Wuxi, China biotech stocks surge on hopes of less severe US sanctions

Investing.com– Chinese biotechnology stocks surged on Monday, with WuXi shares leading gains after proposed U.S. legislation to blacklist the sector was excluded from a recent defense bill.

WuXi AppTec Co Ltd (SS:603259) (HK:2359) surged over 8% in Shanghai and Hong Kong trade, while WuXi Biologics (HK:2269) rose nearly 9%.

Asymchem Laboratories Tianjin Co Ltd (HK:6821), Frontage Holdings Corp (HK:1521) and Pharmaron Beijing Co Ltd (HK:3759) rose between 2% and 5%.

WuXi and four other firms were named in recent legislation, pitched as the Biosecure Act, to block U.S. business with the firms on grounds of national security, given that they have access to genetic data and healthcare information on American citizens. 

But a key U.S. defense bill for 2025, the National Defense Authorization Act (NDAA), excluded the Biosecure Act, legislation revealed over the weekend showed. 

While the NDAA will still include considerations against Chinese biotechnology firms, it did not mention targeted measures against the five companies mentioned in the Biosecure Act. 

The Biosecure Act- which was passed by the House of Representatives earlier this year- would have severely reduced government contracts being offered to WuXi and its peers, cutting off a major revenue stream. The act still needs to be approved by the Senate to be signed into law. 

WuXi and its peers have maintained that the Biosecure Act held baseless concerns. Several bipartisan U.S. lawmakers had also opposed the act, while Chinese authorities had called it discriminatory.  

Concerns over worsening trade ties between the U.S. and China returned to fore over the past month, as incoming President Donald Trump threatened to impose increased import tariffs on the country. 

The 2025 NDAA still has several provisions against Chinese companies, especially the telecom sector.