in the standards established by the U.S. Public Company Accounting Oversight Board.

While these material weaknesses and significant deficiencies were remedied, our failure to and maintain effective internal controls over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the market price of our ordinary shares. Further, material weaknesses or significant deficiencies may be identified in AppTec’s internal control over financial reporting. If we fail to maintain an effective system of internal control over financial reporting or identify material weaknesses or significant deficiencies in AppTec’s internal control over financial reporting, our ability to accurately and timely report our financial results or prevent fraud may be adversely affected.

Investor confidence and the market price of our ordinary shares may be adversely impacted if we or our independent registered public accounting firm are unable to attest to the adequacy of our internal control over financial reporting in accordance with the requirements of Section 404.

We are subject to provisions of the Sarbanes-Oxley Act. We are required under Section 404 to include a report by management assessing the effectiveness of our internal control over financial reporting in our Annual Report on Form 20-F beginning with the fiscal year ending December 31, 2008. In addition, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal controls are not effective. Moreover, even if our management concludes that our internal controls are effective, our independent registered public accounting firm may disagree. If our independent registered public accounting firm is not satisfied with our internal control over financial reporting or the level at which our internal control over financial reporting is documented, designed, operated or reviewed, or if the independent registered public accounting firm interprets the requirements, rules or regulations differently than we do, then they may issue an adverse or qualified opinion. Any of these outcomes could result in a loss of investor confidence in the reliability of our audited consolidated financial statements, which could materially and adversely affect the trading price of our ADSs. Furthermore, we will incur considerable costs and use significant management time and other resources in an effort to comply with Section 404. Our reporting obligations as a public company will continue to place a significant strain on our management, operational and financial resources and systems for the foreseeable future.

If we grant employee share options and other share-based compensation in the future, our net income could be adversely affected.

Our equity incentive plans and other similar types of incentive plans are important in order to attract and retain key personnel. We have granted share options in the past pursuant to an informal plan, and adopted a formal equity incentive plan for our employees in July 2007 for future grants. As a result of the issuance of options under these plans, we have in the past and expect in the future to incur share-based compensation expenses. We account for compensation costs for all share options, including share options granted to our directors and employees, using the fair value method and recognize the expense in our consolidated statement of operations in accordance with Statement of Financial Accounting Standard No. 123-R, which may have a material adverse effect on our net income. Moreover, the additional expenses associated with share-based compensation may reduce the attractiveness of our equity incentive plans.

Anti-takeover provisions in our charter documents may discourage our acquisition by a third party, which could limit our shareholders’ opportunity to sell their shares, including ordinary shares represented by our ADSs, at a premium.

Our amended and restated memorandum and articles of association includes provisions that could limit the ability of others to acquire control of us, modify our structure or cause us to engage in change of control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares, including ordinary shares represented by ADSs, at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of us in a tender offer or similar transaction.

For example, our board of directors has the authority, without further action by our shareholders, to issue preference shares in one or more series and to fix the powers and rights of these shares, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preference shares could thus be issued quickly with terms calculated to delay or prevent a change in control or make removal of management more difficult. In addition, if our board of directors authorizes the issuance of preference shares, the market price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares may be materially and adversely affected. See “Description of Share Capital — Issuance of Additional Ordinary Shares or Preference Shares.”

Our directors are divided into three classes with staggered terms of three years each, which means that shareholders can elect or remove only a limited number of our directors in any given year. The length of these terms could present an additional obstacle against the taking of action, such as a merger or other change of control, that could be in the interest of our shareholders. See “Description of Share Capital — Board of Directors.”

The outsourcing trend in the preclinical and clinical stages of drug and medical device research and development may decrease, which could slow our growth.

The success of our business depends primarily on the number of contracts and the size of the contracts that we may obtain from pharmaceutical, biotechnology and medical device companies. Over the past several years, our business has benefited from increased levels of outsourcing by pharmaceutical, biotechnology and medical device companies of their drug and medical device R&D activities. While industry analysts expect the outsourcing trend to continue for the next several years, a reversal or slowing of this trend could result in a diminished growth rate in the sales of one or more of our expected growth areas and adversely affect our business, financial condition, results of operations and prospects.

A reduction in R&D budgets at pharmaceutical, biotechnology and medical device companies may result in a reduction or discontinued use of our services, which may adversely affect our business.

Fluctuations in the R&D budgets of pharmaceutical, biotechnology and medical device industry participants could have a significant effect on the demand for our services. R&D budgets fluctuate due to changes in available resources, consolidation of pharmaceutical, biotechnology and medical device companies, spending priorities and institutional budgetary policies. Our business could be adversely affected by any significant decrease in life sciences R&D expenditures by pharmaceutical, biotechnology and medical device companies.

We may also be adversely affected in future periods by general economic or pharmaceutical, biotechnology and medical device industry downturns. If pharmaceutical, biotechnology and medical device companies discontinue or decrease the use of our services due to factors such as a slowdown in the overall U.S. or global economy, our revenues and earnings could be lower than we currently expect and our revenues may decrease or not grow at historical rates.

Changes in government regulation or in practices relating to the pharmaceutical, biotechnology and medical device industries, including potential healthcare reform could decrease the need for the services we provide.

Governmental agencies throughout the world, particularly in the United States, strictly regulate the drug and medical device R&D process. Our business involves helping pharmaceutical, biotechnology and medical device companies, among others, navigate the regulatory drug approval process. Changes in regulations, such as a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, or an increase in regulatory requirements that we have difficulty satisfying or that make our services less competitive, could eliminate or substantially reduce the demand for our services.

In recent years, the U.S. Congress and state legislatures have considered various types of healthcare reform to control growing healthcare costs. Similar reform movements have occurred in parts of Europe and Asia. Implementation of healthcare reform legislation that contains costs could limit the profits that can be made from the development of new drugs. This could adversely affect R&D expenditures by pharmaceutical, biotechnology and medical device companies, which could in turn decrease the business opportunities available to us in the United States and other countries. We are unable to predict what legislative proposals will be adopted in the future, if any.

Compliance with environmental regulations can be expensive, and noncompliance with these regulations may result in adverse publicity and potentially significant monetary damages and fines.

As our drug and medical device R&D processes generate waste water, toxic and hazardous substances and other industrial wastes, we are required to comply with all national and local regulations in China and the United States regarding protection of the environment. We believe that we are in compliance with present material environmental protection requirements. Because the requirements imposed by environmental laws and regulations may change and more stringent regulations may be adopted in the future, we may be unable to accurately predict the cost of complying with these laws and regulations, which could be substantial. If we fail to comply with present or future environmental regulations, we may be required to pay substantial fines, suspend production or cease operations. In addition, the risk of accidental contamination or injury from these hazardous materials cannot be eliminated. If we fail to prevent contamination or injury, we could be liable for any resulting damages, which could have a material and adverse impact on our business, financial condition, results of operations and prospects.

Negative attention from special interest groups may impair our ability to operate our business efficiently.

The services that we provide our customers are essential to the drug discovery and development process, and are almost universally mandated by law. Some of the services we provide, or intend to provide in the future, involve the use of large and small animals, as well as non-human primates. Certain special interests groups categorically object to the use of animals for valid research purposes. Historically, our core research model activities with small animals have not been the subject of animal rights media attention, and as we expand our service biology offerings into toxicology, we anticipate that we will work extensively with large animals and non-human primates. However, research activities with animals have been the subject of adverse attention, with negative impact on our industry. In connection with our acquisition of AppTec, we expanded our operations into the United States where negative attention from media and animal rights groups is more common than in China. Any negative attention or threats directed against our animal research activities in the future could impair our ability to operate our business efficiently. In addition, if regulatory authorities were to mandate a significant reduction in safety testing procedures which utilize laboratory animals, as has been advocated by certain groups, our business could be materially and adversely affected.

Any failure to comply with existing regulations and industry standards could harm our reputation and our business, financial condition, results of operations and prospects.

A number of governmental agencies or industry regulatory bodies in China, the United States and Europe, impose strict rules, regulations and industry standards as to how drug and medical device R&D should be conducted which apply to our customers and us. Any failure on our part to comply with existing regulations could result in the termination of ongoing research or the disqualification of data for submission to regulatory authorities. This could harm our reputation, our prospects for future work and our operating results. For example, if we were to treat research animals inhumanely and not in accordance with international standards set out by the Association for Assessment and Accreditation of Laboratory Animal Care, or AAALAC, an accreditation we intend to pursue, AAALAC could revoke any such accreditation and the accuracy of our animal research data could be questioned. AppTec previously received a warning letter from the U.S. Food and Drug Administration, or FDA, relating to documentation and validation information for one client’s tissue processing program. The FDA subsequently accepted AppTec’s corrective actions as adequate. Any material violation by us of GCP, GLP or cGMP, in each case as determined by the FDA could cause our customers to terminate their contracts with us and thus materially and adversely affect our business, financial condition, results of operations and prospects.

For our client’s future drugs and medical devices to be marketed in the United States, we may need to obtain clearance from the FDA and our operations will need to comply with FDA standards. Any adverse action by the FDA against us would negatively impact on our ability to offer our customer services and harm our business and prospects.

As we expand our service offerings, we may need to obtain clearance by the FDA in the event that our customers’ clinical trials reach the stage of filing a New Drug Application, or NDA, with the FDA, to grant permission to market the drug in the United States. All facilities and manufacturing techniques used to manufacture drugs and biologics in the United States must conform to standards that are established by the FDA. The FDA may conduct scheduled periodic inspections of our facilities to monitor our compliance with regulatory standards. If the FDA finds that we have failed to comply with the appropriate regulatory standards, it may impose fines or take other actions against us or our customers, or we may no longer be able to offer our services to U.S. customers. The resulting corrective measures may be lengthy and costly. As a result, we may be unable to fulfill our contractual obligations. Any adverse action by the FDA would have a material and adverse impact on our reputation and our business, financial condition, results of operations and prospects. We may or may not obtain clearance from the FDA standards in the event that we are inspected, or maintain such clearance over time.

In providing our pharmaceutical, biotechnology and medical device R&D outsourcing services, we face health and safety liability and product liability risks.

In providing our services in connection with drug development, we face a range of potential liabilities which include risks that disease models and animals infected with diseases for research interests may be harmful, or even lethal, to themselves and humans despite preventive measures we take for the quarantine and handling of animals.

We also face product liability risks should the drugs and medical devices we assist in developing and manufacturing be subject to product liability claims. We provide services in the development, testing and manufacturing of drugs and medical devices that may ultimately be used by humans, including biologic products to be tested in human clinical trials, although we do not commercially market or sell the products to end users. If any of these drugs or medical devices harm people, we may be subject to litigation and may be required to pay damages to those persons. For example, AppTec was recently sued in the U.S. in an action where the plaintiff alleges she contracted the Hepatitis C virus from a dental implant that she received sometime prior to January 9, 2006, and alleges that AppTec and three other defendents negligently failed to test for the presence of the Hepatitis C virus and negligently failed to warn the plaintiff of such alleged presence. Damages awarded in a product liability action could be substantial and could have a material and adverse impact on our business, financial condition, results of operations and prospects. Although we currently maintain product liability insurance, our insurance coverage may be inadequate or may become unavailable on terms acceptable to us.

New technologies or methodologies may be developed, validated and increasingly used in the global pharmaceutical, biotechnology and medical device R&D outsourcing industry that could reduce demand for some of our services.

The global pharmaceutical, biotechnology and medical device R&D outsourcing industry is constantly evolving, and we must keep pace with new technologies and methodologies in the industry to maintain our competitive position. For example, a new drug discovery method, known as “genome-to-drug-lead” approach, in which chemicals can be virtually screened against computer-predicted protein targets, could offer a solution to reduce labor requirements for chemists who experimentally search for drug leads, one of the most significant obstacles to drug discovery. The method may also allow chemists to better exploit the extensive availability of drug targets at the gene level, and ultimately improve the success of moving discoveries from the laboratory to actual patients.

As a result, we must continue to invest significant human and capital resources in R&D to enhance our technology and our existing services and introduce new services utilizing advanced technologies that customers will use. However, we may not be successful in adapting to or commercializing these new technologies if developed. New technologies could decrease the need for our existing technologies, and we may not be able to

develop new service or technologies effectively or in a timely manner. Our failure to develop, enhance or adapt, to new technologies and methodologies could significantly reduce demand for our services and harm our business and prospects.

The discontinuation of any of the preferential tax treatments currently available to us in the PRC or imposition of any additional PRC taxes on us could adversely affect our financial condition and results of operations.

Before January 1, 2008, China had a dual tax system that contained one set of tax rules for PRC domestic enterprises and one for foreign investment enterprises, or FIEs. Though both domestic enterprises and FIEs were subject to the same income tax rate of 33%, there were various preferential tax treatments that were generally only available to FIEs, which results in the effective tax rates of FIEs being generally lower than those of domestic enterprises.

Two of our PRC subsidiaries were FIEs that were eligible to receive certain preferential tax treatments, in the form of reduced tax rates and/or tax holidays pursuant to certain PRC tax laws and regulations effective before January 1, 2008. WXAT was an FIE engaged in manufacturing businesses with a business term of over ten years and registered in the Wuxi Taihu National Tourist Resort Zone, and as such its head office was granted a two-year exemption from enterprise income tax beginning from its first profitable year and a 12% enterprise income tax rate for the subsequent three years followed by a three-year 12% tax rate so long as it continues to qualify as an “advanced technology enterprise with foreign investment.” The Shanghai branch of WXAT located in Shanghai Waigaoqiao Free Trade Zone was granted to a two-year exemption from enterprise income tax beginning from its first profitable year and a 7.5% enterprise income tax rate for the subsequent three years followed by a three-year 10% tax rate so long as WXAT continues to qualify as an “advanced technology enterprise with foreign investment.” WASH was an FIE engaged in manufacturing businesses with a business term of over ten years and located in Shanghai Waigaoqiao Free Trade Zone, and as such it was granted a two-year exemption from enterprise income tax beginning from its first profitable year and a 15% enterprise income tax rate for the subsequent three years.

