China’s Wuxi AppTec, Biologics, tumble as US sanctions threat grows

March 07, 2024 05:12 PM AEDT | By Investing

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China’s Wuxi AppTec, Biologics, tumble as US sanctions threat grows

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Investing.com-- Shares of Chinese biotechnology firms Wuxi Biologics and Wuxi AppTec tumbled on Thursday, rattled by the progress of a U.S. bill targeted at blocking Chinese biotech firms from federal deals.

WuXi AppTec Co Ltd (SS:603259) slid 10% in Shanghai trade, hitting an intraday circuit breaker. In Hong Kong, shares (HK:2359) slumped nearly 18%, while those of sister firm WuXi Biologics (HK:2269) sank more than 20%. The two were the top drags on the Hang Seng index, which lost 0.6%.

The U.S. Senate's homeland security committee on Wednesday approved a bill intended to block federal business with Chinese biotech firms, amid concerns over the potential misuse of personal health and genetic information of American citizens.

News of the bill, which was initially reported earlier in 2024, had sparked a sharp rout in Wuxi shares in late-January. Shares of the firm are now struggling to recover from a near four-year low.

While the bill still needs to pass in both the full Senate and the House of Representatives, before being approved by the President, it presents a major headwind to Wuxi, which relies on the U.S. for a bulk of its revenue.

In its current form, the bill is aimed at blocking federal agencies from issuing contracts to Chinese biotech firms that are deemed of concern, while also stopping the government from entering contracts with firms that use their equipment.

But the bill also presents a potential headwind to the U.S. biotech industry, given that Wuxi and its peers are key suppliers of equipment, R&D and manufacturing services to American companies.

This article first appeared in Investing.com

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