WuXi Shares Volatile as U.S. Bill Revised to Set Deadline for Decoupling
By Kimberley Kao
WuXi AppTec and its affiliates faced volatile trading after a U.S. bill was revised to give American companies time to decouple from Chinese biotech firms.
Shares of WuXi AppTec rose as much as 15% before paring gains to 3.7% in afternoon trading on Monday, while WuXi Biologics was as much as 11% higher before slipping 4.0% into the red. WuXi XDC, the medical-research unit of WuXi Biologics, was down 7.0%.
The moves came after U.S. lawmakers on Friday introduced a revised version of the Biosecure Act that would give U.S. companies until 2032 to work with Chinese biotech firms named in the bill, after which business tie-ups would be restricted on national-security grounds. The bill will deny government contracts to U.S. companies working with the biotech firms named.
The revised bill also added WuXi Biologics to the list of biotech companies of concern on which the restrictions would apply. WuXi AppTec was already on the list, which also includes Chinese companies BGI, MGI and Complete Genomics.
"The extension reflects the fact that China [contract research organizations are] an important part of the pharmaceutical value chain, not easily to be replaced in a short term of period, thanks to their efficiency, talent pool, capacity," said Jialin Zhang, head of China healthcare research at Nomura.
In the short term, market concerns of an abrupt end to China CROs' existing orders are relieved, which was reflected in the positive reaction in WuXi AppTec's stock move, Zhang said.
But the U.S. is still determined to abandon the WuXi family of companies, and the extension was simply a change from a "death penalty to life sentence" for the firms, Zhang said.
WuXi AppTec and WuXi Biologics remain about 50% lower since the bill's introduction in January.
Write to Kimberley Kao at kimberley.kao@wsj.com
(END) Dow Jones Newswires
May 13, 2024 01:24 ET (05:24 GMT)
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