Shares of WuXi Biologics Cayman Inc. saw a significant increase, marking the largest surge in 19 months. This surge comes as speculation arises that a US bill, which could potentially ban Chinese biotechnology companies from conducting business, may not be included in the National Defense Authorization Act. The stock rose by 14% in Hong Kong, the highest increase since November 2022. The bill, referred to as the biosecure bill, aimed to prohibit certain biotech providers with alleged ties to a foreign adversary from operating. However, it was not included in the US fiscal 2025 NDAA, a crucial step for it to become legally effective. This bill had previously caused the company’s stock to decline as investors were concerned about the potential exclusion of WuXi Biologics from US pharmaceutical production supply chains. Initially, it was widely anticipated that the bill would be added to the NDAA before being enacted as a law.
According to Criss Wang, an analyst at Smartkarma, there are some challenges in the process and a decision may not be reached before the presidential election due to the tight schedule. Additionally, conflicting information regarding the global pharmaceutical supply chain, excluding China, may prolong the process.
In response to the situation, WuXi AppTec Co., a sister company, stated that the further legislative route is currently unclear, but they will closely monitor the relevant legislative process. As a result, WuXi AppTec shares saw an 8.5% increase in Hong Kong.
The unexpected exclusion from the National Defense Authorization Act (NDAA) has introduced some uncertainty regarding the future of the Biosecure Act. This development may temporarily benefit contract research organizations based in China, as noted by Morgan Stanley analysts including Sean Wu.