By Clarence Leong
Shares of Wuxi Biologics (Cayman) Inc. and its peers fell in Tuesday morning trade in Hong Kong, after the Biden administration's move to bolster the U.S. biotechnology industry stoked fears of Chinese companies being targeted.
Wuxi Biologics slid 17% to 55.05 Hong Kong dollars (US$7.01), heading toward its biggest one-day percentage drop since February. The stock has lost 41% so far this year.
Other pharmaceutical companies also declined, with Wuxi AppTec Co., Pharmaron Beijing Co. and Asymchem Laboratories (TianJin) Co. down between 10% and 13%. The city's benchmark Hang Seng Index was up 0.2%.
The selloff came after President Biden on Monday signed an executive order to advance biotechnology and biomanufacturing innovation domestically, which includes developing a strategy to "mitigate risks posed by foreign adversary involvement in the biomanufacturing supply chain," according to a White House statement.
The Covid-19 pandemic has shown the "vital role of biotechnology and biomanufacturing" in developing life-saving vaccines, the statement said.
The Chinese biomanufacturing sector's "fast-growing profile and efficiency in the Covid-19 context puts the sector under spotlight," Nomura analysts Jialin Zhang and John Nie said in a note. They said they expect short-term pressure on the sector and in particular Wuxi Biologics.
In early July, media reports suggested that Wuxi Biologics may be closer to being removed from a U.S. trade list, boosting the stock. Two units of Wuxi Biologics were placed on an "unverified list" by the Commerce Department in February, subjecting them to tighter export controls.
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(END) Dow Jones Newswires