China's WuXi AppTec, Wuxi Biologics plunge to multi-year lows on fears over US biotech bill

WuXi Biologics (Cayman)

02/02/2024 09:50

By Summer Zhen
       HONG KONG, Feb 2 (Reuters) - Shares of WuXi AppTec Co
Ltd  2359.HK  and WuXi Biologics (Cayman)  2269.HK  tumbled on
Friday as investor fears grew over a U.S. draft bill targeting
Chinese biotech giants. 
    Wuxi AppTec plunged 21.2% on Friday, hitting its lowest
since August 2019, and Wuxi Biologics lost 20.7%, dropping to a
five-year low. 
    Wuxi AppTec's Shanghai-listed stocks  603259.SS  also fell
by the daily price limit of 10%. 
    A U.S. congressional committee focused on China introduced a
bill last week that would restrict federally funded medical
providers from contacting WuXi AppTec and other Chinese biotech
companies, citing Wuxi AppTec's military ties as part of the
reason. 
    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. 
    Investor concerns mounted this week, however, and many
dumped Chinese biotech shares on Friday following an analyst
call organised by BofA Global Research, according to market
participants and a meeting note sent to clients that was
reviewed by Reuters. 
    Andrew Bressler, a U.S. medical policy analyst at BofA told
investors he expects the proposed Biosecure Act Bill to move
forward soon. 
    "Many investors are parking money and hoping to hear some
turnaround scenarios ... but they might get a bit disappointed,"
said the BofA meeting note. 
    BofA declined to comment on the Friday meeting. 
    Spreading geopolitical risks have resulted in the
underperformance of biotech companies and added to local market
pessimism, UBS analysts also said in a note on Friday. 
    China's blue-chip CSI 300 Index  .CSI300  dropped 1.2%, and
the Hang Seng Hong Kong-listed Biotech Index  .HSHKBIO  slumped
5%. 
    WuXi AppTec said on Friday it plans to buy back 1 billion
yuan ($140 million) of its Shanghai-listed shares to safeguard
company value and shareholders' interests, but the announcement
failed to restore investor confidence. 
    WuXi AppTec's Hong Kong shares have sunk 45% so far in 2024,
and its Shanghai shares are down 31%. 

 (Reporting by Summer Zhen; Additional reporting by Gu Li in
Shanghai; Editing by Tom Hogue)
 ((summer.zhen@thomsonreuters.com; 852-3462-7739;))