On March 16, 2007, China passed a new Enterprise Income Tax Law, or the New EIT Law, and its implementing rules, both of which became effective on January 1, 2008. The New EIT Law significantly curtails tax incentives granted to foreign-invested enterprises under its predecessor. The New EIT Law, however, (i) reduces the statutory rate of enterprise income tax from 33% to 25%, (ii) permits companies to continue to enjoy their existing tax incentives, adjusted by certain transitional phase-out rules, and (iii) introduces new tax incentives, subject to various qualification criteria. WXAT, WASH and WATJ will gradually transition from 15% to the uniform tax rate of 25% from 2008 to 2012. STA will transition from 24% to the uniform tax rate of 25% in 2008. In addition, based on the new tax law, an enterprise that is entitled to preferential treatment in the form of enterprise income tax reduction or a tax holiday exemption, but has not been profitable and, therefore, has not enjoyed such preferential treatment, would have to begin its tax holiday exemption in the same year that the new tax law goes into effect, i.e., 2008. As such, certain subsidiaries will begin their tax holiday exemption in 2008 even if they are not yet cumulatively profitable at that time.

The New EIT Law and its implementing rules permit certain “high-technology enterprises” to enjoy a reduced 15% enterprise income tax rate, although they do not specify the qualification criteria. Pending promulgation of detailed qualification criteria, we cannot assure you that WXAT and WASH will qualify as high-technology enterprises under the New EIT Law. Preferential tax treatments granted to our subsidiaries by the local governmental authorities are subject to review and may be adjusted or revoked at any time. The discontinuation of any preferential tax treatments currently available to us and our wholly owned subsidiaries will cause our effective tax rate to increase, which could have a material adverse effect on our results of operations.

Under China’s New EIT Law, we may be classified as a “resident enterprise” of China. This classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

Under China’s New EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the New EIT Law define de facto management bodies as “management bodies that exercises substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. Currently no official interpretation or application of this new “resident enterprise” classification is available, therefore it is unclear how tax authorities will determine tax residency based on the facts of each case.

If the PRC tax authorities determine that our Cayman Islands holding company is a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on offering proceeds and other non-China source income would be subject to PRC enterprise income tax at a rate of 25%, in comparison to no taxation in the Cayman Islands. Second, although under the New EIT Law and its implementing rules dividends paid to us from our PRC subsidiaries would qualify as “tax-exempt income,” such dividends may be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC shareholders and with respect to gains derived by our non-PRC shareholders from transferring our shares or ADSs. Similarly, these unfavorable consequences could apply to our BVI holding company if it is classified as a PRC resident enterprise.

The discontinuation of any of the financial incentives currently available to us in the PRC could adversely affect our results of operations and prospects.

Since inception, we have enjoyed either exemptions or subsidies with respect to income tax and sales tax. Our eligibility to receive these financial incentives requires that we continue to qualify for these financial incentives, which is subject to the discretion of the central government or relevant local government authorities, who could determine at any time to immediately eliminate or reduce these financial incentives, generally with prospective effect. Since our receipt of the financial incentives is subject to periodic time lags and inconsistent government practice, for so long as we continue to receive these financial incentives, our net income in a particular period may be higher or lower relative to other periods based on the potential changes in these financial incentives in addition to any business or operating related factors we may otherwise experience. For example, we expect downward pressure on future margins on goods manufactured for export due to changes in China’s VAT system reducing the potential VAT credits on certain categories of goods from 13% to 5%.

Fluctuations in exchange rates have resulted and are expected to continue to result in foreign currency exchange losses and negatively impact our profitability.

In 2007, approximately 94.5% of our net revenues were generated from sales denominated in U.S. dollars, and a significant portion of our operating costs and expenses were denominated in Renminbi. As a result, fluctuations in exchange rates between U.S. dollars and Renminbi affect the relative purchasing power of our revenue, the proceeds of this offering and our balance sheet and earnings per share in U.S. dollars. In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar will affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business, financial condition or results of operations. Since July 2005, the Renminbi is no longer pegged to the U.S. dollar. As a result, from July 21, 2005 to April 3, 2008, the Renminbi appreciated approximately 15.2% against the U.S. dollar. Although currently the Renminbi exchange rate versus the U.S. dollar is restricted to a rise or fall of no

more than 0.5% per day and the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future Chinese authorities may lift restrictions on fluctuations in the Renminbi exchange rate and lessen intervention in the foreign exchange market. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue, which will be exchanged into U.S. dollars and earnings from and the value of any U.S. dollar-denominated investments we make.

Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. We periodically purchase derivative financial instruments such as foreign exchange forward contracts to hedge our exposure to U.S. dollar — Renminbi currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to successfully hedge our exposure at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

Changes in China’s economic, political and social condition could adversely affect our business, financial condition, results of operations and prospects.

We conduct a significant portion of our business operations in China. Accordingly, our business, financial condition, results of operations and prospects are affected to a significant degree by economic, political and social conditions in China. The PRC economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. The PRC government has implemented various measures to encourage, but also to control, economic growth and guide the allocation of resources. Some of these measures benefit the overall PRC economy but may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by changes in tax regulations applicable to us. Furthermore, the PRC government, through the People’s Bank of China, continues to implement interest rate increases to control the pace of economic growth. These measures may cause decreased economic activity in China, which in turn could adversely affect our business, financial condition, results of operations and prospects.

The PRC legal system embodies uncertainties that could limit the legal protections available to you and us.

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades has significantly increased the protections afforded to various forms of foreign investment in China. Our PRC operating subsidiaries are foreign-invested enterprises and are subject to laws and regulations applicable to foreign investment in China as well as laws and regulations applicable to foreign-invested enterprises. These laws and regulations change frequently, and their interpretation and enforcement involve uncertainties. In addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other government authorities (including local government authorities), thus making strict compliance with all regulatory requirements impractical, or in some circumstances, impossible. For example, we may have to resort to administrative and court proceedings to enforce the legal protections that we enjoy either by law or contract. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may also impede our ability to enforce the contracts we have entered into. By way of further example, although required by PRC law, many foreign-invested enterprises, including our PRC subsidiaries, have not historically obtained approvals from the National Development and Reform Commission or its counterparts, or NDRC, before receiving the approval from the Ministry of Commerce or its counterparts for their establishment. The NDRC has recently reiterated its position that the establishment of foreign-invested enterprises

is subject to the NDRC’s approval, in addition to any other required PRC government approvals, but the legal consequence for failure to obtain the NDRC approval by those foreign-invested enterprises, including our PRC subsidiaries, is not prescribed under the current PRC law. As a result, these uncertainties together with any development or interpretation of the PRC law that is adverse to us could materially and adversely affect our business, financial condition, results of operations and prospects.

Our failure to obtain the prior approval of the China Securities Regulatory Commission, or the CSRC, of the listing and trading of our ADSs on the New York Stock Exchange could have a material adverse effect on our business, operating results, reputation and trading price of our ADSs.

On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated a regulation that became effective on September 8, 2006. This regulation, among other things, has some provisions that purport to require that an offshore special purpose vehicle, or SPV, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals shall obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings.

We completed the initial listing and trading of our ADSs on the New York Stock Exchange in August 2007. We did not seek CSRC approval in connection with either our initial public offering or this offering. However, the application of this PRC regulation remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope and applicability of the CSRC approval requirement.

Our PRC counsel, Commerce & Finance Law Offices, advised us that because we completed our restructuring for the initial public offering before September 8, 2006, the effective date of the new regulation, it was not and is not necessary for us to submit the application to the CSRC for its approval, and the listing and trading of our ADSs on the New York Stock Exchange did not require CSRC approval. A copy of Commerce & Finance Law Offices’ legal opinion regarding this PRC regulation is filed as an exhibit to our registration statement on Form F-1 in connection with our initial public offering, which is available at the SEC’s website at www.sec.gov.

If the CSRC or another PRC regulatory agency subsequently determines that CSRC approval was required for the initial public offering or is required for this offering, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from our initial public offering and this offering into the PRC, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur.

If the CSRC later requires that we obtain its approval, we may be unable to obtain a waiver of the CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our ADSs.

PRC regulations relating to offshore investment activities by PRC residents may increase the administrative burden we face and create regulatory uncertainties, and a failure by our shareholders who are PRC residents to complete any required applications and filings pursuant to such regulations may prevent us from distributing profits and could expose us and our PRC resident shareholders to liability under PRC law.

The PRC State Administration of Foreign Exchange, or SAFE, has promulgated several regulations that require PRC residents to register with and/or obtain approvals from branches of SAFE in connection with their direct or indirect offshore investment activities. The SAFE regulation issued in October 2005, known as Notice 75, requires: (i) PRC residents to register with the local SAFE branch before establishing or controlling any offshore company, referred to as an “offshore special purpose company”, for the purpose of acquiring any assets or equities of PRC companies and raising funds from overseas; (ii) any PRC resident who is a shareholder of an offshore special purpose company to amend such shareholder’s SAFE registration with the relevant SAFE branch with respect to such company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China, and (iii) registration by March 31, 2006 of direct or indirect investments previously made by PRC residents in such companies. In November 2005 and May 2007, SAFE promulgated certain implementing rules with respect to Notice 75, known as the Notice 75 Implementing Rules.

We previously notified and urged our shareholders who are PRC residents to make the necessary registrations and filings as required under these regulations, and these shareholders have made efforts to register their investments in our company with the local SAFE branch in Wuxi, China. However, the local SAFE branch in Wuxi declared that registrations under Notice 75 were not required from these shareholders. As Notice 75 Implementing Rules are relatively new, it remains unclear how Notice 75, and any future PRC legislation concerning offshore or cross-border transactions, will be interpreted and implemented by the relevant PRC government authorities, and whether the local SAFE branch in Wuxi correctly interpreted Notice 75 as to its application to certain of our shareholders. Therefore, we cannot assure you that all relevant shareholders have made and will make and obtain all applicable registrations or filings required by these regulations or other related legislation. Our PRC counsel has advised us that if any of our PRC shareholders fails to make any required SAFE registrations and amendments thereto, our ability to inject capital into our PRC subsidiaries may be limited, and our PRC subsidiaries may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to us. Moreover, the failure to comply with SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

We rely principally on dividends and other distributions on equity paid by our operating subsidiaries to fund cash and financing requirements, and limitations on the ability of our operating subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business.

We are a holding company, and we rely principally on dividends and other distributions on equity paid by our subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. If any of our five subsidiaries in China incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Furthermore, relevant PRC laws and regulations permit payments of dividends by the subsidiary only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations.

Under PRC laws and regulations, each of our operating subsidiaries in China is required to set aside a portion of its net income each year to fund specific reserve funds. These reserves are not distributable as cash dividends. A wholly foreign owned enterprise is required to set aside at least 10% of its after-tax profits of the preceding year as its reserve funds. It may stop contributing if the aggregate amount of the reserve funds has already accounted for more than 50% of its registered capital. Moreover, it may, upon a board resolution, set aside certain amount from its after-tax profits of the preceding year as bonus and welfare funds for staff and

workers. An equity joint venture enterprise is required to set aside reserve funds, bonus and welfare funds for staff and workers and development funds, percentage of which shall be determined by the board. As a result of these PRC laws and regulations, each of the operating subsidiaries in China is restricted in its ability to transfer a portion of its net assets to us whether in the form of dividends, loans or advances. As a result of PRC laws and regulations, our PRC subsidiaries are restricted in their ability to transfer a portion of their net assets, either in the form of dividends, loans, or advances. As of December 31, 2007, the restricted portion of their net assets totaled $71.2 million, which is composed of the registered capital and the statutory reserve of the PRC subsidiaries. Limitations on the ability of our operating subsidiaries in China to pay dividends to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our business.

Restrictions on currency exchange may limit our ability to utilize our revenues effectively.

Under China’s existing foreign exchange regulations, each of our subsidiaries in China is able to pay dividends in foreign currencies, without prior approval from SAFE or its local counterparts by complying with certain procedural requirements. However, the PRC government may take further measures in the future to restrict access to foreign currencies for current account transactions.

Foreign exchange transactions by our subsidiaries under capital accounts continue to be subject to significant foreign exchange controls and require the approval of, or registration with, PRC governmental authorities. In particular, if one subsidiary borrows foreign currency loans from us or other foreign lenders, these loans must be registered with SAFE or its local counterparts, and if we finance such subsidiary by means of additional capital contributions, these capital contributions must be approved by certain government authorities including the Ministry of Commerce or its local counterparts. These limitations could affect the ability of our subsidiaries to obtain foreign exchange through debt or equity financing.

PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC operating subsidiaries.

In utilizing the proceeds of this offering in the manner described in “Use of Proceeds,” as an offshore holding company of our PRC operating subsidiaries, we may make loans to our PRC subsidiaries, or we may make additional capital contributions to our PRC subsidiaries. Any loans to our PRC subsidiaries are subject to PRC regulations. For example, loans by us to our subsidiaries in China, which are foreign-invested enterprises, to finance their activities cannot exceed statutory limits and must be registered with SAFE or its local counterparts.

We may also decide to finance our subsidiaries by means of capital contributions. These capital contributions must be approved by the PRC Ministry of Commerce or its local counterpart. We may not be able to obtain these government approvals on a timely basis, if at all, with respect to future capital contributions by us to our PRC subsidiaries. If we fail to receive such approvals, our ability to use the proceeds of this offering and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

Any future outbreak of severe acute respiratory syndrome or avian flu in China, or similar adverse public health developments, may severely disrupt our business and operations.

Adverse public health epidemics or pandemics could disrupt businesses and the national economy of China and other countries where we do business. From December 2002 to June 2003, China and other countries experienced an outbreak of a new and highly contagious form of atypical pneumonia now known as severe acute respiratory syndrome, or SARS. On July 5, 2003, the World Health Organization declared that the SARS outbreak had been contained. However, a number of isolated new cases of SARS were subsequently reported, most recently in central China in April 2004. During May and June of 2003, many businesses in China were

closed by the PRC government to prevent transmission of SARS. Moreover, some Asian countries, including China, have recently experienced incidents of the H5N1 strain of bird flu, or avian flu. We are unable to predict the effect, if any, that avian flu may have on our business. In particular, any future outbreak of SARS, avian flu or similar adverse public health developments may, among other things, significantly disrupt our ability to adequately staff our business and may adversely affect our operations. Furthermore, an outbreak may severely restrict the level of economic activity in affected areas, which may in turn materially and adversely affect our business and prospects. As a result, any future outbreak of SARS, avian flu or similar adverse public health developments may have a material adverse effect on our business, financial condition, results of operations and prospects.

The trading prices of our ADSs have been and are likely to continue to be volatile, which could result in substantial losses to you.

