2023 interim results announcement. Before we begin, please note the following disclaimer. Members of the media and the press are not authorized to be on this call. If you are from the media or the press, please disconnect from this call now. Please note that this call is being recorded. By attending this event, you agree to all these restrictions. To avoid disruption, everyone is muted by default during Q&A. If you have a question, please use the Raise Hand button. For those on the phone, please press star nine on your keypad to raise and lower the hand. If you're asking a question, please wait to be called, and we'll unmute your line accordingly. I'll now pass the line to your host today, Christopher from Jefferies. Please go ahead. Thank you.
Thank you. Good morning, good afternoon, and good evening to our beloved investors online. This is Christopher Lui, Head of Asian Healthcare here at Jefferies. It's our honor to host WuXi Biologics' first half 2023 earnings call. We have with us Dr. Chris Chen, CEO, Dr. Ming Tu, Mr. Min Tu, our CFO, and Ms. Eileen Wang, Head of IR. Let me now pass the floor to Dr. Chris Chen. Dr. Chen, please.
Thank you, Christopher. I think it's great to good morning, good afternoon, good evening to the global investors. I think it's great for me to share our first half of 2023 results with you. So since most of you read the earnings already, I want to use the same slide that I keep using to summarize the first half. From the number of projects perspective, you know, the first half of 2022, we have 534 projects. It grows more than 16% to 641. So the funnel continue to get bigger and bigger. What's very exciting for us, actually, for the first half, is our non-COVID revenue continued a very high growth rate of CAGR of more than 60% compared to the past three years.
The first half, we added 46 projects. This is slightly smaller than the previous two years, but it's not unexpected because as you see, the global funding challenges, especially in China. What's really exciting for the company is actually, we actually added a lot more commercial projects, right? So the number of commercial projects grew from 14 this time last year to 22 right now and this. As you know, commercial project drive near-term revenue, and it's also very significant revenue, and that's really the basis of a strong sustainable growth for the company. Our backlog continue to grow from last year's CNY 18.5 billion to CNY 20.1 billion, and we added more capacity.
Last year, we added more than 100,000 in capacity, so now our total capacity is actually 262,000 liter. Because of we are implementing WBS, lean, our lean manufacturing system, our, efficient, system, we are not, we don't expect to add significant headcount this year, so our total number of employee remain flat. We still have the largest number of, of development scientists that enable us to, execute our CRDMO model. So on the left side is operational metrics, on the right side is financials. So our revenue grow, more than 17%, and our, adjusted net profit, grows slightly. We are still able to maintain very healthy, a world-class, gross profit margin, a net profit margin and also EBITDA margin.
I think this is continuing, WuXi Biologics continues to deliver on, you know, to really very strong financial results despite all the challenges globally. So as I have already shared with you on the financial results, I think that our revenue grow 17.8%. Our non-COVID, if you exclude COVID, our revenue grow almost 60%. Our gross profit still grow modestly. Our gross profit margin dropped from 47% to 41.9%, about a 5 basis point drop. This is not unexpected at all. So as we are investing for the future, so we bring online a German facility, two facilities in Germany, two facilities in Ireland and one facility in the U.S., and a manufacturing site near Beijing called Hebei.
So those four new sites actually will probably contribute a significant loss, at least 600 basis points, impact on the margin. So because of WBS improvement, we're able to offset some of those, so you only see about 500 basis point change in the gross profit margin. Again, we're investing for the future. This is totally expected, and we'll, you know, this year, we'll probably see the bottom of our gross profit margin. Next year, as the global site, as Germany, Ireland, U.S. and also our Hebei site ramp up production, our margin will be higher and higher. So we see about 100, 150 basis points improvement on our gross profit in the next couple of years, each year, each year.
So the first reason for the gross profit drop is actually the investment for the future, you know, launching 4 new facilities globally. The second one is, you know, slightly lower number of new projects. That means our R&D utilization is also slightly lower. So we only added 46 projects versus about 60 projects last year. We have the capacity to handle 60 projects. And lastly, you know, during the COVID years, we actually, you know, were maxed out on all manufacturing capacity. We have some overdue facility maintenance, which require us to shut down the facility for 1 month or 2 months, and you know, as you shut down, you actually lose the revenue, so that's actually have impact on gross profit as well.
I think that's three factors, you know, investment for the future, bringing online globally four new facilities, four new sites, and, you know, slightly lower number of projects coming in and also, catch-up maintenance for our global manufacturing facility. That's the main reason for the gross profit drop. So as a result, our adjusted net profit and our adjusted EBITDA margin, net profit margin, also drop accordingly. So Ming will have a lot more details, as he goes through his section as well. If you look at the key financials, I think we're still very, very healthy. We have operating cash flow of about CNY 2.7 billion. We, our total liability to equity ratio is a very healthy 33%.
In the first half of this year, we are spending about CNY 22.4 billion RMB. As I mentioned, we are as a company, we are going through WBS. We are also working on spending our CapEx more wisely. So this year we are reducing our CapEx slightly, not because we are delaying the projects per se, but we are actually spending more wisely, and we are saving money on the capital side. So we are reducing our CapEx a little bit to CNY 5 billion this year, and we're maintaining our CapEx guidance of CNY 5-6 billion next year. As a, in terms of loan, we're very healthy, and in terms of cash flow, we continue to maintain a free cash flow positive for the first half of this year and also for 2023.
