WuXi's Shares Plunge as Commerce Dept. Adds it to "Unverified List"

China_Compressed

The U.S. Commerce Department has added 33 Chinese entities to an “unverified list,” requiring U.S. exporters to undergo more procedures before shipping goods to the companies. WuXi Biologics was amongst those on the list, with the United States stating that it was unable to verify the legitimacy and reliability of the company in its use of U.S. exports. 

WuXi Biologics reported a tremendous 25% plunge in stock value, losing $9.9 billion in market value as its facilities in Wuxi and Shanghai were named on the list.

WuXi Biologics is a pharmaceutical company that provides open-access biologics technology to provide end-to-end solutions for organizations to discover, develop, and manufacture biologics and builds manufacturing facilities for other pharmaceutical and biotech companies. The company boasts that as of June 2021, they are conducting a total of 408 integrated projects on behalf of its clients and partners worldwide, four of which are in commercial manufacturing. In March 2021, WuXi Biologics began producing COVID-19 vaccines for AstraZeneca in a substance facility purchased from German-based Bayer

For the last ten years, the company has been purchasing hardware controllers for bioreactors and certain hollow fiber filters from the U.S. that have received approval from the Commerce Department. WuXi Biologics is prevented from reselling or re-exporting these items by U.S. export controls, but the Commerce Department has been unable to conduct checks to see if the company is complying. 

In a statement released by WuXi Biologics, the entity indicated that it was in compliance with all U.S. export control regulations and that there is no reselling or re-exporting of items purchased from the U.S. Further, the company states that they have no need for further purchases of these items from the U.S. as it has finished facility construction in Shanghai and Wuxi.

WuXi Bio’s CEO Chris Chen has cited the COVID-19 pandemic as the reason for not receiving verification. “Because of Covid-19, they have not been able to travel here in the last two years to verify us, so they have put us on this ‘unverified list,’” he said in a press release

WuXi Biologics states that being added to this list has no impact on its ongoing services or business and that there is very minimal impact on its imports. However, the company has lost nearly $10 billion in its market value and has since halted trading shares. A sister biopharmaceutical company to WuXi Biologics, WuXi AppTec Co., also plummeted in the value of its stocks with the announcement. 

The company is working with its lawyers to negotiate with the U.S. Commerce Department and pursuing measures to be removed from the unverified list. WuXi Biologics stated that it welcomes inspection from the U.S. at any time to receive clearance. 

In February 2021, WuXi Biologics was presented with several CMO Leadership awards, a U.S.-based award bestowed to companies across six core categories: capabilities, compatibility, expertise, quality, reliability, and service. The awards are based on research from Industry Research’s Contract Manufacturing Quality Benchmarking annual online surveys where participants are recruited from pharma and biopharma companies of all sizes and screened for decision-making influence related to working with contract manufacturing suppliers. 

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