The trading prices of our ADSs have been and are likely to continue to be volatile. Since our initial public offering on August 9, 2007, the daily closing trading price of our ADSs on the New York Stock Exchange has ranged from $18.50 to $41.28, and the last reported trading price on April 2, 2008 was $23.45 per ADS. The trading prices of our ADSs could fluctuate widely in response to factors beyond our control. In particular, the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States may affect the volatility in the trading price and volumes of our ADSs. Recently, a number of PRC companies have listed or are in the process of preparing to list their securities, in the United States. Some of these listed companies have experienced significant volatility, including significant price declines after their initial public offerings. The trading performances of these PRC companies’ securities at the time of or after their offerings may affect overall investor sentiment towards PRC companies listed in the United States and consequently may impact the trading performance of our ADSs. These broad market and industry factors may significantly affect the market price and volatility of our ADSs, regardless of our actual operating performance.

In addition to market and industry factors, the trading price and volume of our ADSs may be highly volatile for specific business reasons. In particular, variations in our revenues, earnings and cash flow and announcements of new investments and cooperation arrangements or acquisitions could cause the trading price and volume of our ADSs to change substantially. Following periods of volatility in the trading price of a company’s securities, shareholders have often instituted securities class action litigation against that company. If we become involved in a class action suit, it could divert our senior management’s attention, and, if adversely determined, could have a material adverse effect on our business, financial condition, results of operations and prospects.

Recent volatility in global capital markets could lead to substantial losses to investors.

On January 21 and 22, 2008, multiple exchanges in the United States and other countries and regions, including China, experienced sharp declines in response to the growing credit market crisis and a potential recession in the United States. Global capital markets volatility may affect overall investor sentiment towards our ADSs, which could also negatively affect the trading prices for our ADSs.

The sale or availability for sale of substantial amounts of our ADSs could adversely affect their trading price and could materially impair our future ability to raise capital through offerings of our ADSs.

Sales of substantial amounts of our ADSs in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of our ADSs and could materially impair our future ability to raise capital through offerings of our ADSs.

There will be 533,715,502 ordinary shares issued and outstanding immediately after this offering. In addition, as of the date of this prospectus, there were 72,960,532 ordinary shares issuable upon the exercise of outstanding options and nonvested restricted shares, 37,128,318 ordinary shares reserved for issuance under our employee share option plans, and 22,771,002 ordinary shares issuable upon conversion of outstanding convertible notes. All of the ADSs sold in this offering will be freely tradable without restriction or further registration under the U.S. Securities Act of 1933, as amended, or the Securities Act, unless held by our “affiliates” as that term is defined in Rule 144 under the Securities Act, or Rule 144.

In connection with this offering, we, our directors, executive officers and certain of our existing shareholders have agreed, among other things, not to sell any ordinary shares or ADSs for 90 days after the date of this prospectus without the written consent of the underwriters. However, the underwriters may release these securities from these restrictions at any time, subject to applicable regulations of the New York Stock Exchange. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ADSs.

Restrictions on our operations contained in convertible notes may limit the manner that we may conduct our business, including the payment of dividends to our shareholders.

On February 9, 2007, we issued $40 million in convertible notes to a consortium of investors. As of the date of this prospectus, $35.9 million in convertible notes are outstanding. These notes contain restrictions on our major corporate actions that may limit the manner in which we conduct our business, including the payment of dividends to our shareholders. For so long as at least 50% of the initial principal amount of all of the notes is outstanding, we may not take any of the following actions without the prior written consent of a majority in interest of the noteholders:

We are a Cayman Islands company, and you may have less protection of your shareholder rights than you would under U.S. law.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Cayman Islands Companies Law and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities

laws than the United States. In addition, some states in the United States, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands.

Moreover, as a non-U.S. company with foreign private issuer status, we have been exempted from, and you are not provided with the benefits of, some of the New York Stock Exchange corporate governance requirements, including that:

As a result, our independent directors will not have as much influence over our corporate policy as they would if we were not a foreign private issuer.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.

Certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands company and the majority of our assets and a large part of our operations are located outside of the United States. In addition, many of our directors and officers are nationals and/or residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not resident in the United States and the substantial majority of whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. In addition, there is uncertainty as to whether such Cayman Islands or PRC courts would be competent to hear original actions brought in the Cayman Islands or the PRC against us or such persons predicated upon the securities laws of the United States or any state. See “Enforcement of Civil Liabilities.”

We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree.

We have not determined a specific use for a portion of the net proceeds of this offering. Our management will have considerable discretion in the application of these proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our profitability or increase our ADS price. The net proceeds from this offering may also be placed in investments that do not produce income or lose value.

The voting rights of holders of ADSs are limited in several significant ways by the terms of the deposit agreement.

Holders of our ADSs may only exercise their voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. Upon receipt of voting instructions from a holder of

ADSs in the manner set forth in the deposit agreement, the depositary will endeavor to vote the underlying ordinary shares in accordance with these instructions. Under our amended and restated memorandum and articles of association and Cayman Islands law, the minimum notice period required for convening a general meeting is ten days. When a general meeting is convened, you may not receive sufficient notice of a shareholders’ meeting to permit you to withdraw your ordinary shares to allow you to cast your vote with respect to any specific matter at the meeting. In addition, the depositary and its agents may not be able to send voting instructions to you or carry out your voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but you may not receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if your ordinary shares are not voted as you requested.

You may not receive distributions on our ordinary shares or any value for them if it is illegal or impractical to make them available to you.

The depositary of our ADSs has agreed to pay you cash dividends or other distributions it or its custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our ordinary shares your ADSs represent. However, the depositary is not responsible if it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after reasonable efforts made by the depositary. We have no obligation to take any other action to permit the distribution of our ADSs, ordinary shares, rights or anything else to holders of our ADSs. This means that you may not receive the distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may have a material and adverse effect on the value of your ADSs. We intend to retain all available funds and any future earnings for use in the operation and expansion of our business, and do not anticipate paying any cash dividends on our ordinary shares, or indirectly on our ADSs, in the foreseeable future. See “Dividend Policy.”

You may not be able to participate in rights offerings and may experience dilution of your holdings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

To the extent you hold certificated ADRs rather than holding ADSs through your bank, broker or other nominee through the Depositary Trust Company, your ADSs represented by ADRs will be transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period.

The depositary may also close its books in emergencies, and will close its books on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or any government or governmental body, or under any provision of or circumstance permitted by the deposit agreement.

This prospectus contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements other than statements of historical fact in this prospectus are forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to” “may,” “plan,” “should,” “will,” “aim,” “potential,” “continue,” or other similar expressions. The forward-looking statements included in this prospectus relate to, among others:

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in the “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Recent Developments,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” and other sections in this prospectus.

The forward-looking statements are made as of the date of this prospectus. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Unless otherwise indicated, information in this prospectus concerning economic conditions and our industry is based on information from independent industry analysts and publications, as well as our estimates. Except where otherwise noted, our estimates are derived from publicly available information released by third-party sources, as well as data from our internal research, and are based on such data and our knowledge of our industry, which we believe to be reasonable. None of the independent industry publications used in this prospectus were prepared on our or our affiliates’ behalf.

This prospectus also contains data related to the global pharmaceutical, biotechnology and medical device R&D outsourcing industries. These market data include estimates and projections that are based on numerous assumptions. If any one or more of the assumptions underlying the market data turn out to be incorrect, actual

results may differ significantly from the projections. For example, the global pharmaceutical, biotechnology and medical device R&D outsourcing markets may not grow at the projected rates, or at all. In addition, the rapidly changing nature of the pharmaceutical, biotechnology and medical device outsourcing industries subjects any projections or estimates relating to the growth prospects or future condition of our markets to significant uncertainties.

We are a Cayman Islands holding company and conduct substantially all of our business through five operating subsidiaries in China and one operating subsidiary in the United States. We own, directly or indirectly, 100% of the equity of all of our operating subsidiaries. We own the equity of our five operating subsidiaries in China, directly or indirectly, through WuXi AppTec (BVI) Inc., or WXAT BVI, an intermediate holding company incorporated in the British Virgin Islands on June 3, 2004 under the name WuXi PharmaTech (BVI) Inc., with no significant assets and or operations of its own. Our corporate structure reflects common practice for companies with operations in the PRC where separate legal entities are often required or advisable for purposes of obtaining relevant tax and other incentives in such jurisdictions. Our holding company structure allows our management and shareholders to take significant corporate actions without having to submit these actions for approval or consent of the administrative agencies in every country where we have significant operations. Moreover, our choice of the Cayman Islands as the jurisdiction of incorporation of our ultimate holding company was motivated in part by its relatively well-developed body of corporate law, various tax and other incentives, and its wide acceptance among internationally recognized securities exchanges as a jurisdiction for companies seeking to list securities.

Substantially all of our business conducted in the PRC is through our primary operating subsidiary, WuXi AppTec Co., Ltd., or WXAT, which was established in December 2000 under the name WuXi PharmaTech Co., Ltd., in Wuxi, China. Immediately prior to becoming a wholly-owned subsidiary of WXAT BVI, WXAT was an equity joint venture held by three immediate shareholders: (i) ChinaTechs Inc., or ChinaTechs, a company owned and controlled by our founders and certain of our shareholders, Dr. Ge Li, Dr. Ning Zhao, Mr. Xiaozhong Liu, Mr. Tao Lin, Mr. Zhaohui Zhang, Mr. Peng Li and Mr. Walter Greenblatt, (ii) Jiangsu Taihushui Group Company, or THS, incorporated in the PRC, and (iii) Dr. John J. Baldwin, one of our directors until July 2007, each of whom held 55.54%, 39.46% and 5% equity interests in WXAT, respectively. In March 2001, WXAT established a Shanghai branch, known as WXAT Shanghai Branch, in Shanghai Waigaoqiao Free Trade Zone.

To effect our offshore reorganization, effective July 13, 2005, WXAT BVI and WXAT’s shareholders, together with new third party investors, undertook a series of interrelated transactions whereby WXAT BVI: (i) issued 155,500,000 and 14,000,000 ordinary shares to ChinaTechs and Dr. John J. Baldwin, respectively, in exchange for approximately 60.54% of the outstanding equity interests in WXAT, (ii) issued to the new third party investors 30,940,000 Series A preference shares for $2,210,000 in cash, (iii) issued 79,560,000 ordinary shares, or approximately 28.41% of the outstanding equity interests of WXAT BVI, to the new investors to be held for the benefit of THS shareholders, and (iv) acquired THS’s remaining interest in WXAT, representing 11.05% of WXAT’s outstanding equity interests, for $2,210,000 in cash. After the reorganization, WXAT BVI owned 100% of the equity of WXAT. The new investors agreed to temporarily hold the 79,560,000 ordinary shares on behalf of THS shareholders to facilitate the reorganization. As a PRC company with PRC nationals as shareholders, neither THS nor its shareholders were initially able to take title to WXAT BVI’s ordinary shares in a timely manner due to PRC law. In October 2006, the ordinary shares held for the benefit of the THS shareholders were transferred to Rexbury, a Hong Kong company established by the shareholders of THS.

We have four other operating subsidiaries in China which we, directly and indirectly, hold a combined 100% equity interest. In 2002 and 2003, WXAT established two domestic subsidiaries, WuXi AppTec (Shanghai) Co., Ltd, or WASH, originally named Shanghai PharmaTech Co., Ltd., and Shanghai SynTheAll Pharmaceutical Co., Ltd., or STA. WXAT held a 90% equity interest in each of WASH (with the remaining 10% equity interest held by Wuxi Century Biology Company) and STA (with the remaining 10% equity interest held by WASH). Through a series of restructurings in 2006, WXAT BVI then acquired a 30% equity interest in each of WASH (with the remaining 70% equity interest held by WXAT) and STA (with the remaining 70% equity interest held by WASH), respectively. As a result, WASH and STA were converted from purely domestic companies into equity joint ventures. Following a capital increase in 2008, WXAT BVI’s holdings increased to 48.32% of the equity interest of WASH and 45% of the equity interest of STA, and WXAT’s holdings decreased to 51.68% of the equity interest of WASH and 55% of the equity interest of STA. WXAT BVI wholly owns,

directly or indirectly, two additional subsidiaries: (i) WUXIAPPTEC (Tianjin) Co., Ltd., or WATJ, located in Tianjin, which was established in June 2006 under the name Tianjin PharmaTech Co., Ltd., and in which WXAT BVI holds a 45% equity interest and WXAT holds a 55% equity interest in, respectively, and (ii) WuXi AppTec (Suzhou) Co., Ltd., or WASZ, located in Suzhou, which was established in October 2006 under the name Suzhous PharmaTech Co., Ltd., and in which WXAT BVI holds a 53.33% equity interest and WXAT holds a 46.67% equity interest. We previously had an additional subsidiary in China, Shanghai PharmaTech Chemical Technology Co., Ltd., or SHCT, located in Shanghai, however SHCT was dissolved in November 2007 due to inactivity.

We undertook a separate restructuring in anticipation of our initial public offering, involving a holding company we incorporated in the Cayman Islands on March 16, 2007. This holding company became our ultimate holding company upon completion of a one-for-one share exchange with the existing shareholders of WXAP BVI on June 15, 2007. The exchange was for all shares of equivalent classes that these shareholders previously held in WXAP BVI.

In December 2007, in connection with our acquisition of AppTec, we incorporated two U.S. subsidiaries: (i) Paul (US) Holdco., Inc., or Holdco, a Delaware corporation wholly owned by us, and (ii) Paul Acquisition Corporation, or PAC, a Delaware corporation wholly-owned by Holdco. In January 2008, we completed the acquisition of AppTec, whereby PAC merged with and into AppTec Laboratory Services, Inc., or ALS, a Delaware corporation, with ALS continuing as the surviving corporation. Following the acquisition, we changed the name of ALS to “WuXi AppTec, Inc.”, Holdco to “WuXi AppTec Holding Company, Inc.”, WXAT BVI, which was originally WuXi PharmaTech (BVI) Inc., to “WuXi AppTec (BVI) Inc.”, and WXAT, which was originally WuXi PharmaTech Co., Ltd, to “WuXi AppTech Co., Ltd.”

The following diagram illustrates our corporate structure and the place of formation and affiliation of each of our subsidiaries as of the date of this prospectus:

We estimate that we will receive net proceeds from this offering of approximately $ million, after deducting underwriting discounts and the estimated offering expenses payable by us, based on an assumed offering price of $23.45 per ADS, which was the last reported sales price of our ADSs on April 2, 2008. We will not receive any of the proceeds from the sale of ADSs by the selling shareholders.