So if you look at the segment we are operating in, it's actually very interesting. So due to the global biotech funding slowdown, so we do see a slightly lower growth rate of 6.6% for early phase program, for DNA to IND. You know, this typically this is 30 or 40% in the past. Now we're only seeing 6.6%. This clearly is not unexpected. This is you know, this is reflect the the global funding challenges, but very excitingly, is actually our phase one to phase two program movement is actually very strong. So we see that growth, that revenue growth, is actually more than 51%. It's actually the fastest segment. And again, our phase three and commercial, you see, if you look at the overall growth, it's modest.
It's more than, more than 14%. But if you take out COVID, that grows more than 130%. So this in line with what I mentioned earlier, we are adding more and more commercial products, and most of them are also non-COVID. So overall growth is only 17.8%, but if you, if you exclude COVID, it's 60%. But if you look at the different segment, you know, phase three and commercial grow more than 130%, and phase one to phase two grow 50%. Only the DNA to IND, basically enter into phase one, only grow modestly at 6.6%. We hope biotech funding will recover, and then that 6.6% will go back to the normal 20%-30%.
So this slide showcases a similar scenario. I just want to reemphasize, we actually, the company, fundamental business is incredibly strong. So if you look at three-year CAGR of non-COVID revenue, we're actually talking about 60%, CAGR, for three years. So I think WuXi excels in our business operation because we have a very exciting business model, called our CRDMO. The R will lead to D, D will lead to M, as in the stickiness part of our business. So the R part actually shines this year because we are signing, we are receiving more and more milestone payments and royalties from our portfolio. I think we highlight two deals here. One, the first deal is working with Arcus to develop, to develop an anti-CD3, anti-CD39 antibody.
Then the second deal, the mega, mega deal with GSK on four bispecifics using WuXi's platform. You know, Those two can basically highlight our WuXi's platform can help global company, whether it's a biotech or it's a large pharma, on developing novel and first-in-class and best-in-class drugs. This R will actually, you know, generate, we help clients generate the candidate, and then hopefully they will develop with us and manufacture with us. I think this is a very exciting part of our business model. Currently, we have more than 60 programs like this. Essentially, where we are, we hope the safety program will be developed at WuXi and eventually will commercialize at WuXi if they are successful.
So for some of the programs, the royalty, royalty income come from those programs actually is more than the profit, more than the profit from 100% of the CMO manufacturer in terms of profit. I think that's the beauty of our business model. So not only we have, we have R will lead to D, D will lead to M, so we'll, we have a full stream of revenue, but also our profit actually improve as the program go into commercial, go into the clinic and go into commercial. So this is a very similar funnel you guys seen, as in on the left side is within the first half, we added 46 projects. If you probably recall that during Investor Day, we highlighted that, during January to May, we are only adding 25 projects. So month of June alone added 21 projects.
We do see a recovery of biotech funding in U.S. and in Europe, and so we added 46 projects. We have not seen WuXi lost any project to competitor. We think we have seen us maintaining a similar market share. So the reason we are only getting 46 projects versus about 60 in the past two years is probably because for one, is that there are a lot fewer COVID projects, number one. And number two, the pie, because of biotech funding issue, the pie is getting smaller and smaller. So we are still maintaining similar market share, but the pie is smaller. That's why we are only expecting 46 projects. But this year, for us, the 46 projects include 11, 11 winner molecule projects. And among the 11 winner molecule project, 4 are phase three, 2 are commercial.
So essentially, the 46 projects we signed the first half of this year, if you add up the value this 46 program bring, it's actually more than the programs will bring, more than this, more than the revenue or more than the contract number from the previous year's 60+ project number. So although the total number of projects dropped, our total contract value actually increased because higher proportion are phase three and commercial projects. So we are very excited. Again, I'm very excited that we are now have 22 commercial projects, and if you, if you think about it, we, you know, back in 2019... About 2017, we have 1. Back in 2019, we have 2. So now we have, you know, just about 5 years later, now we're 22.... a commercial project. This form a basis of our strong growth.
That's give us confidence that we can deliver twice the industry growth, because we have so many new projects still coming in at the same pace, a similar pace, and the market share remains the same. Although the pie is smaller, and the number of commercial projects still explode in the next couple of years. And we now have 44 programs in phase III. Our total number of projects is very healthy as well. So among the 6 programs we signed for phase III and commercial, actually 4 of them already carry a contract value of more than $1 billion. Again, this give us the confidence that the CMO or manufacturing will drive our near-term growth in a very heavier proportion. Basically, it will be making the most significant contribution for revenue growth in the next 5 years.
If you look at the backlog number, it's very healthy, and due to the biotech funding challenges and also due to some of the program terminations, you see our milestone backlog dropped slightly by $500 million, but our service backlog remained very stable. This is actually not easy. Every year, we consume a big chunk of backlog, right? So if our revenue this year is $3 billion, by end of this year, if we don't sign a $3 billion contract, then our backlog will drop. We maintain a very steady backlog. That basically means we are able to sign the contract at the same pace we are consuming the backlog into revenue. If you look at the 3-year backlog, it's actually even more exciting.
