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Chinese pharmaceutical group WuXi AppTec has said it is lobbying hard in Washington against a proposed bill that threatens its business in the US, where it generates 65 per cent of its revenues.
“The company has been actively working together with its advisers to set the record straight and advocate for changes to the proposed legislation,” Edward Hu, vice-chair and chief investment officer, said in an analysts’ call on Tuesday following the release of full-year results.
US lawmakers have put the sector under scrutiny in relations with China and are seeking to restrict companies with federal funding from contracting with “foreign adversary” biotech groups of “concern” deemed to be a threat to national security. The so-called Biosecure Act has singled out WuXi AppTec and Chinese genomics group BGI for their alleged ties to the Chinese government.
WuXi AppTec is a major supplier of essential ingredients to many of the largest global pharmaceutical companies and conducts drug development for them. It generated Rmb16.1bn ($2.2bn) in revenues last year from the 20 largest names and earned Rmb26bn — about two-thirds of its revenues — from the US, which is by far the world’s largest and most profitable drug market.
The company’s Hong Kong-listed shares fell by as much as 9.9 per cent on Tuesday and have lost nearly half their value since the start of this year, with investors reacting after US lawmakers began their efforts in January.
Its sister company WuXi Biologics, which conducts research and develops drugs for pharmaceutical groups, has fallen by more than 50 per cent year to date. Investors fear it might also be hit by the legislation, which was approved at the committee stage in the US Senate this month but still needs to go to a full vote in favour and then to the House of Representatives and the president to become law.
WuXi AppTec on Tuesday denied any affiliation with the Chinese Communist party and army, while adding that it did not collect human genomic data.
Meanwhile weakness in the Chinese drug market following a surge in investment during the first two years of the Covid-19 pandemic meant revenues in its home market grew an anaemic 1 per cent to Rmb7.4bn last year.
WuXi AppTec had a downbeat forecast for 2024, citing “uncertainties” from the proposed legislation’s impact. It forecast revenues of Rmb38.3bn-Rmb40.5bn in 2024, excluding projects involving Covid drug development.
Revenues last year climbed by 2.5 per cent to Rmb40.3bn, in line with analysts’ expectations. The company’s net profit increased 21.3 per cent to Rmb10.7bn, flattered by a favourable exchange rate.
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