By Sherry Qin


WuXi AppTec and its affiliates are taking another beating.

This time, the cause is the loss of support from the biotechnology industry's top lobbying group in Washington as two bills targeting Chinese biotech companies wind their way through Congress.

The Biotechnology Innovation Organization, an influential trade association whose members include Eli Lilly, Merck, Johnson & Johnson and hundreds of other companies, said Wednesday that it is cutting ties with WuXi AppTec as part of measures to aid U.S. national-security efforts.

The organization also said that it will work with U.S. policymakers to ensure biomanufacturing and distribution capacity and that it will support the Biosecure Act draft legislation that would bar contracts with biotech companies of concern.

WuXi AppTec's Hong Kong-listed were 13% lower on Thursday, while its Shanghai-listed shares shed 8.0%. Sister company WuXi Biologics declined 14% and WuXi XDC Cayman, WuXi Biologics' contract medical research unit, fell 16%.

The WuXi companies have been the target of two U.S. bills that seek to prohibit U.S. federal agencies from contracting with or granting funds to certain Chinese biotech companies on the grounds that the companies could threaten national security through actions such as collecting sensitive biometrics information or collaborating with the Chinese military.

The WuXi companies have denied the bills' claims and said their businesses don't include work on human genomics. WuXi AppTec said in a stock-exchange filing last week that it "has not posed, does not pose, and will not pose a security risk to the United States or any other country."

Wuxi AppTec was founded in 2000 by Chief Executive Ge Li, a doctoral graduate in organic chemistry from Columbia University. The contract drugmaker and its affiliates have partnered with companies including Pfizer, AstraZeneca and Eli Lilly on vaccines and other research.

BIO is a prominent voice on behalf of drugmakers in the nation's capital, including many biotechnology companies. It lobbies policymakers on government issues such as taxes and regulations.

At the current stage, losing membership "not necessarily means losing business, but more on the potential loss of [lobbying] support from this organization," said Jialin Zhang, Nomura's head of China healthcare research.

Jefferies analyst Christopher Lui said in a recent research note that WuXi's share-price movements have been driven largely by sentiment rather than fundamentals.

WuXi AppTec's Shanghai- and Hong Kong-listed shares have lost 28% and 44%, respectively, this year. Two proposed 1 billion yuan ($139.1 million) share buybacks by WuXi AppTec in the past two months had little effect on its share price.


Write to Sherry Qin at sherry.qin@wsj.com


(END) Dow Jones Newswires

03-14-24 0312ET