If you take out COVID, we actually—our three-year backlog actually grow by 20%. By about 20%. So the backlog still remain very healthy, and they give us both a near term and also a medium term confidence on the revenue side. If you look at our portfolio, you see our overall number of projects grow by 16%, but if you look at the ADC, almost grows three times as fast as the overall portfolio, and the bispecific, almost one and a half times. The vaccines, almost twice. So this again shows that on complex modality, WuXi Biologics definitely have an edge comparing to our global competitors. You know, companies are trusting us to give us ADC projects, give us bispecific projects, give us vaccine projects.
So this, this program is very, portfolio is very healthy. And again, that give us the higher average contract value as the program goes through. So every bispecific, every ADC, has a carries a contract value more higher than the traditional antibody, and that give us a higher ASP as we go. And then if you look at a, a weighted average of our ASP, it's getting higher and higher. That's what we continue to see every year. Essentially, our weighted average of our ASP is getting higher and higher because we're working with more complex bispecific program, more complex ADC programs, and also more commercial programs. So we started the Win the Molecule strategy five years ago.
You know, at that time, we believed that, you know, WuXi, our Follow the Molecule strategy was perfect, but, you know, we have to be patient. We have to wait for the program going through, going through phase I, phase II, and phase III. Back in 2018, we said we figured we can actually help, you know, large pharma convert the--we can if large pharma have the need, also the program, you know, from their own internal portfolio, we can take over, and that's what we call Win the Molecule. Or if our client are not happy with the current CMO, they can switch the program to WuXi. That's what we call Win the Molecule. It does not contradict with Follow the Molecule at all. It's actually, it actually complement.
It basically means Follow the Molecule is very steep, but if you don't do well, company will switch to a better player, and oftentimes, WuXi Biologics is the better player. That's why we have, over the past five years, we actually won 62 projects. 62 projects. Among them, 26 are phase III and commercial projects. And that's very exciting. Essentially, if you look at our portfolio of phase III and commercial program, almost half of them are being patient, waiting for the program, going from DNA to IND, to phase I, to phase II, to phase III. And the other half actually come from large pharma outsourcing directly to WuXi Biologics, or our competitor didn't do well, and then we actually then—our client actually switched the program from a global competitor to WuXi Biologics.
I think so. This Follow the Molecule continued to complement and give us a near-term, more growth driver. Just want to give you a flavor of a couple of programs on Follow the Molecule side. You know, the first program is a European large pharma, and they have a blockbuster program. They currently manufacture in-house, and they want to transfer to our Ireland site. And the second one is again, it's a blockbuster drug, with probably more than a billion dollar sales. And now they are manufacturing in-house. They'll also be manufacturing in our Ireland site. And the third one is another, like, US large pharma. It's actually a multi-billion-dollar bispecific program. We want to manufacture it in China and in Ireland. And the fourth one is a Korean biotech.
They have a program that's going to be globally approved. We're actually manufacturing in China for them right now, and we'll most likely double that site, and we'll build another site in Germany or Ireland to help them with the global supply as well. So this just give you a flavor of the Win the Molecule success. And as I mentioned earlier, you know, the four of those six programs actually carry a contract value of more than $1 billion. Typical contract term is about five years. That basically means once all those four programs get into a steady state, we're actually getting close to about $200 million a year from those Win the Molecule projects alone. And that showcase really WuXi Biologics being a premier player in the global CMO space.
As most of our investors are very familiar with Amicus already, this is a perfect example of follow the molecule. We started the program with them about 10 years ago. Our average revenue per year was maybe $100,000, $200,000, $1 million. And then a couple of years ago, getting to $10 million, $20 million, $30 million, and nowadays getting close to $50 million, and hopefully eventually, in the next couple of years, we're getting $100 million or even more than $100 million per year. This program is already approved in U.K., approved in Europe. I think the approved, hopefully approved in U.S. any day. U.S. FDA just completed a GMP inspection of our site in May, and everything was successfully addressed.
I think this again showcases our success of our Follow the Molecule strategy, showcases our high-quality system, and showcases our executing capabilities. With this program alone, most likely we'll have 5 factories making the drug for them. 2 in China, 2 in Ireland, 1 in Germany. And this, again, this is a perfect example of how we help a biotech company, you know, getting the drug approved through the, you know, through the life cycle, and we'll have manufacture for them for the next 20-30 years. So as I mentioned a couple of times already, in the next couple of years, the CMO will drive a very steady growth for WuXi Biologics. If you look at my projection for CMO projects, the number of CMO projects back in 2020, I predict by 2025 will be 21 projects.
We actually achieved them more than two years earlier, so now we already have 22 projects. Then, you know, last year, we raised this number. This year, most likely end of this year, we'll raise the number again. Again, this shows the success of Follow the Molecule strategy, success of Win the Molecule strategy, and combine these two, you know, commercial manufacturing will be a key part of our growth. And that's why you see in this year's earnings, this first half earnings result, you already see this part of revenue grow more than 130% if you take out COVID. So as a result of our global building our global network, now we really have a robust and diverse network of global nodes that can help companies do R, D, and M.
