July 23 (Bloomberg) -- WuXi PharmaTech Co., the largest Chinese drug-research contractor, plans to make public a proposed $200 million share sale in the U.S. this week, said two people with knowledge of the deal.

Fidelity Asia Ventures, the Asian venture capital unit of Fidelity International Ltd., and General Atlantic LLC., a Greenwich, Connecticut-based private equity firm, have invested in the Shanghai-based company, said the people, who declined to be identified before the deal is made public. They wouldn't say if the investors would sell WuXi PharmaTech shares.

The initial public offering will take place amid growing demand among drugmakers for outsourcing of research and development, to cut costs and reduce delays caused by rules, such as restrictions on animal testing, in developed countries. U.S. drug companies may outsource 41 percent of research and development in 2009, worth about $24 billion, according to U.S.- based medical research publisher Kalorama Information.

Credit Suisse Group and JPMorgan Chase & Co. are arranging the share sale, the people said. Luke Treloar, a Shanghai-based spokesman for WuXi PharmaTech, declined to comment. So did Godwin Chellam, a Hong Kong-based spokesman for Credit Suisse, and Marie Cheung, a spokeswoman for JPMorgan in Hong Kong.

Outsourcing accounted for 33 percent of U.S. drugmakers' research and development spending, or $13 billion, in 2005, compared with 10 percent in 1997, Kalorama said in a report last year.

Laboratory Tests

Pharmaceutical companies may outsource $7.2 billion of pre- clinical laboratory and animal tests -- the area on which WuXi PharmaTech focuses -- by 2009, 76 percent more than 2005, the research publisher projected.

Chinese research organizations have the advantage of laboratories built with government funds and scientists who are paid less than a third of their U.S. counterparts, Kalorama said.

Still, concerns about the protection of intellectual property and English-language proficiency remain deterrents to outsourcing to China, it said.

Six-year-old WuXi PharmaTech employs more than 1,300 scientists, its Web site said. Nine of the world's top 10 pharmaceutical companies by 2006 revenue are clients, it said. The researcher has provided services to New Jersey-based Merck & Co. and London-based AstraZeneca Plc., it said.

More than 30 mainland Chinese and Hong Kong medical companies have gone public in Hong Kong or in the U.S. to tap a larger pool of health-care investors.

Mindray Medical International Ltd., which develops, makes and markets medical devices, trades at 33 times next year's estimated earnings, with a market value $3.1 billion, according to Bloomberg data. Its New York-quoted American depositary receipts are trading at more than double the price they were initially offered in September.

Albany Molecular Research Inc., a U.S. contract research organization, is trading at nearly 40 times next year's earnings, according to Bloomberg data. The company in November announced it was going to focus on providing contract services to the drug industry.

To contact the reporter on this story: Bei Hu in Hong Kong at