WuXi Shares Lose $17 Billion on Fear US to Target China Biotech

Charlotte Yang, Bloomberg News

(Bloomberg) -- WuXi AppTec Co. extended losses in Hong Kong amid renewed investor concerns over a proposed US legislation that would ban the Chinese medical technology company and its units from government contracts.

WuXi AppTec plunged as much as 27% on Friday while WuXi Biologics Cayman Inc. fell as much as 23%. Both stocks are now trading at the lowest level since 2019. The Hong Kong benchmark was down 0.3%.

The stocks’ weakness today is still due to “concerns on the passage of the US bill,” said Jialin Zhang, Head of China healthcare research at Nomura International HK Ltd.

A bipartisan group of House and Senate lawmakers proposed legislation last week aimed at blocking some Chinese biotech companies — which they said are controlled by the Communist Party and represent a national security risk — from accessing federal contracts.

READ: WuXi AppTec, Wuxi Bio Tumble as US Lawmakers Propose Ban

The draft bill listed WuXi AppTec and any subsidiary or parent affiliate among “biotechnology companies of concern” and alleged that WuXi Biologics Chief Executive Officer Zhisheng Chen had ties to a military-associated institution, which the company denied in a stock exchange filing.

WuXi AppTec and WuXi Biologics have suffered intense selloff since the proposal, wiping out a combined $17 billion in market cap as of Thursday’s close.

“Geopolitical risks are still high especially during the US election season, which prompted investors to avoid such short-term risks,” said Carol Dou, senior healthcare analyst at UOB Kay Hian.

--With assistance from Jing Jin.