We have 3 R now, 8 D, and 9 M. You know, those global sites give us enough diversity that, you know, to meet the needs of every client, whether they're Europe, whether they're U.S., or whether in China. So I want to give you the highlight of our global sites. Essentially, all those sites actually are built during COVID. This really, again, showcase our strong executing capabilities. So far, all the global site in Germany, in Ireland, U.S., are hiring our own track or developing our own track. Let me explain to you one by one. Ireland, we put the largest amount of investment in Ireland. So our facility was GMP released late last year, and couple of months later, we received GMP certificate from Ireland health authorities.
Now, we already signed more than 7 CMO contracts, and the facility is almost fully booked. So we just finished the 3 engineering run with a 100% success rate, and we are kicking off 1, the first PBQ, with another 5 next year. So Ireland will have 6 PPQ in about 18 months timeframe. And if you add, we have another 1 or 2 in Germany. So basically, our global site will actually do 7-8 PBQ per year, at least next year. We'll just give you the context. Our China site did 12 last year, and that's how fast we can ramp up our global site. So the Wuxi speed is actually evident in how we bring the site online and how we sign the projects to those global sites. Our Germany site, we're getting ready for our first PBQ.
The facility is not fully released yet. We are getting the facility finally ready for MFG 19, and we're getting ready for our first PBQ. In DP 7, we finished our first PBQ, we're getting ready for the second one. In the U.S., where is our clinical site, we have already 300 people. So far, we have been manufacturing at a 100% success rate and, you know, next year, hopefully, we'll get into a modest transition rate. So I mentioned earlier that we bring online Ireland, Germany, U.S., and Beijing, a facility near Beijing, to make sure that we can meet the global need. And, you know, this is really the investment for the future. This year, all those sites are losing money. Next year, we'll be losing a lot less money, and they will be contributing significant revenue.
And then two years from now, they will contribute both on top line and bottom line. And this give us a sustainable high growth that, if we have promised investors. We are still building a facility in Worcester, Massachusetts, and now we are doubling the capacity in that site. Now, it's actually 24,000 liter. The facility will be ready by end of 2025. We are planning a $1.4 billion investment in Singapore, and that's everything on track. So I mentioned Ireland. I want to use Ireland as an example to showcase how WuXi speed, how WuXi quality are manufactured in Ireland. So the IDA told us, IDA is the Irish government agency who attract business to Ireland.
So they told us, the site we built in Ireland is actually the fastest they have seen from construction to GMP operation. Actually, we did that during COVID. So at peak time, we have 1,500 Irish workers or global workers, you know, working on our site to make sure the facility deliver on time. So not only we deliver the facility at the fastest speed, but it's also a premier quality. Our facility received ISPE Facility of the Year award. As for those of you who are not professional, ISPE basically is a global head of engineers from all the global premier organization, companies like Merck, Pfizer, Lilly. They get together every year saying, you know, "Whose facility is the best built?" You know, the facility. We actually won the Facility of the Year award for our Ireland facility.
Interestingly, back in 2014, our Wuxi facility also won this award, almost 8 years ago now. So we have, you know, during COVID, we spent the shortest time to build a facility, and then we built a premier facility as well, a premier quality. So as I mentioned earlier, we just finished the test run or a year run of the project. Our facility is almost fully booked. So people have a huge leap of faith in Wuxi to deliver on this site. They know our track record in China. They know we can deliver in China. Now they have a leap of faith, we can actually deliver in Ireland. Again, because we haven't run a GMP run yet, our facility is almost fully booked.
Again, that showcase really global client trust us and really showcase we are a global premier CMO now. The other number also support this. When we designed the facility, we thought 70% of the project will be a dual site from China. We said we will be making some in China, when we make transfer into Ireland, give them a second site. So in reality, only 30% is like that. 70% of the program actually comes directly from our clients or from competitors. What's more exciting actually for us, actually, among the 70% project transferred to Wuxi, actually, a lot of them are already blockbuster drugs. One of the program already achieved $3 billion sales. Actually, two of the program already achieved $3 billion sales. They are transferring to our Ireland site.
And so we are initially as a secondary site, and most likely in the next couple of years, we may be a primary site for manufacturing those drugs. Again, if you look at diversity of our clients, including U.S. companies, Swiss companies, and Japanese companies as well. So large pharma and biotech. So again, Ireland is actually a very good story. If we are successful in Ireland, then we can translate that success to Germany and then to U.S. and to Singapore. So our competitive strengths, you know, is actually getting stronger and stronger. So we can replicate our success from China to Ireland, from Ireland to Germany, Germany to U.S., U.S. to Singapore. Then that give us, again, you know, a sustainable high growth, that we promise to investors.
So I think we have always been sharing with you that US has always been our largest market, but this year, very, very exciting in Europe, now actually become our second largest market. So if you look at non-COVID revenue, US, we see a 40% growth. Europe, you see a whopping 238% growth. Europe now is actually almost one third of revenue, surpassing China. China, we see a modest 22% growth, but it's also a 20% of revenue. And then the other part of Asia, mostly Japan and Korea, is the rest of the world. So you see a very diversified engines. So, you know, if one area maybe suffer a little bit, other area can pick up. So this year, the star is definitely Europe, and you see it.
You know, as you know, Europe is actually the birthplace of, you know, the stronghold of the global CDMOs. We actually have a, you know, more than 20% growth in Europe. So those growth in Europe actually come from all types, come from R, the R deal with GSK, the D deal with many large pharma and biotech, the M deal with the large pharma I mentioned earlier. So it's, so the 238% growth come from R, D, and M, come from large pharma and small biotech, and come from U.S., come from Switzerland, U.K., Germany, and every other country in Europe. So North America continue to be our stronghold.
