Chinese Biotech Stocks Plunge Again on Call for Sanctions Review

Shares of Chinese biotech firm WuXi Biologics and its affiliate WuXi AppTec plunged again on Wednesday after US lawmakers called on the Biden administration to review whether they should face sanctions.

WuXi Biologics fell 15% before clawing some losses to be 9.2% at the close of trading in Hong Kong, while WuXi App tumbled 17% before ending the day at about 3.9% down.

The two companies, which have over 50,000 employees between them, have lost billions – and seen their market value nearly halved this year – on concern over negative impacts from geopolitical tensions between the US and China.

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In a letter dated Monday February 12 and seen by Reuters, a bipartisan group of lawmakers told Treasury Secretary Janet Yellen, Defence Secretary Lloyd Austin and Commerce Secretary Gina Raimondo that the global pharmaceutical giant’s links to China’s Communist Party and military threatened US national security.

The letter, signed by the Republican chair and ranking Democrat member of the House committee on China, Mike Gallagher and Raja Krishnamoorthi, plus Senators Gary Peters and Bill Hagerty, is Congress’ latest effort to highlight what it says are risks posed by China’s biotech leaders.

Congress has introduced legislation that would restrict federally-funded medical providers from allowing China’s BGI Group, WuXi AppTec and other biotech firms from getting genetic information about Americans.

WuXi AppTec did not respond immediately to a request for comment, but has repeatedly said that it is not a national security risk to any country.

“We are concerned by a misguided US legislative initiative to target our company without a fair and transparent review of the facts,” WuXi AppTec said previously in a statement still on its website home page.

Signing agreements with US supply chains

The four lawmakers – citing public Chinese government documents, Chinese university websites and media articles – outlined what they called WuXi AppTec’s clear military ties, as well as support for China’s policies in Xinjiang, a region where Washington has accused Beijing of committing genocide against Muslim minorities.

They said WuXi AppTec had received investment from numerous PLA funds, including the AVIC Military-Civil Integration Selected Hybrid Securities Investment Fund.

They also cited a resume for WuXi Biologics CEO Chen Zhisheng, posted in 2018 to a Tsinghua University website, that listed him as a visiting professor at China’s Academy of Military Medical Sciences, which was added to the Commerce Department’s export control list in 2021.

“Given WuXi AppTec’s clear ties to the CCP and the PLA and its likely role in enabling the genocide in Xinjiang, we urge your departments to consider the inclusion of WuXi AppTec and its subsidiaries on your respective control lists,” they said in the letter.

Those should include sanctions under Treasury’s Non-SDN Chinese Military-Industrial Complex Companies List, the Commerce list restricting US sales to named entities and the Pentagon’s “1260H” list, which carries implicit warnings about US cooperation with certain firms.

“WuXi AppTec and WuXi Biologics have obscured their ties to the CCP and PLA and, as a result, are rapidly integrating themselves into US supply chains by signing agreements with prominent US biotech entities,” the lawmakers wrote.

The two companies have counted Pfizer, AstraZeneca, GlaxoSmithKline, and US national labs as partners.