Shares of the Hong Kong-based WuXi AppTec Co. (HK:2359) dropped sharply after the U.S. House of Representatives passed a restrictive bill, curbing the Chinese company’s funding and operations within the U.S. The Biosecure Act, which could block Chinese biotech firms from obtaining federal contracts, passed its first vote on Monday and now heads to the Senate.
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The bill’s passage caused a breakdown among the Chinese biotechnology companies listed on the Hong Kong Stock Exchange. WuXi AppTec lost over 8% as of writing while WuXi Biologics (HK:2269) fell by around 4%.
WuXi AppTec offers research, development, and manufacturing services to support pharmaceutical and biotech companies globally.
WuXi AppTec Faces Setback as U.S. Tightens Restrictions
The bill was first introduced in December mainly due to concerns about the potential misuse of the personal health data of Americans by Chinese entities. The bill prohibits U.S. federal agencies from entering into contracts or offering funds to Chinese biotech companies.
In response to the approval of the bill, Wuxi AppTec expressed disappointment over the House vote. It further stated that it unfairly targets the company without following appropriate legal procedures. Additionally, Wuxi AppTec refuted claims of posing a security threat to the U.S., emphasizing that their work is focused on human genomics and data analysis.
On the other hand, Republican congressman James Comer supported the bill and accused WuXi of aiding Chinese military research and allegedly stealing intellectual property from U.S. firms.
What Is the Price Target for WuXi AppTec?
Since its introduction, the bill has led to a lot of panic among investors, resulting in a sell-off in Wuxi AppTec shares. Year-to-date, the stock has lost 56% in trading.
As per the consensus rating on TipRanks, 2359 stock has received a Strong Buy rating supported by three Buys and one Hold recommendation. The WuXi AppTec share price target stands at HK$57.64, signifying a potential upside of 66.6% from the current level.