This year, among the 46 projects we signed, 60% come from North America, about 20% from Europe, and then China and Japan and China and Asia, the remaining 20%. So this again, showcase that we, you know, we are a very strong global player. We have very strong leadership position in U.S., now very strong leadership position in Europe, continue to have dominant position in China. You know, despite the Chinese market, the market challenges, despite the funding challenge in China, we still maintain a 20% growth of in China, or revenue in China. In China now, actually, the companies that work with us are the most premier companies. And then we did a survey over the past 18 months for all the global partnership deals with Chinese company.
For 80% of them, WuXi Biologics is the CMC supplier. Essentially, we are behind 80% of the deals that the Chinese company are able to out-license to global companies. So you have seen this slide over and over again. This, you know, I just pile numbers so that you can actually recognize how well we execute, you know, in our R&D track record, our manufacturing track record. You know, despite biotech funding slowdown, we actually enabled 55 INDs first half of the year. You know, it just give you the context, most large pharma is 5-10. We five to ten for the full year, basically 2-5 first for six months. We actually enabled 55 in the first half, first six months. Over the years, we already supported more than 440 programs into the clinic.
You know, we published 23 papers in the first half alone. Total publication exceeded more than 100. If you look at our manufacturing excellence, we finished the four PBQ runs, 100% success rate. You know, manufacturing overall, 98% success rate, 2,500 batches, right? So I mentioned earlier that in our China side, probably have about overall last year, 12 PBQs. Now, Europe side, next year, we'll do 7-8. And in a couple of years, we are connecting to the same number of PBQ runs in Europe and compared to China. And that shows the success of our global expansion, show really a replicate our success of our manufacturing China into manufacturing excellence in Europe, especially in Germany and in Ireland. Okay?
So we use disposable technology, but we can make very large scale manufacturing. So first half alone, we made 68 batches at 12,000 unit scale, 100% success rate. This is the beauty about disposable technology. If we have a standard scale reactor, the best industry record is probably 95%, 90%, 98%. People barely can get a hundred percent success, but with disposable bioreactor, we can do it. So I mentioned I had it during our portfolio, the presentation. I had it that the bispecific, ADC, and vaccine are the strongest growth, right? We actually have our own bispecific platform called WuXiBody. You know, over the past years, now it's become really globally accepted as one of the premier bispecific platform. Now we have 25 clients, 42 programs. We have four programs in phase one.
We have some programs already seen very exciting clinical data. We're seeing very good PR, CRs for patients using our platform. We are spinning off XDC as a separate company because we believe ADC has enjoyed very fast growth. And our XDC actually now work on 110 ADC programs. So this is the largest portfolio of ADC. In terms of number of programs, XDC has the number one number of programs. Revenue, number two, but number of programs, number one already. So I think that, you know, XDC really enjoyed the premier quality system, premier execution from both WuXi Biologics and WuXi AppTec. Now, they are able to we are able to build world-class ADC platform, and that support global clients. So I think this go back to our strategy, has always been perfect.
You know, when the global company need ADC, we actually have a XDC. When the global company need biosimilar, we have bispecific. So our timing has always been perfect in that sense. I mentioned vaccines already. I mentioned vaccines is the fastest growing segment. So now we are working with 21 companies on 46-48 vaccines. One of the leading program is getting hopefully getting the product approval in the next couple of years, which enjoy $150 million revenue, probably per year in peak time. We hope other program will be as successful so that WuXi Vaccines can enjoy very healthy revenue as well. The reason we are so successful with our CMO business is actually underlying principle is our quality. So back in 2017, we have one CMO project, we have one FDA inspection.
So now, totally, we have 30 FDA inspections from FDA, from EMA, from China, from other agencies. Now, we also have 22 projects. So this, you know, quality, the commercial quality is our competitive advantage in become a barrier for other entry, especially China. So far, we are the only CMO in China that received FDA and EMA approval. No other CMO in China has received—no other CMO in China has received either FDA or EMA approval on their commercial program. This become a huge barrier. That's why I said earlier, 80% of the program, Chinese company partner with global, WuXi is behind them, because our quality. As I mentioned earlier, we are implementing a lean manufacturing, a lean development approach, as the company is going for operational excellence.
We don't expect to see a more and more significant headcount growth. So you only see a modest, about 10% headcount growth this year. And our attrition rates remain very incredibly low, as in this year. So we are able to attract, develop, and retain all the key talent, which is crucial for our success. Now we are able to transfer a lot of our SMEs, subject matter expert, to Ireland, to Germany, to help the global community, to help us replicate the success from China. So most of you are already aware that we propose to spin off XDC as a separate entity, to really enjoy, to ask the team to focus on, to have a dedicated team focus on XDC and drive the business as fast as they can.
I think this is very obvious, but the key part here is that, you know, WuXi Biologics will still benefit from all the XDC growth, because we are the controlling shareholder. We are able to, you know, we are able to basically, consolidate on the books. So all the top line get consolidated into WuXi Biologics's top line, and we are only sharing, you know, the profit with the minority interest holders in there. So I think we believe WuXi XDC's proposed spin-off listing is beneficial to both XDC and WuXi Biologics. So that's a very high-level update to the global community about WuXi Biologics in the first six months. I think I mentioned WBS many, many times. I want to use this five minutes to talk about WBS.
