US bill targeting Chinese biotech firms WuXi AppTec, BGI hits delay

BGI AD

02/02/2024 22:30

By Karen Freifeld and Michael Martina
       Feb 2 (Reuters) - A bill in the U.S. Congress that
sparked a sell-off in shares of China's WuXi AppTec  603259.SS 
hit a delay in the Senate this week, a Senate aide and three
other sources said on Friday.
     The bill would prohibit federal agencies from contracting
with China's BGI Group, MGI, Complete Genomics, WuXi AppTec,
their subsidiaries and other biotechnology companies of concern.
It would also stop the government from entering into contracts
with companies that use their equipment or services. 
     It sent shares of Wuxi AppTec tumbling 21% overnight. 
     The bill, sponsored by Democratic Senator Gary Peters, did
not move out of committee this week, as expected. It will be
considered at a future date, said a majority aide for the Senate
Committee on Homeland Security and Governmental Affairs, which
Peters chairs.
    The bill is not expected to move out of committee for at
least a few weeks, said another congressional aide.   
    A companion bill proposed by Republican Congressman Mike
Gallagher, chair of the House select committee on China, accuses
the companies of aiding Beijing's military.
    No date has yet been set to move the House bill out of
committee, that congressional aide said.
    The Chinese biotech companies pose a threat to how sensitive
American data and personal health information can be accessed by
the Chinese Communist Party, the Senate aide said on Friday. 
    Shares of WuXi AppTec  2359.HK  and WuXi Biologics  2269.HK 
tumbled on Friday as investor fears grew over the draft
legislation targeting the China biotech giants. 
    WuXi AppTec, which provides drug R&D and manufacturing
services, has denied any ties to China's military and said its
business does not pose national security risks to any country.
    WuXi AppTec said last week that company-related content in
proposed U.S. legislation on biosecurity is not appropriate or
accurate. The company is "closely watching" the development of
the bill, it said in a filing to Shanghai bourse.
    BGI Group said last week that it supports protecting
personal data, but the legislation "which will effectively drive
BGI from the U.S. market will not accomplish this goal." The
company added that in the U.S. it does not collect patient
samples or have access to personal or genetic data.
    Units of BGI Group appear on a U.S. Department of Commerce
export control list over allegations that they pose a
"significant risk" to contributing to Chinese government
surveillance.  
    Reuters also has reported that BGI was collecting genetic
data from millions of women for sweeping research on the traits
of populations, and collaborates with China's military. 

 (Reporting by Karen Freifeld in New York and Michael Martina in
Washington; Editing by Chris Sanders and Lisa Shumaker)
 ((karen.freifeld@thomsonreuters.com; +1(646) 223-6921;))