We do not currently have any agreements or understandings to make any acquisitions of, or investments in, other businesses. We may use the proceeds to fund, through loans or capital contributions, operations of our operating subsidiaries if they require additional cash resources. Any loans to our operating subsidiaries in China, because each is an FIE, cannot, in the aggregate, exceed the difference between their respective approved amounts for total investment and registered capital. Furthermore, we must register any foreign loan with SAFE or its local counterparts for the loan to be effective. The PRC Ministry of Commerce or its local counterpart must approve any increase in the total investment and registered capital. We may be unable to obtain these government approvals on a timely basis, if at all, which could delay the process of making these loans. See “Risk Factors — Risks Related to Doing Business in China — PRC regulations relating to offshore investment activities by PRC residents may increase the administrative burden we face and create regulatory uncertainties, and a failure by our shareholders who are PRC residents to complete any required applications and filings pursuant to such regulations may prevent us from distributing profits and could expose us and our PRC resident shareholders to liability under PRC law” and “— PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC operating subsidiaries.”

The foregoing represents our intentions with respect of the use and allocation of the net proceeds from this offering based upon our present plans and business conditions. Our management, however, will have significant flexibility and discretion in applying the net proceeds from the offering. Unforeseen events or changed business conditions may result in application of the proceeds from this offering in a manner other than as described in this prospectus. See “Risk Factors — Risks Relating to this Offering — We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree.”

Pending their use, we intend to invest the net proceeds from this offering in short-term, interest bearing, debt instruments or bank deposits. These investments may adversely affect the U.S. federal income tax consequences of your investment in our ADSs. In particular, it is possible that we may become a PFIC for U.S. federal income tax purposes, which could result in negative tax consequences for you. See “Risk Factors — Risks Relating to Our Business — We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or ordinary shares” and “Taxation — United States Federal Income Taxation — Passive Foreign Investment Company.”

Our ADSs are listed for trading on the New York Stock Exchange under the symbol “WX.” The following table sets forth the monthly high and low daily closing trading prices of our ADSs on the New York Stock Exchange for the periods indicated:

On April 2, 2008, the last reported trading price of our ADSs on the New York Stock Exchange was $23.45 per ADS.

We intend to retain all available funds and any future earnings for use in the operation and expansion of our business, and do not anticipate paying any cash dividends on our ordinary shares, or indirectly on our ADSs, for the foreseeable future. Future cash dividends, if any, will be at the discretion of our board of directors and will depend upon our future operations and earnings, capital requirements and surplus, general financial conditions, shareholders’ interests, contractual restrictions and other factors as our board of directors may deem relevant. We can pay dividends only out of profits or other distributable reserves.

In addition, our ability to pay dividends depends substantially on the payment of dividends to us by our operating subsidiary in the United States and our five operating subsidiaries in China, namely, WXAT, WASH, STA, WATJ and WASZ. Each of these operating subsidiaries in China may pay dividends only out of its accumulated distributable profits, if any, determined in accordance with its articles of association, and the accounting standards and regulations in China. WXAT, being a wholly owned foreign enterprise, is required to set aside at least 10% of its after-tax profits of the preceding year as its reserve funds. It may stop such setting aside if the aggregate amount of the reserve funds has already accounted for more than 50% of its registered capital. Moreover, it may, upon a board resolution, set aside certain amount from its after-tax profits of the preceding year as bonus and welfare funds for staff and workers. The other four operating subsidiaries in China are equity joint ventures which are required to set aside reserve funds, bonus and welfare funds for staff and workers and development funds, percentage of which shall be determined by the board. Further, if any subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us. Any limitation on the payment of dividends by our subsidiary could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends and otherwise fund and conduct our businesses. See “Risk Factors — Risks Related to Doing Business in China — We rely principally on dividends and other distributions on equity paid by our operating subsidiaries to fund cash and financing requirements, and limitations on the ability of our operating subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business.”

Furthermore, our outstanding convertible notes contain restrictions on our major corporate actions that may limit the manner that we may conduct our business, including the payment of dividends to our shareholders. For so long as at least 50% of the initial principal amount of all of the notes is outstanding, we may not, without the prior written consent of a majority in interest of the noteholders, declare or pay any dividends or other distributions to any equity securities, other than the declaration and payment of (i) a cash dividend in any fiscal year which, when aggregated with all other cash dividends declared during such fiscal year, does not exceed 50% of our audited consolidated net income for our most recently completed fiscal year, calculated in accordance with U.S. GAAP or (ii) any dividend for which an adjustment is made in accordance with the terms of the notes. See “Risk Factors — Risks Relating to this Offering — Restrictions on our operations contained in convertible notes may limit the manner that we may conduct our business, including the payment of dividends to our shareholders.”

We paid no dividends in 2004. Our primary operating subsidiary in China, WXAT, declared a cash dividend of $2.4 million in 2005 to its then-current shareholders. We declared and paid a cash dividend of $6.0 million in 2006 to our shareholders. We paid no dividends in 2007. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Financing Activities.”

Holders of ADSs will be entitled to receive dividends, subject to the terms of the deposit agreement, to the same extent as holders of our ordinary shares, less the fees and expenses payable under the deposit agreement. Cash dividends will be paid by the depositary to holders of ADSs in U.S. dollars. Other distributions, if any, will be paid by the depositary to holders of our ADSs in any means it deems legal, fair and practical. See “Description of American Depositary Shares — Share Dividends and Other Distributions.”

You should read this table in conjunction with “WuXi Selected Consolidated Financial Data,” “AppTec Selected Financial Data,” “Selected Unaudited Pro Forma Condensed Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and WuXi’s and AppTec’s audited consolidated financial statements and related notes included elsewhere in this prospectus.

The following selected consolidated income statement data for the years ended December 31, 2005, 2006 and 2007, and the selected consolidated balance sheet data as of December 31, 2006 and 2007 have been derived from WuXi’s audited consolidated financial statements included elsewhere in this prospectus, which have been audited by Deloitte Touche Tohmatsu CPA Ltd., an independent registered public accounting firm. WuXi’s selected consolidated income statement data for the year ended December 31, 2004 and selected consolidated balance sheet data as of December 31, 2004 and 2005 were derived from its audited consolidated financial statements that are not included in this prospectus. WuXi’s selected consolidated financial information for the year ended December 31, 2003 was derived from its unaudited consolidated financial statements, which are not included in this prospectus. WuXi prepared the unaudited consolidated financial information on the same basis as its audited consolidated financial statements. The unaudited financial information includes all adjustments, consisting only of normal and recurring adjustments, that we consider necessary for a fair presentation of WuXi’s financial position and operating results for the periods presented. You should read the selected consolidated financial data in conjunction with WuXi’s audited financial statements and the accompanying notes included elsewhere in this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” WuXi’s audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP. WuXi’s historical results are not necessarily indicative of our future China-based results.

The following selected income statement data for the years ended December 31, 2005, 2006 and 2007, and the selected balance sheet data as of December 31, 2006 and 2007 have been derived from AppTec’s audited financial statements included elsewhere in this prospectus, which have been audited by PricewaterhouseCoopers LLP, independent accountants. You should read this selected financial data in conjunction with AppTec’s audited financial statements and the accompanying notes included elsewhere in this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” AppTec’s audited financial statements are prepared and presented in accordance with U.S. GAAP. AppTec’s historical results are not necessarily indicative of our future U.S.-based results.

The following selected unaudited pro forma condensed combined financial information has been derived by the application of pro forma adjustments to the historical consolidated financial statements of WuXi and financial statements of AppTec as of and for the year ended December 31, 2007. WuXi’s historical information has been derived from its audited consolidated financial statements. AppTec’s historical information has been derived from its audited financial statements. The unaudited pro forma condensed combined income statement data gives effect to WuXi’s acquisition of AppTec as if it had been completed on January 1, 2007. The unaudited pro forma condensed combined balance sheet data give effect to the acquisition as if it had been completed on December 31, 2007.

Assumptions underlying the pro forma adjustments necessary to present this selected pro forma condensed combined financial data are described in the accompanying notes appearing in this prospectus, which you should read in conjunction with this selected pro forma condensed combined financial data. The pro forma adjustments described in the accompanying notes have been made based on available information and, in the opinion of management, are reasonable. The pro forma condensed combined financial data is not necessarily indicative of actual results that would have been achieved had the acquisition occurred on January 1, 2007 and do not purport to indicate future results of operations. The assumptions used in the preparation of the pro forma condensed combined financial data may prove to be incorrect.

The AppTec acquisition will be accounted for using the purchase method as prescribed by Statement of Financial Accounting Standards, or SFAS, No. 141, “Business Combinations,” with intangible assets, if any, to be recorded in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” The preliminary allocation of the total purchase price of AppTec’s net tangible and identifiable intangible assets was based on their estimated fair value as of January 31, 2008. The excess of the purchase price over the fair values of the net assets acquired, if any, will be allocated to goodwill. The final purchase price allocation and the resulting effect on operating income may differ from the pro forma amounts presented below.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the sections entitled “WuXi Selected Consolidated Financial Data,” “AppTec Selected Financial Data,” “Selected Unaudited Pro Forma Condensed Combined Financial Data,” and WuXi’s and AppTec’s audited financial statements and the unaudited pro forma condensed combined financial data and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus. In this section, when we refer to “WuXi,” we are referring to our company before taking into account the AppTec acquisition we completed in January 2008, and when we refer to our “China-based” business, we are referring to our historical business going forward, before taking into account the AppTec acquisition.

We are a leading pharmaceutical, biotechnology and medical device R&D outsourcing company, with operations in China and the United States. We provide a broad and integrated portfolio of laboratory and manufacturing services throughout the R&D process to pharmaceutical, biotechnology and medical device companies. Our services are designed to assist our global customers in shortening the time and lowering the cost of drug and medical device R&D by providing cost-effective and efficient outsourcing solutions.

We group our operations into two segments: laboratory services and manufacturing services. Through 2007, our laboratory services segment consisted of discovery chemistry, service biology, toxicology, pharmaceutical development and analytical services, while our manufacturing services segment focused on advanced intermediates and APIs. With the AppTec acquisition in January 2008, we expanded our laboratory services segment to include biopharmaceutical and medical device testing and other related contract R&D, and expanded our manufacturing services segment to include biologics-based manufacturing, testing and related services.

We have developed broader and more integrated customer relationships through our expanded capabilities and services throughout the drug and medical device R&D process. In 2007, WuXi provided services to more than 80 pharmaceutical and biotechnology customers. Most of our customers return to us for additional and often larger and longer-term projects, and each of WuXi’s top ten customers over the last three years continues to be our customer today. The AppTec acquisition added more than 700 biopharmaceutical and medical device companies to our customer base, further expanding our addressable market size.

We have benefited and expect to continue to benefit significantly from growth trends in the global pharmaceutical and biotechnology R&D outsourcing industry. With the AppTec acquisition, we also anticipate benefiting from growth trends in the global medical device R&D outsourcing industry. The need to shorten the time to market and lower the cost of drug and medical device development, the unmet medical needs of a growing and aging population, technological innovations that are increasing the number of qualified leads suitable for further evaluation, heightened regulatory and safety standards, and increasing biotechnology, pharmaceutical and medical device industry demands are driving these growth trends.

We intend to focus on successfully integrating the AppTec services and operations and continuing to expand our service offerings, particularly in the preclinical development, formulation and manufacturing areas. In 2007, we began to offer preclinical development services, such as DMPK, general toxicology and pharmaceutical development services and clinical trial material manufacturing. We are also expanding our capacity and facilities. We are expanding our Jinshan facility to quadruple its manufacturing capacity, and are constructing a preclinical drug safety evaluation center in Suzhou.

Our net revenues increased from $33.8 million in 2005 to $69.9 million in 2006 and $135.2 million in 2007, representing a two-year 100.0% CAGR and 93.3% year-over-year growth from 2006 to 2007. Our net income increased from $6.1 million in 2005 to $8.9 million in 2006 and $33.9 million in 2007, representing a two-year 135.7% CAGR and 283.0% year-over-year growth from 2006 to 2007. Our historical growth is attributable primarily to an increased customer base and resulting projects, expanded capacity, increased service offerings, and the continued focus on obtaining long-term, integrated customer service contracts. On an unaudited pro forma basis to give effect to the AppTec acquisition as if it had occurred on January 1, 2007, our 2007 net revenues would have been $205.5 million and our net income would have been $34.7 million.

Our gross margins were 54.1% in 2005, 49.1% in 2006 and 46.5% in 2007. We expect downward gross margin pressure on our manufacturing services segment growth as a percentage of net revenues, which typically has a lower gross margin than our laboratory services segment. Moreover, we expect that the anticipated manufacturing projects at our expanded Jinshan facility will lower our gross margins as we evolve our business from small-scale, discrete projects to large scale, higher-volume projects and as we begin to recognize depreciation on the completed facility. Furthermore, we expect overall gross margin pressure in 2008 as we integrate the AppTec acquisition. On an unaudited pro forma basis to give effect to the AppTec acquisition as if it had occurred on January 1, 2007, our 2007 gross margin would have decreased to 37.7% due to lower gross profit contribution from AppTec’s business. We expect to partially offset these gross margin pressures by expanding our laboratory services segment into higher margin areas such as preclinical and service biology offerings, increasing capacity utilization and continuing to improve management operational efficiencies. Despite the potential for lower gross margins, we believe that a broader manufacturing business enhances revenue stability and predictability and enables us to continue to increase our revenues and net income.

Our net revenues represent our total revenues from operations, less sales taxes. We generated substantially all of our total net revenues over the last three years from U.S.-based customers, and we expect this to continue in 2008.

We derive our China-based laboratory services revenues primarily from our discovery chemistry services on a fee-for-service basis, FTE basis or a combination thereof. From an operational perspective, there is no difference between our scientists and other employees that work on an FTE basis and those that work on a fee-for-service basis. All are our full-time employees. However, FTE arrangements differ from conventional fee-for-service arrangements in that we provide a dedicated team of scientists for a specific customer’s needs for a period of time. The customer pays a fixed rate per FTE regardless of the workload, overtime or how the assignment may change, as determined in each contract, and generally includes the materials costs incurred. While our per-FTE fixed rate has remained relatively stable in recent years, our underlying labor costs per scientist have increased in line with overall increases in labor costs in China, creating margin pressures. We previously derived a significant portion of our laboratory services revenues from FTE-based discovery chemistry services, as we expanded our customer base and the scope of services provided to existing customers. However, we expect FTE-based revenues to decrease as a percentage of revenues because of the AppTec acquisition and as we expand into higher margin areas such as service biology, toxicology and bio-analytical services where project-based contracts are more common and preferred. We also expect to secure more multi-year contracts with our customers, which we believe will increase revenue stability and predictability.

