Chinese Biotechnology Stocks Surge

Chinese biotechnology stocks experienced significant gains on Monday, led by WuXi shares, after the U.S. legislation aimed at blacklisting the sector was excluded from a recent defense bill.

Market Performance

• WuXi AppTec Co Ltd (SS:603259) (HK:2359) surged over 8% in both Shanghai and Hong Kong.
• WuXi Biologics (HK:2269) increased nearly 9%.
• Asymchem Laboratories Tianjin Co Ltd (HK:6821), Frontage Holdings Corp (HK:1521), and Pharmaron Beijing Co Ltd (HK:3759) saw increases between 2% and 5%.

Background on the Biosecure Act

Recently, WuXi and four other firms were named in the proposed Biosecure Act, intended to block U.S. business with them based on national security concerns, especially regarding access to genetic and healthcare data of American citizens.

However, a crucial U.S. defense bill for 2025, the National Defense Authorization Act (NDAA), excluded the Biosecure Act from its provisions, as revealed over the weekend. While the NDAA will still contain considerations against Chinese biotechnology firms, it notably did not mention specific measures targeting the five companies from the Biosecure Act.

If passed, the Biosecure Act would have significantly cut government contracts for WuXi and its competitors, jeopardizing a vital revenue stream. This act was previously passed by the House of Representatives but still requires Senate approval to become law.

WuXi and other companies claimed that the concerns underlying the Biosecure Act are unfounded, with bipartisan opposition from U.S. lawmakers as well as allegations of discrimination from Chinese authorities.

Trade Relations

Concerns regarding deteriorating trade relations between the U.S. and China have resurfaced, particularly with incoming President Donald Trump's threats to impose higher import tariffs on Chinese goods. The 2025 NDAA will retain various measures against Chinese firms, especially in the telecommunications sector.