US puts further squeeze on WuXi AppTec

The US House of Representatives Committee on Oversight & Accountability committee has approved the Biosecure Act, which will require American companies to cease working with WuXi AppTec, among other Chinese biotechs, by 2032. This follows a vote on an earlier draft by the Senate’s Homeland Security & Governmental Affairs committee. The Act must now go through votes in both chambers and be signed into law by the President.

Also affected are WuXi Biologics, which is under different ownership to WuXi AppTec, BGI, MGI and Complete Genomics. This action is being taken on national security grounds on the basis that hostile foreign governments might misuse the health and genetic data of Amercan citizens. It also cites the danger of China entirely dominating the biotechnology supply chain.

In the first three quarters of 2023, according to investors, two thirds of WuXi AppTec's revenue came from the US market, while WuXi had 47% of its sales in North America for the whole year. Both companies have seen their share prices badly impacted by the restrictions, with WuXi Biologics seeing its fall by over 50% in 2023 and a further 36.5% in Q1 2024.

In March, the three co-CEOs of WuXi AppTec sent an open letter to customers expressing their concern about “a misguided US legislative initiative to target our company without a fair and transparent review of the facts”. While welcoming regulatory oversight, they said, “we strongly object to blanket allegations and preemptive actions against our company without due process … We are confident that upon considering the facts, US lawmakers will understand that WuXi AppTec does not in any way pose a national security risk to any country.”

The immediate effect has been to leave customers scrambling for alternative capacity elsewhere. Given that, according to CBO Yu Lu, WuXi AppTec was involved in 27% of the small molecule drugs approved by the FDA in 2023, this seems entirely plausible. There were claims that WuXi AppTec had closed, or was intending to close, a plant, but the company has since confirmed that this is not the case.

Meanwhile, another Chinese CDMO, Asymchem Laboratories, has signed a lease agreement with Discovery Park, which manages the former Pfizer plant at Sandwich, UK. This will give it its first manufacturing footprint in Europe, operating a small molecule API pilot plant and part of the development laboratories. The latter are expected to begin operation in June 2024, followed by the former in August. The site is expected to employ about 100 by the end of 2024, including many previously employed by Pfizer. Asymchm ads that it plans to add further capabilities for peptide and oligonucleotide manufacture, plus continuous flow and biocatalysis.