WuXi buoyed as BIOSECURE Act is left out of US spending bill

Shares in WuXi Biologics and WuXi AppTec have tracked up after the BIOSECURE Act – which could have profound effects on their businesses in the US – was omitted from legislation due to be followed up in the House of Representatives.

The House Rules Committee has not included the Act among a final basket of amendments to the National Defense Authorization Act (NDAA) for fiscal 2025, a key piece of legislation that lays out the budget for the Department of Defense and was viewed as the likeliest route for the BIOSECURE Act to make it onto the statute.

The BIOSECURE Act is a proposed piece of federal legislation in both the House and Senate that would prohibit US federal funding in connection with biotechnology equipment produced or services provided by certain Chinese companies, including the two WuXi units alongside BGI Group and MGI/Complete Genomics.

Around 1,350 amendments were filed to the NDAA, but the House Rules Committee did not include the Act in its final selection of 350.

That may not be the end of the matter, as its backers could take a different legislative route, and the politically loaded, Biden-backed NDAA – which also covers contentious areas like funding for the war in Ukraine and aid for Palestine – may well not make it through the legislative process ahead of the Presidential elections in November.

For now, at least, the omission means that some of the pressure on the companies cited in the Act has been alleviated.

SmartKarma analyst Criss Wang said it means that the possibility of BIOSECURE Act becoming formal legislation is reduced, but pointed out that US companies have already been negotiating with other contract manufacturers to reduce their reliance on WuXi AppTec and the company remains in a “dangerous period.”

A recent GlobalData survey of biopharma organisations in the US found that around half of all respondents said they believed the BIOSECURE Act would have no impact on them, with a third saying they would get a benefit from the legislation and one in five predicting harm due to loss of funding or contracts.

Its backers - Representatives Raja Krishnamoorthi and Brad Wenstrup – insist that US supply chains “must break free from our dependency on foreign adversaries”, adding: “American patients cannot be in a position where we rely on China for genomic testing or basic pharmaceutical ingredients.” Wenstrup is due to retire after the forthcoming elections.

Shares in WuXi AppTec rose almost 7% on the news, while WuXi Biologics was up around 14%.