We derive our China-based fee-for-service revenues primarily from our discovery chemistry services. A significant portion of our net revenues from these services are typically contingent on success and are often structured as fixed price or fee-for-service with a cap. We primarily perform the laboratory services we added with AppTec acquisition on a fee-for-service basis.

We also derive limited revenues from our China-based service biology, pharmaceutical development and analytical services on a combination of FTE and fee-for-service basis. Although aggregate revenues from these services represented only 1.8%, 1.1% and 3.8% of our total net revenues in 2005, 2006 and 2007, respectively, we expect that these services will increasingly contribute to revenue growth, particularly as our service biology offerings gain acceptance with our customer base. The addition of biopharmaceutical and medical device testing, contract R&D from the AppTec acquisition further expands our laboratory service offerings.

We derive our China-based manufacturing services revenues from chemistry-based manufacturing of advanced intermediates and APIs on a fee-for-service basis. We completed construction of our Jinshan facility in June 2004, and through 2005 our major customers performed audits to determine the facility met their requirements. Manufacturing services segment revenues began increasing significantly in 2006 and 2007. We anticipate continuing to increase manufacturing services revenues as a percentage of total net revenues as our customers move their development programs forward, leading to more large-scale, higher-volume manufacturing projects. With the AppTec acquisition, our manufacturing services now include biologics-based manufacturing, testing and related services.

Cost of laboratory services consists primarily of (i) labor, including salaries and benefits such as bonuses for employees who provide laboratory services, (ii) raw materials, including catalysts, solutions, reagents and solvents and lab supplies, and (iii) overhead, including primarily costs allocated to the internal support component of our analytical services department; direct depreciation and associated direct expenses and salaries and benefits for employees associated with our health, safety, environmental, quality control, quality assurance, engineering, warehouse and procurement departments; depreciation for our primary facility, property, plant and equipment; and utilities.

We expect labor costs to increase substantially in absolute terms due to the AppTec acquisition and as we significantly increase headcount for our China-based operations to meet anticipated growth. Rising labor costs in China and higher labor costs for our U.S.-based scientists will increase our near-term labor costs as a percentage of total laboratory services segment net revenues, partially offset by improved productivity from our scientists and by entering into and expanding higher margin services.

We expect raw material costs to increase substantially in absolute terms as we increase net revenues, and as the Renminbi continues to appreciate. However, we expect near-term raw materials costs, as a percentage of total laboratory services segment net revenues, to remain relatively stable due to steps we are taking to control raw materials costs, such as improving raw material use efficiencies and gaining from economies of scale from increasing sales, size and scope of services.

We expect overhead costs to increase substantially in absolute terms as we are expanding our facilities, purchasing new equipment and increasing supporting staff to satisfy future business needs. However, we expect overhead costs, as a percentage of total laboratory services segment net revenues, to remain relatively stable due to improving our laboratory facility utilization, and gaining from economies of scale from increasing sales, size and scope of services.

Cost of manufacturing services consists primarily of (i) overhead, consisting primarily of facility depreciation, costs of our quality control and quality assurance departments and R&D, and (ii) raw materials used in manufacturing. We expect near-term overhead costs to increase in absolute terms primarily due to business

growth and depreciation of our expanded Jinshan manufacturing facility. However, we expect increased capacity utilization to cause a decline in overhead costs as a percentage of manufacturing services segment net revenues as we benefit from increased capacity utilization. We expect near-term raw materials costs to increase significantly in absolute terms due to the AppTec acquisition and as our manufacturing services business expands.

Cost of revenues also includes an allocation of our share-based compensation charges based on the nature of work which certain employees were assigned to perform. See “— Critical Accounting Policies — Share-Based Compensation Expenses.”

Gross profit is equal to net revenues less cost of revenues. Gross margin is equal to gross profit divided by net revenues. Periodic changes in our gross profit and margin are primarily driven by our service mix and pricing, as well as exchange rate fluctuations. We expect downward gross margin pressure in our China-based business due to anticipated manufacturing services segment growth as a percentage of total revenues. Manufacturing services is a volume-based business and typically has a lower gross margin than our laboratory services segment. While we anticipate that our move from small-scale, discrete projects to large scale, higher-volume projects at our Jinshan facility will enhance revenue stability, large-scale projects typically have lower gross margins. We also expect that anticipated Renminbi appreciation relative to the U.S. dollar will negatively impact our gross margin. Moreover, the gross margin on AppTec services was 27.0% in 2007, significantly lower than the 46.5% gross margin in 2007 prior to the AppTec acquisition. We expect to partially offset these gross margin pressures by expanding our laboratory services segment into higher margin areas such as our preclinical and service biology offerings, and by increasing capacity utilization at our facilities and continuing to improve management operational efficiencies.

Our operating expenses consist of selling and marketing expenses and general and administrative expenses.

Selling and marketing expenses consist primarily of export agent fees and freight charges related to samples and products shipped to our customers and salaries and benefits for our customer service department. We anticipate expanding our selling and marketing efforts in the U.S., Europe and Japan to grow our business. We expect selling and marketing expenses to increase as a percentage of net revenues due primarily to higher selling and marketing expenses associated with our AppTec acquisition and our efforts to promote cross-selling. We also expect that selling and marketing expenses will include an allocation of share-based compensation charges based on the nature of the work which certain employees were assigned to perform.

General and administrative expenses consist primarily of (i) salary and welfare funds, plus bonuses for senior management, and all employees in our administration departments including finance, human resources, executive office, legal, information technology and public/investor relations; legal counseling and auditing fees, and (ii) depreciation and amortization of our land use rights and intangible assets. General and administrative expenses include, and are offset by, government cash subsidies for our general use, which are awarded at the discretion of local authorities. General and administrative expenses also include an allocation of our share-based compensation charges based on the nature of work which certain employees were assigned to perform. See “— Critical Accounting Policies — Share-Based Compensation Expenses.”

We expect our general and administrative expenses to increase in absolute terms as our business expands. We plan on hiring additional senior executives and management as we grow our business. We are also incurring

costs related to U.S. securities law reporting compliance, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, which will require that our 2008 annual report on Form 20-F include our management’s report on internal control over financial reporting and an attestation by our independent registered public accounting firm as to the effectiveness of our internal control over financial reporting. We are also incurring general and administrative costs relating to the integration of the AppTec acquisition. However, as a percentage of revenues, we expect general and administrative expenses to remain relatively stable.

Other income consists primarily of rental income derived from leasing excess office space, net foreign exchange gains and gains recognized on the fair value of foreign exchange forward contracts.

Other expenses primarily consists of net foreign exchange losses and losses recognized on the fair value of foreign exchange forward contracts.

Interest expense consists of interest expense associated with loan finance costs and interest expense related to a financing arrangement related to our primary facility in Shanghai Waigaoqiao Free Trade Zone. In March 2006, we cancelled the financing arrangement and fully repaid the indebtedness in June 2007. On February 9, 2007, we issued $40.0 million notional amount of convertible notes. The note holders were entitled to stated interest of 5% per year on the principal amount of the note calculated from the issuance date through our initial public offering on August 9, 2007. Interest ceased accruing on the notes on August 9, 2007.

Interest income consists of income earned on cash and cash equivalents and restricted cash.

We are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands.

Our intermediate offshore holding company, WXAT BVI, is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, WXAT BVI is not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the British Virgin Islands.

Corporations with operations in the United States are subject to a 34% or 35% federal tax rate, and state taxes, net of a federal tax benefit, generally ranging from 4% to 6%. The 2007 federal tax rate for AppTec was 34%. As of December 31, 2007, AppTec had federal and state net operating losses $13.9 million and $8.9 million, respectively, that we expect to be available to offset future U.S. taxable income.

All of our PRC subsidiaries were FIEs that were eligible to receive certain preferential tax treatments, in the form of reduced tax rates and/or tax holidays pursuant to certain PRC tax laws and regulations effective before January 1, 2008. WXAT was an FIE engaged in manufacturing businesses with a business term of over ten years and located in the Wuxi Taihu National Tourist Resort Zone, and as such its head office was granted a two-year exemption from enterprise income tax beginning from its first profitable year and a 12% enterprise income tax rate for the subsequent three years followed by a three-year 12% tax rate so long as it continues to qualify as an “advanced technology enterprise with foreign investment.” The Shanghai branch of WXAT located in Shanghai Waigaoqiao Free Trade Zone was granted to a two-year exemption from enterprise income tax beginning from its first profitable year and a 7.5% enterprise income tax rate for the subsequent three years followed by a three-year 10% tax rate so long as WXAT continues to qualify as an “advanced technology enterprise with foreign investment.” WASH was an FIE engaged in manufacturing businesses with a business term of over ten years and located in Shanghai Waigaoqiao Free Trade Zone, and as such it is entitled to a two-year exemption from enterprise income tax beginning from its first profitable year and a 7.5% enterprise income tax rate for the subsequent three years. STA is a FIE engaged in manufacturing with a business term of over ten years and located in Jinshan, Shanghai. The applicable income tax rate is 24% and is entitled to a two-year exemption beginning from its first profitable year. WATJ is a FIE engaged in discovery chemistry services. It is located in Tianjin, China and is subject to an income tax rate of 15%. WASZ is a foreign invested enterprise engaged in biology services. This enterprise stepped out of the pre-operating stage in August 2007 and as such is subject to an income tax rate of 24% at the year ended December 31, 2007.

China passed a new Enterprise Income Tax Law, or the New EIT Law, and its implementing rules, both of which became effective on January 1, 2008. The New EIT Law significantly curtails tax incentives granted to foreign-invested enterprises under its predecessor. The New EIT Law, however, (i) reduces the statutory rate of enterprise income tax from 33% to 25%, (ii) permits companies to continue to enjoy their existing tax incentives, adjusted by certain transitional phase-out rules, and (iii) introduces new tax incentives, subject to various qualification criteria. WXAT, WASH and WATJ will gradually transition from 15% to the uniform tax rate of 25% from 2008 to 2012. STA will transition from 24% to the uniform tax rate of 25% in 2008. In addition, based on the new tax law, an enterprise that is entitled to preferential treatment in the form of enterprise income tax reduction or a tax holiday exemption, but has not been profitable and, therefore, has not enjoyed such preferential treatment, would have to begin its tax holiday exemption in the same year that the new tax law goes into effect, i.e. 2008. As such, certain subsidiaries will begin their tax holiday exemption in 2008 even if they are not yet cumulatively profitable at that time.

Because we are a Cayman Islands holding company, substantially all of our income may be derived from dividends we receive from our PRC operating subsidiaries described above. The New EIT Law and its

implementing rules generally provide that a 10% withholding tax applies to China-sourced income derived by non-resident enterprises for PRC enterprise income tax purpose. We expect that such 10% withholding tax will apply to dividends paid to us by our PRC subsidiaries, but this treatment will depend on our status as a non-resident enterprise. For detailed discussion of PRC tax issues related to resident enterprise status, see “Risk Factors — Risks Relating to Doing Business in China — Under China’s New EIT Law, we may be classified as a ‘resident enterprise’ of China. This classification could result in unfavorable tax consequences to us and our non-PRC shareholders.” We do not currently intend to declare dividends for the foreseeable future.

Since inception, we have enjoyed either exemptions or subsidies with respect to income tax and sales tax. Our eligibility to receive these financial incentives requires that we continue to qualify for these financial incentives, which is subject to the discretion of the central government or relevant local government authorities, who could determine at any time to immediately eliminate or reduce these financial incentives, generally with prospective effect. Since our receipt of the financial incentives is subject to periodic time lags and inconsistent government practice, for so long as we continue to receive these financial incentives, our net income in a particular period may be higher or lower relative to other periods based on the potential changes in these financial incentives in addition to any business or operating related factors we may otherwise experience. See “Risk Factors — Risks Related to Doing Business in China —The discontinuation of any of the financial incentives currently available to us in the PRC could adversely affect our results of operations and prospects.”

Our effective tax rate was 14.9% in 2005, 4.3% in 2006 and 4.2% in 2007. These historical effective tax rates reflect only our China-based operations. We expect our 2008 marginal tax rate in China to range from 10-12%. We are currently evaluating the impact on our 2008 overall effective tax rate of our acquisition of AppTec and its U.S.-based operations.

The following table sets forth a summary of WuXi’s consolidated results of operations by amount and as a percentage of WuXi’s total net revenues for the years ended 2005, 2006 and 2007. You should read this information together with WuXi’s audited consolidated financial statements and related notes included elsewhere in this prospectus. WuXi’s historical operating results are not necessarily indicative of our future China-based results.

In this section, references to “we” and “our” are to WuXi, without taking into account AppTec, which we acquired in January 2008.

The following table sets forth the percentage of WuXi’s net revenues and net revenues by segment for 2005, 2006 and 2007:

Our net revenues increased from $33.8 million in 2005 to $69.9 million in 2006 and $135.2 million in 2007, or 106.8% and 93.4%, respectively, primarily due to an increase in number of customers and the scope of services we provide, particularly in our laboratory services segment. Our total number of customers increased from 68 in 2005 to 70 in 2006 and 80 in 2007, while our average revenues per top-ten customer increased from $2.5 million in 2005 to $4.8 million in 2006 and $10.0 million in 2007.

Sales tax exemptions for total net revenues were $0.4 million in 2005, $3.0 million in 2006 and $5.0 million in 2007.

Net revenues from our laboratory services segment increased from $29.4 million in 2005 to $59.8 million in 2006 and $102.4 million in 2007, or 103.4% and 71.3%, respectively. This increase was primarily due to FTE-based services revenues growing from $20.8 million in 2005 to $43.9 million in 2006 and $71.6 million in 2007, or 111.1% and 63.1%, respectively. Net revenues from our fee-for-service based services increased from $8.6 million in 2005 to $15.9 million in 2006 and $30.8 million in 2007, or 84.9% and 93.7%, respectively. The increased demand for our FTE-based services and our fee-for-service based services was primarily related to our discovery chemistry services.

Net revenues from our manufacturing services segment increased from $4.4 million in 2005 to $10.1 million in 2006 and $32.8 million in 2007, or 129.5% and 224.8%, respectively. Prior to June 2004, we had limited production capacity while we completed construction of our Jinshan manufacturing facility. During the rest of 2004 and throughout 2005, many of our customers conducted their quality assurance audits on our Jinshan facility. The increase from 2005 to 2006 and continuing in 2007 was primarily due to growing demand for manufacturing services once our customers satisfactorily completed their audits of our facilities.

