WuXi Companies' Shares Fall Amid Renewed U.S. Sanction Concerns
By Sherry Qin
Shares of the WuXi family of biotech and research companies fell sharply after a U.S. bill targeting certain Chinese biotechnology providers got the green light to go to the Senate floor, reigniting worries about potential U.S. sanctions.
WuXi AppTec's Shanghai-listed shares fell by the daily limit of 10% to 52.86 yuan (US$7.34) on Thursday. Its Hong Kong-listed shares slid 16% to 47.55 Hong Kong dollars (US$6.08).
Sister company WuXi Biologics dived 21% to HK$17.24. WuXi XDC Cayman, WuXi Biologics' contract medical research unit, slumped 16%.
WuXi AppTec and WuXi Biologics have lost 40% and 42%, respectively, in Hong Kong this year.
The bill, introduced in December, prohibits U.S. federal agencies from contracting with or granting funds to "a biotechnology company of concern." The WuXi companies were among those named in the bill.
The U.S. Senate Committee on Homeland Security and Governmental Affairs held a hearing on the bill on Wednesday and gave it a thumbs-up, allowing it to move to the Senate floor for further discussion.
WuXi AppTec and WuXi Biologics on Thursday denied the bill's findings and said they don't have a human genomics business.
In an exchange filing, WuXi AppTec said it "has not posed, does not pose, and will not pose a security risk to the United States or any other country." WuXi Biologics, in a separate statement, similarly denied posing any national-security risk to the U.S.
China's contract research organizations are highly exposed to the U.S. market. WuXi Biologics and WuXi AppTec generated 46% and 66% of their sales from U.S. clients in the first half of 2023, respectively, according to Nomura.
The development comes days after investor sentiment was lifted briefly by President Biden's executive order that signaled the scope of restrictions might narrow to genomics companies that collect Americans' personal data.
"Geopolitical tensions could be an overhang against the backdrop of the U.S. presidential elections this year," Nomura analysts Jialin Zhang and Yi Xiang said in a research note. They also cautioned that the bill has a long way to go before becoming law and could face amendments.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
March 07, 2024 00:38 ET (05:38 GMT)
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