What's our operational culture and what's our operational excellence? WBS refers to WuXi Business System. Over the past 10 years, we have very fast growth, but our growth, every time we want to improve, is also almost sporadic. It's more grassroots. So I think to about 2 years ago, we said, we really need to have a very lean system, holistic approach, to look at how we operate. So that's why we learn from Toyota, we learn from General Electric, we learn from Danaher, to say, "What's the best way to go for a lean operation and management system?" We want to do everything cheaper, faster and better.... We want to have tools and methodology. We want to build a mindset, we build a system, and eventually we want to build a lean culture.
That's something we started two years ago. I think the timing is also could be, couldn't be better, right? Two years ago, when we started this, we didn't anticipate there was a downturn. We didn't anticipate, you know, that, you know, we'll have challenges on the biotech funding side. With this improvement, we are able to improve both our top line and the bottom line. Just want to share with you the highlight we have the first half of this year. You know, we are on target to achieve a full year saving. You know, we actually worked on more than 350 projects this year already. Just give you a couple of examples. On the inventory side, was working with WBS.
We actually saved about CNY 630 million of inventory. We are able to save 340,000 hours of labor by doing Kaizen. Kaizen means improvement, improvement projects. So we're looking at every aspect of the saving. Look at from the quality improvement side, from material saving, from labor efficiency, and eventually also from ESG. I think our goal is eventually, you know, WuXi Business System is for every employee at WuXi Biologics. It's not a campaign, it's not a movement, it's actually, it's actually, you know, a gene. It's how we work, it's how we drive business success. I think, you know, by then, you know, we hope we be able to achieve a lean culture every time we go into a new site.
ESG has always been important part of our business strategy, so I want to also highlight ESG in this call. So just a couple of highlights. Again, as a company, 53% of employees are women, 47% of managerial position are women, and even at the executive level, 30% are female. So I think we are, you know, in China, we said women are half of the world, and at WuXi Biologics, we are seeing that. Every time we build a new facility, we also ask our engineering team, saying: "How can you build it better? How can you build it greener?" Every new facility is greener than the previous one.
So we're actually very happy to report to the global community, we may have the greenest biologic facility, exactly our facility in Ireland. So now with the facility in Ireland, we are using 100% renewable energy, in terms of electricity. We are actually using disposable manufacturing, so we use a lot of water, we use a lot of detergents. So our Irish manufacturing facility, it could be the greenest biologic manufacturing facility globally. This year, we also committed to a Science Based Targets initiative. We look essentially looking at our carbon emission, and make a commitment to reduce that. So we are part of global community to help fight the climate change. On the emission intensity alone, last year, we actually achieved 21% year-over-year reduction.
If you are interested in our ESG highlight, we actually have a report. So we're looking at how we enhance governance, how we enable our clients and community, how we empower people, how we green our business. I think that, you know, we have a lot more details in our ESG report. So I want, I want to highlight only two points. Again, one, the first one is SBTi initiative. I think this is a great progress. We really wanted to reduce our carbon target by 50% by 2030, and net zero by 2050. And again, last year alone, we see our emission reduced by 21%. So every facility we build need to be greener, you know, as we progress. So our greenest facility in China is our facility near Hebei, near Beijing. It's called MFG8.
If you visit the facility, as you go into the tour, you can actually see every batch we make, what's the carbon emission, how much electricity we consume, how much, how much water we consume, how much discharge we have into the environment. So we have, we have very green mindset in that facility. Again, Ireland site is actually the, you know, the greenest biologic manufacturing facility we, we have ever built. So our ESG effort also well recognized by our, by our global community, so we've received all those recognition from our global peers. So with that, I'll hand over to our CFO, Min, who's going to talk about the financial in details.
Thank you, Chris. So now I'm going to talk about our financial performance. This slide here gives us highlights of our key financial metrics in the first half of 2023. First, revenue. Our revenue continued to grow at such a big scale. As you can see, that, in the first half of 2023, our revenue reached roughly about CNY 8.5 billion, a 17.8% increase over the same period last year, continuing our journey of rapid growth over the past nine years. Although compared to our prior year's CAGR, 17.8 might be a little bit pale, but compared to our peers globally, it certainly stood out as a leader. And the scale of the growth, CNY 1.3 billion, was extraordinary under such a tough microenvironment.
Our revenue growth in this reporting period was primarily driven by the successful execution of follow and win the molecule strategies, with more customers, more projects, and more revenue per project, as more and more projects are advancing to the later stages. Now, the late phase and commercial manufacturing revenue represents about 42% of our total portfolio. The second growth driver is the 52% increase in our early phase revenue, a continuation of the growth from pre-IND phase, enabled by the R&D of our unique CRDMO model. Due to the biotech funding constraint, especially in China, our pre-IND revenue only increased about 6.6%. However, with signs of recovery in the U.S. and Europe, our pre-IND revenue is expected to regain its momentum in the near future....