The following table sets forth the percentage of our cost of revenues and cost of revenues by segment for 2005, 2006 and 2007:

Our total cost of revenues increased from $15.5 million in 2005 to $35.6 million in 2006 and $72.3 million in 2007, or 129.7% and 103.1%, respectively.

The increases in our laboratory services segment cost of revenues were primarily due to increases in: (i) direct labor and related increases in salaries, benefits and associated payments, accounting for 35%, 33% and 35% of segment costs in 2005, 2006 and 2007, respectively, reflecting primarily increased headcount, (ii) raw materials, accounting for 32%, 31% and 36% of segment costs in 2005, 2006 and 2007, and (iii) overhead, accounting for 33%, 36% and 29% of segment costs in 2005, 2006 and 2007, respectively, reflecting primarily new investments in our property, plant and equipment and higher related depreciation costs. The downward pressure on laboratory services segment gross margin was partially offset by improving laboratory facility utilization, economies of scale and scope of services.

The increases in our manufacturing services segment cost of revenues were primarily due to increases in (i) overhead, accounting for approximately 59%, 56% and 50% of segment costs in 2005, 2006 and 2007, respectively, reflecting increased supporting production headcount, particularly from 2005 to 2006, and increased depreciation charges relating to our Jinshan facility, and (ii) raw materials, accounting for approximately 34%, 37% and 46% of segment costs in 2005, 2006 and 2007 respectively, which was a result of the overall increase in our business over the period.

Cost of revenues also included an allocation of our share-based compensation charges based on the nature of work which certain employees were assigned to perform, which amounted to $0.4 million, $0.5 million and $2.1 million in 2005, 2006 and 2007, respectively.

Our gross profit increased from $18.3 million in 2005 to $34.3 million in 2006 and $62.9 million in 2007, or 87.4% and 83.4%, respectively. The increases were due to increased revenues for both of our business segments, particularly our laboratory services segment and FTE revenues. Overall gross margin decreased from 54.1% in 2005 to 49.1% in 2006 and 46.5% in 2007. Gross margin for our laboratory services segment decreased from 56.5% in 2005 to 55.7% in 2006 and 48.8% in 2007. The gross margin decrease in 2007 was primarily due to Renminbi appreciation, investment in our laboratory facility expansion and equipment and an increase in scientific staff.

Gross margin for our manufacturing services segment decreased from 37.8% in 2005 to 10.4% in 2006 and increased to 39.3% in 2007. The decrease in our manufacturing services segment gross margin in 2006 was primarily due to increased overhead costs without a commensurate revenue increase. The increase in our manufacturing services segment gross margin in 2007 was primarily due to economies of scale and increased capacity utilization at our Jinshan facility.

Our operating expenses as a percentage of net revenues were 28.1% in 2005, 34.5% in 2006 and 24.2% in 2007. Our total operating expenses increased from $9.5 million in 2005 to $24.2 million in 2006 and $32.7 million in 2007, or 45.2%, 153.4% and 35.1%, respectively.

Our selling and marketing expenses increased from $1.0 million in 2005 to $1.9 million in 2006 and $2.4 million in 2007. Selling and marketing expenses as a percentage of net revenues declined from 3.0% in 2005 to

2.6% in 2006 and 1.7% in 2007, primarily because these costs are relatively fixed and do not increase in direct proportion to net revenues.

Our general and administrative expenses increased from $8.5 million in 2005 to $22.3 million in 2006 and $30.3 million in 2007, or 161.7% and 35.9%, respectively. This increase was primarily due to (i) increased senior management and administrative employee headcount and associated expenses such as travel, (ii) professional services expenditures, such as auditing, legal consulting, insurance which increased after our initial public offering, and (iii) our leasing expenses, which are attributable to increased employee transportation and housing expenses as a result of the increase in our employee base over the periods presented. Our general and administrative expenses also included an allocation of our share-based compensation charges based on the nature of work which certain employees were assigned to perform, amounting to $2.7 million, $7.9 million and $8.6 million in 2005, 2006 and 2007, respectively. Our general and administrative expenses were partially offset by government cash subsidies, which decreased from $2.0 million in 2005 to $0.9 million in 2006 and $0.3 million in 2007. General and administrative expenses as a percentage of net revenues were 25.1%, 31.9% and 22.4% in 2005, 2006 and 2007, respectively.

Our other income increased from $0.3 million in 2005 to $0.5 million in 2006 and $2.7 million in 2007, with the increase in 2007 reflecting primarily gains from foreign exchange forward contracts.

Our other expenses decreased from $0.6 million in 2005 to $0.5 million in 2006 and $0.3 million in 2007, reflecting primarily foreign exchange losses.

Our interest expense was $1.3 million in 2005, $1.1 million in 2006 and $1.2 million in 2007, primarily due to our financing arrangement for our primary facility in Shanghai Waigaoqiao Free Trade Zone, which commenced operation in January 2004. We cancelled the financing arrangement in March 2006 and fully repaid the indebtedness in June 2007.

Our interest income increased from $42,000 in 2005 to $0.3 million in 2006 and $4.0 million in 2007. This increase was primarily due to the increases in interest earned on increased balances of cash and cash equivalents and restricted cash.

Our income tax expense was $1.1 million in 2005, $0.4 million in 2006 and $1.5 million in 2007. The decrease from 2005 to 2006 was primarily due to the tax holidays that we received. Our effective tax rate decreased from 14.9% in 2005 to 4.3% in 2006 and 4.2% in 2007.

As a result of the foregoing, our net income increased from $6.1 million in 2005 to $8.9 million in 2006 and $33.9 million in 2007, reflecting 44.5% and 280.9% growth, respectively. This included total share-based compensation charges of $3.1 million in 2005, $8.4 million in 2006 and $10.7 million in 2007.

Income (loss) attributable to holders of ordinary shares, basic and diluted

In 2005, 2006 and 2007, we incurred deemed dividends on our preference shares as they included a beneficial conversion feature and due to our selling to the investors preference shares with a fair value significantly in excess of the cash purchase price. The decision to sell the preference shares at a discount was made in part in recognition of terms stemming from negotiations with the investors which began in 2004. These deemed dividends totaling $6.2 million, $43.3 million and $7.6 million in 2005, 2006 and 2007, respectively, resulted in reducing aggregate net income available to ordinary shares — basic to a loss of $0.1 million in 2005, a loss of $35.1 million in 2006 and a gain of $21.7 million in 2007. The aggregate net income available to ordinary shares — diluted was a loss of $0.1 million in 2005, a loss of $35.1 million in 2006 and a gain of $27.3 million in 2007. See “— Deemed Dividend on Issuance of Preference Shares” below and note 10 to our consolidated financial statements.

The following is a discussion of certain AppTec income statement data for the years ended December 31, 2005, 2006 and 2007 derived from AppTec’s audited financial statements included elsewhere in this prospectus. We acquired AppTec in January 2008. We will include AppTec’s operating results in our consolidated operating results beginning February 1, 2008. Going forward, we do not intend to separately break out AppTec operating results. You should not view AppTec’s historical operating results as representative of our combined future operating performance or the AppTec’s operating performance on a standalone basis.

The following table sets forth the percentage of AppTec revenues for 2005, 2006 and 2007:

AppTec’s revenues increased from $32.7 million in 2005 to $51.0 million in 2006 and $70.3 million in 2007, representing a two-year 46.7% CAGR and 37.7% year-over-year growth from 2006 to 2007. Manufacturing services growth was particularly strong.

AppTec’s laboratory services revenues increased from $19.0 million in 2005 to $25.5 million in 2006 and to $35.0 million in 2007, or 34.7% and 36.9%, respectively. This increase was primarily due to an expanded scope of services, particularly in the areas of toxicology, increased acceptance of some of our newer tissue-based services, and broader geographic coverage, particularly in Europe and Asia.

AppTec’s manufacturing services revenues increased from $13.7 million in 2005 to $25.5 million in 2006 and to $35.3 million in 2007, or 86.2% and 38.5%, respectively. This increase was primarily due to increased biotech customer acceptance of our manufacturing services, particularly cell therapy services, and broader geographic coverage, particularly in Europe.

In comparison to WuXi, AppTec has a significantly larger number of customers, with its largest customers varying from year to year. In 2005, 2006 and 2007, AppTec’s 10 largest customers collectively accounted for 42%, 35% and 38%, respectively, of AppTec’s revenues. In 2007, AppTec’s largest customer accounted for $7.3 million, or 10.4%, of AppTec’s revenues, with no other customer accounting for more than 10% of AppTec’s 2007 revenues.

The following table sets forth the percentage of AppTec’s cost of revenues for 2005, 2006 and 2007:

AppTec’s total cost of revenues increased from $26.8 million in 2005 to $38.9 million in 2006 and $51.3 million in 2007, or 45.8% and 31.7%, respectively. Total cost of revenues includes share-based compensation charges beginning in 2006 of $0.2 million and $0.1 million in 2007.

Laboratory services cost of revenues consists primarily of (i) labor, including salaries and benefits such as bonuses for employees who provide laboratory services, (ii) raw materials and (iii) overhead, including direct depreciation and associated direct expenses and salaries and benefits for employees associated with AppTec’s health, safety, environmental, quality control, quality assurance, warehouse and procurement departments, depreciation for facilities, property, plant and equipment, and utilities. The increase in laboratory services cost of revenues resulted primarily from increased volume of services provided to customers. Cost of laboratory services revenues as a percentage of laboratory services revenues remained stable at 61.4% in 2005, 61.6% in 2006 and 62.2% in 2007.

Manufacturing services cost of revenues consists primarily of (i) labor, including salaries and benefits such as bonuses for employees who provide manufacturing services, (ii) overhead, consisting primarily of facility depreciation and costs allocated to the internal support component of AppTec’s quality control and quality assurance departments and R&D, and (iii) raw materials used in manufacturing. The increase in manufacturing cost of revenues resulted from additional salaries, benefits, supplies and depreciation of equipment required to support the revenue growth. Cost of manufacturing services revenues as a percentage of manufacturing services revenues decreased from 110.2% in 2005 to 91.0% in 2006 and 83.7% in 2007. The decrease was primarily due to economies of scale and increased capacity utilization at AppTec’s Philadelphia facility.

AppTec’s gross profit increased from $5.9 million in 2005 to $12.1 million in 2006 and $19.0 million in 2007, or 103.9% and 57.1%, respectively. Overall gross margin increased from 18.2% in 2005 to 23.7% in 2006 and 27.0% in 2007. Gross margin for AppTec’s laboratory services remained relatively stable at 38.6% in 2005, 38.4% in 2006 and 37.8% in 2007. Gross margin for AppTec’s manufacturing services increased from (10.2)% in 2005 to 9.0% in 2006 and 16.3% in 2007.

The following table sets forth AppTec’s operating expenses for 2005, 2006 and 2007:

AppTec general and administrative expenses increased from $5.2 million in 2005 to $6.6 million in 2006 and $8.3 million in 2007. General and administrative expenses as a percentage of AppTec revenues declined from 16.0% in 2005 to 13.0% in 2006 and 11.8% in 2007 primarily because of improved operating leverage. Included in general and administrative expenses for 2006 and 2007 are share-based compensation charges of $65,000 and $41,000, respectively.

AppTec selling and marketing expenses increased from $3.5 million in 2005 to $4.2 million in 2006 and $5.3 million in 2007. Selling and marketing expenses as a percentage of AppTec revenues declined from 10.7% in 2005 to 8.2% in 2006 and 7.5% in 2007, primarily because net revenue growth outpaced the growth in the variable expense component of sales and marketing expense and improved leverage over fixed expense components. Included in selling and marketing expenses for 2006 and 2007 are share-based compensation charges of $44,000 and $28,000, respectively.

The following table sets forth a summary of WuXi’s consolidated results of operations by amount and as a percentage of our total net revenues, each derived from our unaudited consolidated financial statements for the three-month periods ended on the dates indicated. You should read the following table in conjunction with WuXi’s audited consolidated financial information and related notes contained elsewhere in this prospectus. WuXi prepared its unaudited consolidated financial information on the same basis as its audited consolidated financial statements. The unaudited financial information includes all adjustments, consisting only of normal and recurring adjustments, that WuXi considers necessary for a fair presentation of its financial position and operating results for the quarters presented. In this section, references to “we” and “our” are to WuXi, without taking into account AppTec, which we acquired in January 2008.

Our quarterly net revenues, gross profit and net income experienced sequential quarter-on-quarter growth in the eight quarters ended December 31, 2007, other than net revenues and gross profit in the second quarter of 2007. The increases were primarily due to an increased number of projects and an expansion in our scope of services, particularly in our laboratory services segment, and the expansion of, and increased utilization at, our manufacturing facilities.

Net revenues from our laboratory services segment were flat from the fourth quarter of 2006 year through the first quarter of 2007 due to (i) spending patterns of our large customers, who put more emphasis on the third and fourth quarter of each year, and (ii) fewer work days in the first quarter in the PRC because of traditional Chinese holidays. From the second quarter through the fourth quarter of 2007, our laboratory services revenues grew primarily due to increases in project volume and scope.

Revenues in our manufacturing services segment are prone to quarterly fluctuation, principally based on customer delivery schedules, which vary from period to period. Prior to June 2004, we had limited production capacity while we completed construction of our Jinshan manufacturing facility. During the rest of 2004 and throughout 2005, many of our customers conducted their quality assurance audits on our Jinshan facility. Once our customers satisfactorily completed their audits of our facilities, our manufacturing revenues began to increase. We expect that our manufacturing services revenues in the first quarter of 2008 will be higher than the fourth quarter of 2007 reflecting (i) two months of AppTec manufacturing services following the transaction closing and (ii) our recognition of deferred revenues in the first quarter of 2008 based on increased product shipments. See “Risk Factors — Our limited operating history and recent acquisitions may make it difficult for you to evaluate our business and future prospects,” and “— Our quarterly revenues and operating results may be difficult to predict and could fall below investor expectations, which could cause the market price of our ADSs to decline.”

Our historical quarterly growth was offset in part by a corresponding increase in our cost of revenues and operating expenses.

