5 Drug Stocks With Upside Potential of 25%

4. WuXi PharmaTech is a China-based pharmaceutical, biotechnology and medical device research and development outsourcing company, with operations in China and the United States. The company has a broad portfolio of laboratory and manufacturing services.

Total revenue for the third quarter grew 20% year over year. Revenue from laboratory services grew 19% during the same period, benefiting from stronger demand for drug discovery and development services. The manufacturing services segment saw a revenue increase of 23%, aided by higher demand for pharmaceutical advanced intermediates and active ingredients.

In a press statement, Ge Li, WuXi chairman and CEO, commented on the expansion initiatives: "We made a decision to establish a new laboratory in Wuhan that will house laboratory chemistry operations to leverage lower costs in central China. We are also planning to build manufacturing facility in the city of WuXi to produce biological products for preclinical and clinical trials. We expect these expansion initiatives to drive continued revenue growth in future years."

Wuxi increased its full-year 2010 revenue guidance to $330 million to $333 million from the earlier guidance of $320 million to $325 million. Management expects operating income growth of 28% to 32% for 2010, up from an earlier forecast of 15% to 20%.

The stock is trading at 15.9 times its estimated 2011 earnings.

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