WuXi Bio shares drop as US BIOSECURE bill targets China biotech

Introduced in the House of Representatives last week, the BIOSECURE act aims to “ensure foreign adversary biotech companies of US national security concern do not gain access to US taxpayer dollars,” according to the bipartisan Select Committee on the Chinese Communist Party.

“The Government of the People’s Republic of China (PRC) seeks to dominate biotechnology as an industry of the future,” the bipartisan draft bill states. “In recent years, the PRC has pursued a strategy known as ‘military-civil fusion’ that merges public and private industries to enable the military modernization of the People’s Liberation Army (PLA),” it continues, adding this includes collaboration with companies looking to accelerate the development of biotechnology.

Specifically, the bill names BGI Group, its former subsidiary MGI, and MGI's former subsidiary Complete Genomics. It also names WuXi Apptec, which it describes as presenting “a national security threat to the United States, due to alleged “sponsored Military-Civil Fusion events in the PRC.”

The bill also takes aim at WuXi Biologics, which span-out from WuXi PharmaTech (the former name for WuXi AppTec) as a contract development and manufacturing organization (CDMO) in 2017, saying its CEO Chris Chen was “previously an adjunct professor at the PLA’s Academy of Military Medical Sciences.”

Shares in Hong Kong Stock Exchange listed WuXi Biologics dropped 41% on the news.

In a clarification posted today, WuXi Biologics said the bill’s description of the background of Chris Chen is misleading.

“The draft bill references an academic designation granted as a courtesy after a one-time guest lecture in 2013, a common practice in Chinese universities. The Company’s understanding is that Dr. Chen had no other engagement with the institution prior to or since then. He has neither worked for the Academy of Military Medical Sciences or any military-affiliated institution, nor has he received compensation from military-affiliated institutions.”

The firm added global business operations remain as usual. “The Company is committed to supporting its customers globally and to operating with the highest standards of compliance and in accordance with the applicable laws and regulations of all jurisdictions where it has business operations.”

WuXi Biologics has one of the world’s largest biologics manufacturing networks, both in its native China and in other regions, including the US. Just this month, the firm announced plans to make a significant investment at its site in Worcester, Massachusetts.

However, this is not the first time WuXi Biologics has been caught in the geopolitical crossfire between Washington and Beijing.

In February 2022, the US Commerce Department included two subsidiaries of WuXi Biologics among 33 Chinese companies to its Unverified List (UVL), essentially placing the firms under certain import, export, and resale restrictions. The restrictions were lifted eight months later.