We prepare our financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect our reporting of, among other things, assets and liabilities, contingent assets and liabilities and net revenues and expenses. We periodically evaluate these estimates and assumptions based on available information, our historical experiences and other factors that we deem to be relevant. As our financial reporting process inherently relies on the use of estimates and assumptions, our actual results could differ from our expectations. This is especially true with accounting policies that require higher degrees of judgment than others in their application. We consider the policies discussed below to be critical to an understanding of our audited consolidated financial statements because they involve the greatest reliance on our management’s judgment.

We review our long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of its carrying amounts to the future undiscounted cash flows the assets are expected to generate. If the sum of the expected undiscounted cash flows are less than the carrying amount of the assets, we would recognize an impairment loss equal to the amount by which the carrying value of the asset exceeds its fair value.

Revenues are recognized when persuasive evidence of an arrangement exists, the sales price is fixed or determinable, delivery of the product or performance of the service has occurred and there is reasonable assurance of collection of the sales proceeds.

For laboratory services provided on a fee-for-service or project basis, we recognize revenues upon finalization of the project terms and delivery and acceptance of the final product, which is generally in the form of a technical laboratory report. The service period required to complete such contracts is generally two to three months.

For laboratory services provided under a full time equivalent basis, or FTE based contracts, the customer pays a fixed rate per FTE and we recognize revenue as the services are provided. The FTE contracts do not require acceptance by the customer or fixed deliverables from us.

We provide manufacturing services to our customers, which involve the manufacture of advanced intermediates and APIs for R&D use. Revenues from the sale of manufactured products are recognized upon

delivery and acceptance by the customer when title and risk of loss has been transferred. We record deferred revenues for payments received from the customer prior to the delivery of the products.

We follow the asset and liability method of accounting for income taxes. Under the asset and liability method, the change in the net deferred tax asset or liability is included in the computation of net income. Deferred tax assets and liabilities are measured using the enacted tax rates applicable to taxable income in the years in which the temporary differences are expected to be recovered or settled. Deferred tax assets are evaluated and, if realization is not considered to be “more-likely-than-not,” a valuation allowance is provided.

In the first quarter of 2007, we adopted the Financial Accounting Standards Board Interpretation, 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109”, or FIN 48. Based on its FIN 48 analysis documentation, We have made its assessment of the level of tax authority for each tax position (including the potential application of interest and penalties) based on the technical merits. The adoption of FIN 48 did not have material impact on our total liabilities or shareholders’ equity. We have no material uncertain tax positions as of December 31, 2007 or unrecognized tax benefits which would favorably affect the effective income tax rate in future periods

FASB Statement No. 123 (Revised), “Share-Based Payment,” or SFAS 123R, requires us to use a fair-value based method to account for share-based compensation. Accordingly, share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as expense over the service period in which the award vests. The share-based compensation expenses have been categorized as either cost of revenues or general and administrative expenses. The table below sets forth the allocation of our share-based compensation charges on our cost of revenues and operating expense line items based on the nature of work which they were assigned to perform:

Total compensation expenses for the years ended December 31, 2005, 2006 and 2007 were $3.1 million, $8.4 million and $10.7 million, respectively.

With respect to options granted prior to our initial public offering, we determined the fair value of our ordinary shares by considering a number of factors, including the result of a third-party appraisal and an equity transaction of our company, while taking into account standard valuation methods and the achievement of certain events.

As a private company, we determined the fair value of our ordinary shares in connection with our share or option grants on each grant date with the assistance of American Appraisal China Limited, an independent third party. The valuation used was based on a combination of a market approach and an income approach.

The market approach focuses on comparing our company to comparable publicly traded companies. In applying this method, valuation multiples are (i) derived from historical operating data of comparable companies, (ii) evaluated and adjusted, if necessary, based on the strengths and weaknesses of our company relative to the selected guideline companies, and (iii) applied to the appropriate operating and future projected financial data of our company to arrive at an indication of fair market value for our equity.

In the income approach, equity value is dependent on the present value of future economic benefits such as cost savings, periodic income, or revenues. Indications of equity value are developed by discounting future net cash flows to their present value at a discount rate that reflects both the current return requirements of the market and the risks inherent in the specific investment. A discount rate is the expected rate of return that an investor would theoretically need to give up by investing in our company instead of in available alternative investments that are comparable in terms of risk and other investment characteristics. In most circumstances, the discount rate is the weighted average cost of capital, which takes into account the cost of equity and the cost of debt. Our cost of equity was derived using the Capital Asset Pricing Model, which takes into account the risk-free interest rate and a required risk premium. Our required risk premium takes into account the equity risk premium, a small share premium and a country risk premium for China.

The valuation model then allocated the equity value between our ordinary shares and our preference shares. The fair value of the equity interest allocated to the preference shares was calculated using the option pricing method. The fair value of the ordinary shares was calculated as the residual, or the total equity value less the fair value of the preference shares. Under the option pricing method, we treated the preference shares as a call option on our equity value, with the exercise price based on the liquidation preference of the preference shares. Because a call option is used, the option pricing method commonly used is the Black-Scholes model, which takes into account the expected life of the option, a risk-free interest rate, dividend yield and a measure of volatility. Because we were a private company, we approximated volatility using the historical volatility of comparable publicly traded companies.

With respect to options granted after May 18, 2007, we estimated the fair value of share options granted using the Black-Scholes option pricing model, which requires the input of highly subjective assumptions, including the estimated expected life of the share options, estimated forfeitures and the price volatility of the underlying shares. The assumptions used in calculating the fair value of share options represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgement. As a result, if factors change and we use different assumptions, our share-based compensation expense could be materially different in the future. In addition, we estimate our expected forfeiture rate and recognize the expense only for those shares expected to vest. These estimations are based on past employee retention rates. We will prospectively revise our estimated forfeiture rates based on actual history. Our compensation expense may change based on changes to our actual forfeitures of these share options. Based on share options and nonvested restricted shares granted and outstanding as of December 31, 2007, and assuming no change in the estimated forfeiture rates, we expect total share-based compensation expense of $7.4 million, $3.1 million, $1.2 million and $0.1 million in 2008, 2009, 2010 and 2011, respectively, related to these options.

Our primary sources of liquidity for our China-based business has been cash generated from operating and financing activities, which have consisted of private placements of preference shares, our initial public offering and bank borrowings. As of December 31, 2007, we had approximately $213.6 million in cash and cash equivalents. We used $137.3 million of our cash and cash equivalents on the AppTec acquisition, exclusive of acquisition-related expenses of $4.7 million. Our cash and cash equivalents consist of cash on hand. We expect to require cash to fund our ongoing business needs, particularly salary and benefits and material costs and expenses. Other cash needs include primarily the working capital for our daily operations, equipment purchases for our laboratory services segment, and expenditures related to our Jinshan and Suzhou expansion projects. We believe that our cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for the foreseeable future, including the expansion of our manufacturing facilities in Jinshan and the construction of our preclinical drug safety evaluation center in Suzhou. The following table sets forth a summary of our cash flows for the periods indicated:

Net cash provided by operating activities consists primarily of our net income increased by non-cash adjustments such as share-based compensation charges and depreciation of property, plant and equipment, as well as changes in assets and liabilities such as accounts receivable, accounts payable and inventory. Net cash provided by operating activities increased by $4.0 million, $6.3 million and $49.9 million in 2005, 2006 and 2007, respectively, primarily due to increases in net income. Our accounts receivable increased by $1.5 million, $7.8 million and $5.6 million in 2005, 2006 and 2007, respectively, primarily due to business growth and timing of revenue recognition and collection of accounts receivable. Our accounts payable increased by $0.3 million, $3.2 million and $1.8 million in 2005, 2006 and 2007, respectively, primarily due to increased purchases related to business growth and the timing of our payables. Our inventory balances increased by $2.4 million, $6.0 million and $3.1 million in 2005, 2006 and 2007, respectively, due primarily to increases in finished manufacturing goods for customers, as well as raw materials and consumable supplies.

Net cash used in investing activities largely reflects our capital expenditures, which consist of purchases of property, plant and equipment made in connection with the expansion and upgrade of our laboratory and manufacturing facilities, purchases of intangible assets and purchase of land use rights. These capital expenditures were $9.1 million, $26.9 million and $41.0 million in 2005, 2006 and 2007, respectively. The increase in 2006 was primarily due to our repurchase of our primary facility at Shanghai Waigaoqiao Free Trade Zone. The increase in 2007 was primarily due to equipment purchases to support our laboratory services and construction at our Jinshan and Suzhou facilities. We expect our net cash used in investing activities over the next several years to increase significantly as we execute our expansion plan to further upgrade and expand our existing facilities, particularly our Jinshan facility manufacturing capacity expansion and construction of a preclinical drug safety evaluation center in Suzhou. See “— Capital Expenditures.”

Net cash provided by financing activities in 2007 consists primarily of net proceeds from our initial public offering of $152.9 million and from our issuance of convertible notes for $40.0 million, offset by the repayments of short-term bank borrowings of $9.9 million. Net cash used in financing activities in 2006 was primarily attributable to our repayment of debt and bank borrowings of $4.6 million and shareholder dividend payments of $6.8 million, offset by net proceeds from our issuance and sale of Series B preference shares for $18.9 million and debt and bank borrowings of $10.0 million. Net cash used in financing activities in 2005 was primarily attributable to our repayments of debt and bank borrowings of $3.6 million and shareholder dividend payments of $1.7 million, offset by net proceeds from our issuance and sale of Series A preference shares for $2.2 million and debt and bank borrowings of $5.0 million.

After our initial public offering, we repaid most of our bank loans. As of December 31, 2007, we had one bank loan with a domestic PRC bank with an outstanding loan balance of $4.1 million. The interest rate for this loan at December 31, 2007 was 6.24%.

Our convertible notes are contingently convertible, in whole or in part, into our ordinary shares at the option of the note holders at any time. The notes are convertible into our ordinary shares at a conversion price of $1.575 per ordinary share, which is equal to $12.60 per ADS. The notes contain restrictions on major corporate actions that may limit the manner that we may conduct our business, including the payment of dividends to our shareholders. For so long as at least $20.0 million is outstanding, we may not, without the prior written consent of a majority in interest of the noteholders, pay, in whole or in part, any indebtedness for borrowed money, other than all present and future bank and purchase money loans, equipment financings and equipment leasings, or declare or pay any dividends or other distributions to any equity securities, other than the declaration and payment of (i) a cash dividend in any fiscal year which, when aggregated with all other cash dividends declared during such fiscal year, does not exceed 50% of our audited consolidated net income for our most recently completed fiscal year, calculated in accordance with U.S. GAAP or (ii) any dividend for which an adjustment to the conversion ratio is made in accordance with the terms of the notes. The notes are recorded as a long-term liability without any substantial premium or discount.

We are in compliance with all financial covenants contained in our debt and bank borrowing facilities. This offering will not impact our compliance with these financial covenants.

We began negotiating with our initial group of international investors in 2004. In the course of related negotiations, we reached an understanding to issue our Series A and Series B preference shares for cash proceeds of $2.2 million and $19.2 million, respectively. These investments closed in August 2005 and June 2006, respectively. Given the strategic value of the investments, we did not seek to renegotiate the sales price of our preference shares, notwithstanding the increase in the value of our company over time. As such, we recognized the discount between the fair value of our preference shares at the time of closing, and the prices paid, respectively, as a deemed dividend on issuance of preference shares of $4.0 million in 2005 and $24.1 million in 2006. In addition, the Series A and Series B preference shares, which are convertible into one ordinary share each, were deemed to include a beneficial conversion feature on their date of issuance. The beneficial conversion feature of $2.2 million in 2005 and $19.2 million in 2006 were recorded as a deemed dividend against additional paid-in-capital and recognized immediately as the Series A and Series B preference shares were convertible upon issuance.

Concurrently with the issuance of Series C preference shares, pursuant to a share purchase agreement dated January 26, 2007, we offered to the then existing shareholders the opportunity to sell to us shares at a price equal to $0.869 per share for a maximum of 62,780,950 shares. Pursuant to this offer, we acquired 10,041,300 Series A preference shares, 1,581,100 Series B preference shares and 51,158,550 ordinary shares, each at a price of $0.869 per share, and immediately retired the shares. We believe this offer, which represents a premium over the fair value of the preference and ordinary shares, represents a benefit to the shareholders. We recognized the amount in excess of the recorded value of the preference shares as a deemed dividend of $7.6 million. We also recognized the amounts paid for ordinary shares as a purchase of treasury shares with a reduction to retained earnings for $43.4 million.

We incur capital expenditures primarily in connection with purchases of property, plant and equipment, construction of our facilities, leasehold improvements and investment in equipment, technology and operating systems. Our capital expenditures were $9.1 million, $26.9 million and $41.0 million in 2005, 2006 and 2007, respectively. Our primary capital expenditures are related to the expansion of our Jinshan facility and construction of a preclinical drug safety evaluation center in Suzhou, each of which will total up to $40 million. We estimate that our anticipated capital expenditures for these two facilities in 2008 will be $40-45 million and our total capital expenditures will be between $65-75 million.

The following table sets forth our contractual obligations as of December 31, 2007, including interest portion, on an actual and combined pro forma basis to give effect to the acquisition of AppTec as if the acquisition occurred on December 31, 2007.

We do not have any outstanding off-balance sheet guarantees, interest rate swap transactions “— Quantitative and Qualitative Disclosure About Market Risk” below. We do not engage in trading activities involving non-exchange traded contracts. In our ongoing business, we do not enter into transactions involving, or otherwise form relationships with, unconsolidated entities or financials partnerships that are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The conversion of Renminbi into foreign currencies, including U.S. dollars, has been based on rates set by the People’s Bank of China. On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar and began allowing modest appreciation of the Renminbi versus the U.S. dollar. However, the Renminbi is restricted to a rise or fall of no more than 0.5% per day versus the U.S. dollar, and the People’s Bank of China continues to intervene in the foreign exchange market to prevent significant short-term fluctuations in the Renminbi exchange rate. Nevertheless, under China’s current exchange rate regime, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. The Renminbi appreciated 13.5% versus the U.S. dollar from July 21, 2005 to December 31, 2007. There remains significant international pressure on the PRC government to adopt a substantial liberalization of its currency policy, which could result in a further and more significant appreciation in the value of the Renminbi against the U.S. dollar.

