WuXi AppTec and WuXi Biologics Surge as US Biosecure Act Faces Slim Odds of Passage
Shares of Chinese biotech service providers WuXi AppTec and WuXi Biologics surged on Monday after a key piece of US legislation, the Biosecure Act, failed to make it into the latest proposed amendments to the National Defence Authorisation Act (NDAA). The absence of the act, which threatened to bar the companies from federally funded contracts, has provided a reprieve for the biotech firms, temporarily easing concerns about their future in global drug development.
WuXi AppTec’s shares jumped 12% in early trading in Hong Kong, reaching their highest point in two months. WuXi Biologics rose 13%, while Shanghai-listed MGI Tech climbed 4.3%.
A Legislative Break for Chinese Biotech Firms
The Biosecure Act, introduced last year, aimed to curb the influence of Chinese companies like WuXi in global pharmaceutical supply chains, citing national security concerns over genetic information and drug production dependencies. However, the legislation has faced delays and revisions, including waivers, grandfather clauses, and softened measures that grant US companies until 2032 to sever ties with targeted Chinese firms.
While the bill passed the US House in September, growing opposition and narrowing legislative timelines have dimmed its prospects before Congress adjourns for the year. Jefferies analysts hailed the current situation as exceeding expectations, reiterating WuXi Biologics as a top buy.
If the bill fails to pass by year-end, it would expire and require reintroduction under a new administration. Analysts at Jefferies suggested that President-elect Donald Trump’s administration, expected to prioritize business efficiency, may be less inclined to revive the Biosecure Act, favoring cost savings from Chinese service providers instead.
Industry Concerns and Resilience
The Biosecure Act’s proponents argue it is essential for safeguarding national security, particularly regarding genetic data. However, US pharmaceutical companies have raised concerns that severing ties with WuXi and similar firms could disrupt drug development and delay production timelines.
WuXi Biologics, which has worked to reassure US lawmakers about its independence and operational transparency, stated that it does not handle human genomic data or pose a security threat. WuXi AppTec, one of the world’s largest drug research and manufacturing service providers, also reported stable revenue from its primary offerings, despite challenges in its advanced therapies unit.
Both companies have expressed a commitment to educating lawmakers about their operations and the value they bring to global drug development.
Future Uncertainties
Even if the Biosecure Act is reintroduced in the future, it could face further reshaping, including potential reviews by the executive branch to determine which companies should be restricted. Reports suggest this compromise may provide additional breathing room for the targeted firms.
Although WuXi AppTec, WuXi Biologics, and MGI Tech have seen their shares fall more than 30% year-to-date, Monday’s rally reflects optimism about their ability to navigate the uncertain regulatory landscape. Meanwhile, other firms named in the draft, such as BGI Group and Complete Genomics, have declined to comment on the developments.
For now, the absence of the Biosecure Act from this year’s legislative agenda marks a temporary win for these Chinese biotech giants, offering them a chance to continue their pivotal roles in global drug development.