Although COVID revenue diminished to only about CNY 500 million in the first half, the 60% revenue surge from the non-COVID sector more than offset the decreases from COVID. Also, the newer exciting growth platforms, such as ADC bispecific, contributed significantly to our revenue increases in the first half. At the same time, the growth of our licensing income, generated from, Group's, various leading-edge technologies, added over $16 million of the milestone revenue to our top line. Lastly, our capacity expansion and the associated utilization are the key enablers for us to achieve the solid growth on our top line. Moving over to gross profit, which increased about CNY 115 million, approximately CNY 3.6 billion during the reporting period. The increase in the gross profit was primarily attributed to the robust revenue increase.
The profitability from the late phase and commercial manufacturing continued to meet and exceed our expectations. However, due to the ramp-up impact from new facilities in Ireland, U.S., Germany, and the Hebei Province in China, we have seen about 6 points of the margin compression. Also, the lower number of the new projects due to biotech funding slowdown in China and the required maintenance shutdown of the existing facilities also created some challenges for us. But these challenges were partially offset by the 100 basis points of efficiency improvement from the WBS implementation. Excluding share-based compensation, or our adjusted gross profit margin is standing at 47%, one of the highest in the industry. One thing I would like to mention here is that the first half of 2022 is a special period with the COVID lockdown in Shanghai.
We had one third of the workforce delivered 100% of the revenue during that period. Hence, it is a very difficult GP margin comparison year-over-year. But excluding the ramp-up margin compression and the non-repeating COVID lockdown impact, our adjusted GP margin of 47% in the first half is still solid compared to our average historical GP margin percentage. Adjusted EBITDA, which is a proxy of our operating cash generation capability, increased by more than about 3.6% to RMB 3.8 billion in the first half. The adjusted EBITDA margin reached 45%, lower than same period last year due to the new capacity ramp-up and also the one-time COVID lockdown impact, as I mentioned earlier.
But it is still one of the highest compared to those in the past nine years, and it is certainly one of the highest in the CDMO industry. Adjusted net profit is the GAAP-based net profit, excluding the impact of foreign exchange gains, share-based compensation, fair value gains from our investment portfolio, and also XDC spin-off related one-time expenses. This is the proxy of our business profitability and the continuous operation. As you can see, the adjusted net profit increased 0.4% to CNY 2.9 billion in the reporting period. The increase in adjusted growth profit was partially offset by the increases in SG&A and R&D expenses, as we continue to invest in our global footprint and technology for the future. Chris, next page, please. Slide 41 shows our sustained profitability over the past nine years.
On a GAAP basis, net income, net profit attributable to owners of the company, earnings per share, and also adjusted earnings per share. You can see that our net profit has grown more than 108 times between 2014 and 2022, and exceeded CNY 4.5 billion last year. During the first half of 2023, our GAAP-based net profit exceeded CNY 2.3 billion, roughly CNY 300 million lower than the same period last year, largely due to the CNY 200 million of SG&A increase, as we continue to invest in our global footprint, build business development resources, and also enhance our digital capabilities. We also had a CNY 200 million one-time valuation swing year over year from our investment portfolio due to the capital market turmoil in the first half of 2023.
The increase in SG&A, R&D, and also the one-time investment portfolio valuation fluctuation, contributed to about 10.8% decline in our GAAP-based net profit line. Net profit attributable to the owners of the company and diluted earnings per share moved in tandem with the GAAP-based net profit. However, if we exclude share-based compensation, investment gain loss, and also FX hedging impact, our adjusted EPS on a diluted basis is still on par with the first half of 2022. Again, the most important metrics here is the adjusted earnings per share, as it strips out the one-time and non-cash impacts, and it is the true indicator of our continuing operating performance. Next page, please. So, this slide here gives us more insight into our gross margin.
In the first half of 2022, so 2023, our gross margin was about 42%. Excluding share-based compensation, our adjusted gross margin reached 47%, one of the highest compared to our global peers. As I mentioned earlier, first half of 2022 is a rough, tough comparison due to the COVID lockdown. In the reporting period, we had Dundalk, Ireland, a 48,000-liter facility, and the Shijiazhuang, Hebei province, another 48,000-liter capacity coming online. The drug product facility at Leverkusen, Germany, and the clinical manufacturing facility at Cranbury, New Jersey, were in various stages of ramping up. In the ramp-up phase, we usually have the step changes in manufacturing costs, but linear progression in revenue increase.
Hence, most of the biologics facilities would incur a loss at a startup stage and turning a profit as the utilization rate gradually improve towards the steady state. In the first half of 2023, these new facility ramp-up created about CNY 360 million of the headwind, or 6 points of the GP margin compression. This being said, the 47% of the adjusted gross profit margin is still, you know, represent a solid improvement over our historical average. You can see the composition of the cost components in the stack bars below, with roughly 18% in labor costs, 19% in material, and 21% in overhead, which includes maintenance, utilities, depreciation of the manufacturing facilities.
The high overhead costs were primarily driven by new facilities coming online as we expanded our global capacity from 156,000 liter at the beginning of 2022 to 262,000 liter in the first half of 2023. The new capacity brought in more depreciation, utilities, maintenance, and other overhead charges. Labor and the material costs, as a percentage of revenue, were lower than the average of the past three years, as we started to see some fruitions from the efficiency improvement driven by the WBS implementation. Next page, please. This slide here is about free cash flow. Last year, at WuXi Biologics, we achieved a positive free cash flow, a critical milestone in our company's history.
