U.S. Bill Threatens Wuxi AppTec and Collaborators, Sending Shares Tumbling
Wuxi AppTec, SHANGHAI – Concerns over a proposed U.S. bill have rocked China’s biotech giant, Wuxi AppTec, raising alarms not only for the firm but also for numerous labs and Western pharmaceutical companies reliant on its research and manufacturing capabilities, according to publicly available data.
The bill, introduced by a congressional committee focused on China, aims to limit federally funded medical providers from sharing genetic information of Americans with China’s BGI Group, Wuxi AppTec, and other biotech firms.
Similar legislation in the Senate seeks to bar federal agencies from contracting with these firms and prevent the government from engaging with companies utilizing their services or equipment. While the bill faces a lengthy legislative journey before potential enactment, its implications have already sent shockwaves through the market.
Wuxi AppTec’s shares, listed in Shanghai and Hong Kong, have plummeted nearly 50% in response to the bill. Despite a 4% rebound in its Hong Kong shares, Shanghai stocks dropped by the same margin following the company’s denial of any affiliations with governmental or military institutions, asserting no collection of human genomic data in its operations.
Established in 2000 by Ge Li, Ph.D., an alumnus of Columbia University, Wuxi AppTec has evolved into a prominent entity offering early-stage drug research, development services, and contract manufacturing for Western pharmaceutical firms.
The company and its affiliate, Wuxi Biologics, boast partnerships with industry giants including Pfizer (NYSE:PFE), AstraZeneca (NASDAQ:AZN), and GlaxoSmithKline (NYSE:GSK), along with U.S. government-funded laboratories. Collaborative ventures encompass research initiatives on Alzheimer’s disease with Pfizer, vaccine component production with AstraZeneca, and licensing agreements with GSK for cancer research antibodies.
According to a 2022 report from the U.S. Department of Energy Office of Scientific and Technical Information, Lawrence Livermore National Laboratory has utilized Wuxi’s services for an antivirals lab project, leveraging virtual compounds synthesized by Wuxi AppTec.
Despite outreach, AstraZeneca, Pfizer, GSK, and Lawrence Livermore National Laboratory declined to comment on the situation.
With multiple offices in the United States, including a New Jersey-based testing facility, Wuxi AppTec has bolstered its presence in the country, offering services such as cell and gene therapy manufacturing and biologics testing.
Revenue from the U.S. market constitutes the largest portion of Wuxi AppTec’s earnings, comprising two-thirds of its total revenue of 29.5 billion yuan ($4.10 billion) in the first nine months of 2023.
Yiming Liu, a partner at Cooley LLP, emphasized the early stage of the legislative process, noting the absence of a definitive timeline for the bills’ consideration by Congress.
However, analysts remain cautious, anticipating continued pressure on Wuxi shares due to investor confidence concerns amidst an election year in the United States. Steven Leung, director of institutional sales at UOB Kay Hian in Hong Kong, highlighted the broader impact of potential restrictions on Chinese companies, suggesting forthcoming news could further dampen investor confidence. 1 USD = 7.1979 Chinese yuan renminbi
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