Congressional Scrutiny Intensifies On Chinese Biotech Firms: WuXi AppTec Faces Biotech Exodus

Amid the ongoing scrutiny from Congress, WuXi AppTec and its affiliates face another setback as the Biotechnology Innovation Organization (BIO), a U.S. industry lobbying group, severs ties with the Chinese biotech. 

This decision comes in response to the mounting concerns raised by two bills targeting Chinese biotech firms circulating in Congress, reflecting escalating tensions over national security issues.

The Biotechnology Innovation Organization, boasting a membership roster including industry titans such as Eli Lilly And Co LLY, Merck & Co Inc MRK, and Johnson & Johnson JNJ, announced its dissociation from WuXi AppTec as part of its efforts to align with U.S. national-security priorities. 

Additionally, BIO pledged support for the Biosecure Act, a draft legislation restricting contracts with biotech companies flagged for national security risks.

Following this announcement, WuXi AppTec’s shares plummeted 13% on the Hong Kong stock exchange and 8.0% on the Shanghai exchange. Its sister company, WuXi Biologics WXXWY, also experienced significant declines, shedding 14%, while WuXi XDC Cayman, the contract research unit, saw a drop of 16%.

These developments stem from concerns raised by the proposed bills, which seek to prevent federal agencies from engaging with certain Chinese biotech firms, citing potential national security threats such as data collection and military collaboration. 

However, WuXi AppTec has vehemently denied these allegations, the Wall Street Journal noted, asserting that its operations do not involve activities related to human genomics.

WuXi AppTec has established itself as a key player in the biotech sector, collaborating with major pharmaceutical companies like Pfizer Inc PFE, AstraZeneca Plc AZN, and Eli Lilly. 

However, the recent turn of events underscores the challenges it faces in navigating the increasingly complex geopolitical landscape.

Commenting on the situation, Jialin Zhang, Nomura’s head of China healthcare research, highlighted that while losing BIO membership may not immediately impact business, it could signal a potential loss of lobbying support. 

Citing Jefferies analyst, the WSJ report emphasized that market reactions to WuXi’s stock are primarily driven by sentiment rather than underlying fundamentals, as evidenced by the company’s share-price movements this year.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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