We use the U.S. dollar as our functional and reporting currency for our financial statements. All transactions in currencies other than the U.S. dollar during the year are re-measured at the exchange rates prevailing on the respective relevant dates of such transactions. Monetary assets and liabilities existing at the balance sheet date denominated in currencies other than the U.S. dollar are re-measured at the exchange rates prevailing on such date. Exchange differences are recorded in our consolidated income statement. The financial records of the our subsidiaries are maintained in local currency, the Renminbi, which is the functional currency. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of accumulated other comprehensive income in the Statement of Shareholders’ Equity (Deficit) and Comprehensive Income. Transaction gains and losses are recognized in the statements of operations in other income (expenses).

Fluctuations in exchange rates directly affect our cost of revenues and net income, and have a significant impact on fluctuations in our operating margins. For example, in 2007, 94.5% of our net revenues were generated from sales denominated in U.S. dollars, and 78.0% of our operating costs and expenses were denominated in Renminbi. Fluctuations in exchange rates also affect our balance sheet. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount that we receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of paying dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the corresponding U.S. dollar amount available to us. Considering the amount of our cash and cash equivalents as of December 31, 2007, a 1.0% change in the exchange rates between the Renminbi and the U.S. dollar would result in an increase or decrease of $0.5 million to our total cash and cash equivalents.

We periodically purchase derivative financial instruments such as foreign exchange forward contracts to hedge our exposure to U.S. dollar — Renminbi currency exchange risk. The counterparty for these contracts is generally a bank. These contracts mature between one to 12 months. We recorded a loss of $0.4 million and

gains of $2.3 million and $2.9 million on account of foreign exchange forward contracts in 2005, 2006 and 2007, respectively. Our accounting policy requires us to mark to market at the end of each reporting period and recognize the change in fair value in earnings immediately. We held foreign exchange forward contracts with an aggregate notional amount of $150 million as of December 31, 2007. As of December 31, 2007, the forward contracts had a fair value of $2.4 million.

Our exposure to interest rate risk primarily relates to the interest rates for our outstanding debt and convertible notes and the interest income generated by excess cash invested in liquid investments with original maturities of three months or less. As of December 31, 2007, our total outstanding loans amounted to $4.1 million with a weighted average rate of 6.24%. Each of our loans is subject to a variable interest rate. A 1.0% increase in each applicable interest rate would add $40,000 to our interest expense in 2008. We have not used any derivative financial instruments to manage our interest risk exposure. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates. However, our future interest income may be lower than expected due to changes in market interest rates.

Inflation in China has not materially impacted our results of operations in recent years. According to the National Bureau of Statistics of China, the change of consumer price index in China was 1.8%, 1.5% and 4.8% in 2005, 2006 and 2007, respectively.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement,” or SFAS 157, which defines fair value, establishes a framework for measuring fair value and expands disclosures about assets and liabilities measured at fair value. We will be required to adopt SFAS 157 for fiscal year beginning January 1, 2008. We are currently evaluating the impact, if any, of SFAS 157 on our financial position, results of operations and cash flows.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” or SFAS 159. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact, if any, of SFAS 159 on our financial position, results of operations and cash flows.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations,” or SFAS 141R, which replaces SFAS No. 141, “Business Combination”. The statement retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. SFAS 141R is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2008 and will apply prospectively to business combinations completed on or after that date. We are currently evaluating the impact, if any, of SFAS 141R on our financial position, results of operations and cash flows.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51,” or SFAS 160, which changes the accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not

result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS 160 is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2008 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively. We are currently evaluating the impact, if any, of SFAS 160 on our financial positions, results of operations and cash flows.

Global R&D expenditures for both pharmaceutical and biotechnology companies have grown from $47.6 billion in 2004 to $55.2 billion in 2006, according to the Pharmaceutical Research and Manufacturers of America, or PhRMA. R&D expenditures for the U.S. pharmaceutical industry alone grew from $20 billion in 1997 to $40 billion in 2005, and are expected to reach $58 billion in 2009, according to Kalorama Information. While R&D expenditures for the U.S. pharmaceutical industry are projected to grow at an annual rate of approximately 5% to 6% over the period from 2005 to 2010, according to Kalorama Information, annual growth for R&D outsourcing is expected to be approximately 15% to 18% over the same period. Furthermore, R&D outsourcing has increasingly been accepted as an alternative by both pharmaceutical and biotechnology companies over the last decade: for example, in 1997, only 37% of pharmaceutical companies outsourced R&D projects and by 2005 the percentage had grown to 70%.

In response to time and cost pressures for developing more innovative, safe and effective drugs, many large pharmaceutical and biotechnology companies are “offshoring” and/or outsourcing R&D activities to regions with significant resource and cost advantages, such as China. Pharmaceutical companies have been outsourcing drug development, clinical and manufacturing services for many years. Outsourcing companies servicing this demand have developed and become efficient and cost effective, while providing high quality service. Pharmaceutical and biotechnology companies are consistently relying on outsourcing companies, and as a result, service offerings are increasing in number and complexity as outsourcing companies broaden their offerings throughout the R&D process.

The growing use of outsourcing in drug discovery is driven by three major benefits: reduced operating costs, reduced timelines and an increased number of drug candidates moving into development. As illustrated in the table below, the percentage that pharmaceutical companies spend on R&D outsourcing has increased from 10% of total U.S. pharmaceutical industry R&D spending in 1997 to 33% in 2005, and is expected to grow to 41% by 2009. The market for outsourced drug discovery is expected to grow at 15% per year from $4.1 billion in 2005 to $7.2 billion in 2009.


	Per ADS	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to WuXi	$	$
Proceeds, before expenses, to the selling shareholders	$	$


	High		Low
2007 (from August 9, 2007)
August	$	26.25	$	18.50
September	$	31.31	$	26.18
October	$	41.28	$	28.12
November	$	38.32	$	24.57
December	$	33.95	$	27.25
2008
January	$	30.30	$	22.41
February	$	27.53	$	23.42
March	$	23.99	$	19.33
April (through April 2)	$	23.45	$	23.40


	As of December 31, 2007
	Actual			Pro Forma			Pro Forma As Adjusted
	(in millions of dollars)
Long-term debt, excluding current portion	$	4.1		$	11.0		$	11.0
Convertible notes		41.0			41.0			41.0
Shareholders’ equity (deficit):
Ordinary shares ($0.02 par value: 5,002,500,000 shares authorized and 492,226,776 shares issued and outstanding⁽¹⁾, actual, 496,347,302 shares issued and outstanding⁽¹⁾, pro forma; and 530,462,502 shares issued and outstanding⁽¹⁾, pro forma as adjusted)		9.8			9.9			10.6
Additional paid-in capital		291.0			306.1
Accumulated deficit		(57.3	)		(57.3	)		(57.3	)
Accumulated other comprehensive income		7.9			7.9			7.9

Total shareholders’ equity (deficit)	$	251.4		$	266.6		$

Total capitalization	$	296.5		$	318.6		$


		Page
Prospectus Summary		1
Risk Factors		15
Forward Looking Statements		40
Our Corporate Structure		42
Use of Proceeds		44
Price Range of our ADSs		45
Dividend Policy		46
Capitalization		47
WuXi Selected Consolidated Financial Data		48
AppTec Selected Financial Data		50
Selected Unaudited Pro Forma Condensed Combined Financial Data		51
Management’s Discussion and Analysis of Financial Condition and Results of Operations		53
Our Industry		77
Business		86
Regulation		100
Management		107
Principal and Selling Shareholders		116
Related Party Transactions		120
Description of Share Capital		124
Description of American Depositary Shares		133
Shares Eligible for Future Sale		142
Taxation		144
Underwriting		149
Notice to Canadian Residents		154
Enforcement of Civil Liabilities		155
Expenses Relating to This Offering		156
Legal Matters		157
Experts		158
Where You Can Find Additional Information		159
Index to Consolidated Financial Statements — WuXi		F-1
Index to Financial Statements — AppTec		F-47
Unaudited Pro Forma Condensed Combined Financial Information		P-1


	Year Ended December 31,
	2003			2004			2005			2006			2007
	(in millions of dollars, except share data)
WuXi Consolidated Income Statement Data:
Net revenues:
Laboratory services	$	7.8		$	16.4		$	29.4		$	59.8		$	102.4
Manufacturing services		1.9			4.5			4.4			10.1			32.8

Total		9.7			20.9			33.8			69.9			135.2

Cost of revenues:
Laboratory services		(3.7	)		(7.9	)		(12.8	)		(26.5	)		(52.4	)
Manufacturing services		*			(1.4	)		(2.7	)		(9.1	)		(19.9	)

Total		(3.7	)		(9.3	)		(15.5	)		(35.6	)		(72.3	)

Gross profit		6.0			11.6			18.3			34.3			62.9

Operating expenses:
Selling and marketing expenses		(0.7	)		(0.7	)		(1.0	)		(1.9	)		(2.4	)
General and administrative expenses		(3.5	)		(5.9	)		(8.5	)		(22.3	)		(30.3	)

Total		(4.2	)		(6.6	)		(9.5	)		(24.2	)		(32.7	)

Operating income		1.8			5.0			8.8			10.1			30.2

Other income		*			0.6			0.3			0.5			2.7
Other expenses		*			*			(0.6	)		(0.5	)		(0.3	)
Interest expense		(0.1	)		(0.6	)		(1.3	)		(1.1	)		(1.2	)
Interest income		*			*			*			0.3			4.0

Income before income taxes		1.7			5.0			7.2			9.3			35.4
Income tax expense		*			(0.7	)		(1.1	)		(0.4	)		(1.5	)

Net income⁽¹⁾	$	1.7		$	4.3		$	6.1		$	8.9		$	33.9

Basic earnings (loss) per share⁽²⁾	$	0.01		$	0.02		$	(0.00	)	$	(0.15	)	$	0.07

Diluted earnings (loss) per share⁽²⁾	$	0.01		$	0.02		$	(0.00	)	$	(0.15	)	$	0.05

Dividends declared per ordinary share	$	—		$	—		$	0.01		$	0.02		$	—

Dividends declared per preference share	$	—		$	—		$	—		$	0.00		$	—


	Three Months Ended
	March 31,					June 30,					September 30,					December 31,					March 31,					June 30,					September 30,					December 31,
	2006																				2007
	Amount			Net Revenues %		Amount			Net Revenues %		Amount			Net Revenues %		Amount			Net Revenues %		Amount			Net Revenues %		Amount			Net Revenues %		Amount			Net Revenues %		Amount			Net Revenues %
	(dollars in millions)
Net revenues, total	$	12.8		100.0	%	$	15.1		100.0	%	$	19.1		100.0	%	$	22.9		100.0	%	$	33.8		100.0	%	$	30.3		100.0	%	$	34.0		100.0	%	$	37.1		100.0	%
Laboratory services		8.9		69.4			12.4		81.9			16.8		87.8			21.7		94.9			21.7		64.1			25.2		83.1			26.7		78.5			28.8		77.8
Manufacturing services		3.9		30.6			2.7		18.1			2.3		12.2			1.2		5.1			12.1		35.9			5.1		16.9			7.3		21.5			8.3		22.2
Cost of revenues, total		(7.4	)	57.5			(8.1	)	53.8			(10.0	)	52.6			(10.0	)	43.9			(18.1	)	53.7			(15.0	)	49.5			(18.0	)	53.0			(21.2	)	57.1
Laboratory services		(3.6	)	28.0			(5.7	)	37.8			(8.0	)	41.9			(9.2	)	40.2			(10.8	)	32.2			(11.9	)	38.9			(13.8	)	40.7			(15.9	)	42.9
Manufacturing		(3.8	)	29.5			(2.4	)	16.1			(2.0	)	10.7			(0.8	)	3.7			(7.3	)	21.5			(3.1	)	10.6			(4.2	)	12.4			(5.3	)	14.2

Gross profit		5.4		42.5			7.0		46.2			9.1		47.4			12.8		56.0			15.7		46.3			15.3		50.5			16.0		47.0			15.9		42.9
Operating expenses:
Selling and marketing		(0.2	)	1.8			(0.4	)	2.7			(0.6	)	2.9			(0.6	)	2.8			(0.7	)	2.2			(0.5	)	1.6			(0.5	)	1.4			(0.7	)	1.8
General and administrative		(3.7	)	29.0			(5.1	)	33.5			(5.6	)	29.2			(8.0	)	34.8			(9.1	)	26.9			(7.3	)	24.1			(8.0	)	23.6			(5.9	)	15.9

Total operating expenses		(3.9	)	30.8			(5.5	)	36.2			(6.2	)	32.1			(8.6	)	37.6			(9.8	)	29.1			(7.8	)	25.7			(8.5	)	25.0			(6.6	)	17.7
Other income		*		0.2			0.1		0.7			0.3		1.3			0.1		0.6			0.8		2.5			0.2		0.8			0.1		0.3			1.6		4.3
Other expenses		*		0.3			(0.1	)	0.8			(0.1	)	0.6			(0.2	)	0.9			*		**			(0.2	)	0.8			(0.1	)	0.3			*		**
Interest expense		(0.4	)	3.0			(0.3	)	2.0			(0.2	)	1.1			(0.2	)	0.9			(0.7	)	2.0			(0.5	)	1.7			*		**			*		**
Interest income		*		0.1			*		0.3			*		0.1			0.1		0.5			*		0.1			0.4		1.3			1.4		4.0			2.2		5.8
Income tax expense		(0.3	)	2.2			*		0.1			*		0.2			(0.1	)	0.3			(0.1	)	0.2			(0.3	)	0.8			(0.2	)	0.5			(0.9	)	2.7

Net income	$	0.8		6.5	%	$	1.2		8.1	%	$	2.9		14.8	%	$	4.0		17.3	%	$	6.0		17.7	%	$	7.1		23.6	%	$	8.6		25.4	%	$	12.2		32.7	%


	Total		2008		2009		2010		2011		2012 and thereafter
	(in millions of dollars)
Operating lease obligations	$	9.2	$	1.7	$	1.7	$	1.5	$	2.4	$	1.9
Loan obligations		4.6		0.3		4.3		—		—		—
Capital commitments		12.1		10.4		1.7		—		—		—
Convertible notes⁽¹⁾		41.0		—		—		—		—		41.0

Total	$	66.9	$	12.4	$	7.7	$	1.5	$	2.4	$	42.9


	U.S. Pharmaceutical Industry R&D Spending (dollars in billions)
Year	Internal Spending		Total Outsourcing		Outsourcing — Discovery Services		Outsourcing — Clinical Services		Total Spending		% Outsourced
1997	$	18	$	2	$	0	$	2	$	20	10	%
2001		22		7		2		5		29	24
2005		27		13


Credit Suisse		JPMorgan