Ever since our IPO in 2017, we have been consistently investing in our CapEx to build a world-class CRDMO. Cumulatively, we have spent over RMB 28 billion on CapEx during the past six years to support our global expansion. At the same time, we grew our operating cash inflow 14 times to reach RMB 5.5 billion last year. For the first six months of this year, our operating cash inflow reached RMB 2.7 billion, less than the RMB 2.4 billion CapEx spending, so we generated about RMB 300 million of the free cash inflow. Our goal here still continue to deliver positive free cash flow in the near future, in the future, using the operating cash inflow to fund our global capacity expansion.
So now I'm going to pass the baton back to Chris to summarize our presentation.
Thank you, Min. You know, despite the currently we've seen the global funding challenges, and you see, sort of, you know, our industry has some short-term turbulence, but overall, biologics CDMO industry will continue to grow. The drivers are very clear, right? Multinationals are more willing to outsource rather than build in-house. If they have $1, they would rather invest in R&D or a business development instead of building manufacturing site, because CDMO now is a very reliable partner for them. The surging demand from Alzheimer's drug, from the, you know, other cancer drug, autoimmune drug, continue to drive the capacity for the CDMO. And lastly, biosimilars and ADC are also the strong demand drivers.
So this year, our industry may only see a high single-digit growth, but overall, I think we believe the average CAGR should still be around 14%. And as a result, you know, WuXi Biologics wanted to grow twice the industry. We want to make sure we capture the opportunity to grow twice the industry. So we believe our business model is very unique. We have built this model that, you know, the CRDMO will really give us a sustainable long-term growth. So this actually were plotted the before 2023, exactly, a real number, our revenue. So for the past 10 years, a majority of our success come from our D. And then in the past couple of years, M start to play a very significant role.
So, as example, this year, manufacturing revenue, if you include the phase 3, already account 40% or 42% of total revenue. And the growth, if you take out COVID, growth is actually 130%. So the next couple of years, our D will continue to shine. Our D is already more than half of the global market share, right? It will continue to shine. Our R will shine. You'll see more deals like GSK deal and Arcus deal. And our M actually will be key to see revenue growth. So as I mentioned earlier, our M project, you know, in 2017, we have one, in 2019, we have two, in 2022, 2023, now we have 22. So we hope we'll continue to drive long-term manufacturing contract.
Also the blockbuster deals that we have in M&A is also very significant. So if we have our -- for, that's why for the first time, for the first six months of this year, you know, 4 manufacturing current contract alone already summarized already added up to about $1 billion in contract. So we believe the straight line are very clearly aligned, that give us sustainable long-term growth. If we want to go into details, we want to actually go into really the CRDMO model, where the R is clearly, you know, we have, we have 6.5 billion RMB, $6.5 billion backlog already. And we now have more than 50 programs with a low single-digit royalties.
So the milestone will continue to attract more milestone revenue, but royalty will also be very significant. You know, the first half of this year, the R part already contributed more than $60 million revenue. The D part, we're a global leader. We don't believe we lose any market share during the downturn, but the number of product is smaller. We continue to maintain that we'll be able to get 80 products a year, despite the global downturn or funding challenges. So those programs, we continue to see the funnel getting bigger and bigger. And historically, our R will also have a 95% converting to a D. Our D will have more than 90% converting to M, and that's the stickiness of our CRDMO model, right?
With the momentum, I already said earlier that our contracts will continue to sign, and it will be a strong basis for our sustainable growth. So to summarize, I think we believe our business model is very unique. The CRDMO model is very hard for a company to follow and to copy. And our big CRDMO model plus Follow the Molecule strategy, implement together, really give us continue to drive the sustainable high growth. That's why despite all those challenges, the first half, if you take out COVID, we actually deliver 96% growth. So in the next 6 months, we'll continue to foresee some challenges in short term, but I think medium and long term, we may remain very, very positive for our long-term growth.
On the R side, we continue to hope that we'll have similar deals like GSK, like Arcus, and we'll continue to see more and more milestone revenue, more and more royalties coming to Wuxi. As I mentioned earlier, for some, for some of the programs, the royalty revenue actually may exceed the profit from the total manufacturing from CMO. That's the beauty of our business model. So on the R side, we continue to want R to sign. On the D side, we are already global strong leader. We've maintained similar market share despite the downturn, and we want, want, want to add at least 80 products a year during the downturn to continue the momentum, to make our funnel bigger and bigger. And M, and near term, is definitely a star, right?
You know, that's why we see 130% growth of our revenue if you exclude COVID. You know, the first half of this year, the first six months, we already signed more late-phase projects and the CMO project than previous years. So we hope we can continue to sign more projects in the second half. You know, I mentioned earlier also, on four programs alone, the contract value already exceeded $1 billion. And actually, the last four programs, they are all blockbuster already, so there's no risk. The program is already on the market, and so to us, it's very, very, very few risk. And lastly, WuXi Biologics continue to invest in new technology and platform that drive our future growth.
So if you, you know, our industry needs ADC, we have ADC. Our industry needs bispecific, we have a bispecific platform. I think we are always positioned, you know, to support our industry, to become a key player, to enable a global community to develop more drugs for the patients. Thank you.