Overview of the Situation
A draft U.S. bill has caused a significant drop in the shares of Wuxi AppTec, a Chinese biotech company.
The bill, introduced by a congressional committee focused on China, aims to limit federally funded medical providers from sharing genetic information about Americans with specific Chinese biotech firms, including Wuxi AppTec.
Impact on Wuxi AppTec and Others
The bill poses a substantial threat not only to Wuxi AppTec but also to various labs and Western drugmakers that rely on the company for research and manufacturing.
Another legislation in the Senate proposes prohibiting federal agencies from contracting with firms like Wuxi AppTec and restricting the government from entering contracts with companies using their equipment or services.
Financial Impact on Wuxi AppTec
Wuxi AppTec’s shares, listed in Shanghai and Hong Kong, have witnessed a nearly 50% decline since the bill’s introduction.
Hong Kong shares rose 4%, while Shanghai shares dropped 4% after the company clarified it has no links with governments or military institutions and does not collect human genomic data.
Background of Wuxi AppTec
Founded in 2000, Wuxi AppTec is a prominent biotech company offering early drug research and development services and contract manufacturing for Western companies.
The company has affiliations with Pfizer, AstraZeneca, GlaxoSmithKline, and state-funded U.S. labs, working on various projects, including Alzheimer’s disease research, vaccine component production, and cancer research licensing agreements.
Collaborations and Presence in the United States
Wuxi AppTec collaborates with Lawrence Livermore National Laboratory on an antivirals lab project, utilizing virtual compounds synthesized by the company.
The company has a significant presence in the United States, including multiple offices and a lab testing facility in New Jersey.
Financial Dependency on the U.S.
The U.S. market contributes to two-thirds of Wuxi AppTec’s total revenue, reaching 29.5 billion yuan ($4.10 billion) in the first nine months of 2023.
Legislative Process Status
The proposed bills are still in the early stages of the legislative process, with no set timeline for consideration by Congress.
Analysts caution that Wuxi AppTec shares may face continued pressure due to investor confidence concerns.
Potential Impact on Chinese Companies
The U.S. election year may bring more news on restrictions affecting Chinese companies, adding to investor uncertainty.
Yiming Liu, a partner at Cooley LLP, mentions that the bills are in the early stages, and there is no specified timeline for consideration.
Responses from Affiliated Companies
AstraZeneca, Pfizer, GlaxoSmithKline, and Lawrence Livermore National Laboratory did not immediately respond to requests for comment on the situation.