Publicly traded shares of WuXi AppTec Co Ltd and WuXi Biologics (Cayman) were hammered on Friday as investor fears grew over a draft US bill targeting Chinese biotech giants.
Wuxi AppTec plunged by over 21% to its its lowest level since August 2019, while Wuxi Biologics lost 20.7% and sank to a five-year low.
Wuxi AppTec’s Shanghai-listed stocks also fell by the daily price limit of 10%.
A US 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 denies ties to China’s military
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 US 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 meeting due on Friday (US time).
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 dropped 1.2%, and the Hang Seng Hong Kong-listed Biotech Index 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%.
- Reuters with additional editing by Jim Pollard