After being named by U.S. lawmakers, WuXi AppTec has been busy putting out fires recently, first urgently convening a ** meeting, then issuing a clarification announcement, and finally simply making a big move: taking out 1 billion yuan to buy back the company's shares.
On February 5, WuXi AppTec announced the completion of the buyback. But investors don't seem to appreciate it at allAfter a brief red in the morning, the day was still down.
WuXi AppTec's troubles are not limited to the market. As we all know, more than 80% of WuXi AppTec's revenue is overseas, and its customers come from more than 30 countries, and it is necessary to maintain the trust of these customers.
On February 5, WuXi AppTec made an unprecedented unified voice directly to customersThrough the official website, an open letter from WuXi AppTec's management team to customers was published, which attracted the attention of the industry.
The letter, which was released in both Chinese and English, reiterates that "WuXi AppTec has not, is and will not pose a risk to any country in the past, present, and future." At the same time, he added: "The United States** has identified certain companies as posing a risk to the United States*** and imposed sanctions on them." But,WuXi AppTec has never received such designations or been subject to sanctions. ”
Source: WuXi AppTec wait-and-see.
Can WuXi AppTec succeed in saving itself?
WuXi AppTec retreated step by step
Judging from WuXi AppTec's external performance in recent days, the situation is not optimistic.
On January 25, a draft version of the Biosecurity Act submitted to the U.S. House of Representatives circulated in the industry. The proposal, in the name of maintaining ***, aims to restrict U.S.** transactions with specific biotech companies, in which WuXi AppTec is specifically named. Soon, this CRO leader led the decline in A-shares and Hong Kong stocks.
On the evening of the 26th, WuXi AppTec immediately organized a press conference to respond to the questions about the proposal one by one. On the 27th, WuXi AppTec issued a clarification announcement: the draft has not yet taken effect and promulgated ......We firmly believe that WuXi AppTec's business development will not pose a risk to the security of any country.
At this stage, WuXi AppTec has been spreading a concept to the outside world:The U.S. legislative process is long, and this matter still needs to be discussed; Taking 10,000 steps back, the company's business did not endanger the security of the United States.
On January 30, Morgan Stanley said that the market may have overreacted to the draft, and that "even if the bill becomes law, it will only restrict the outsourcing of projects that receive federal funding to overseas companies." ”
But the capital markets did not accept this. WuXi AppTec's stock price has been ** since the release of the news from the U.S., and there has been new progress in the U.S. side.
On February 3, the Global Times quoted the United States as reporting that the "biosecurity bill" recently proposed by the Senate and the House of Representatives has been postponed. This indicates that the proposal is still under considerationIt is not subject to the will of third parties such as WuXi AppTec and Da Mo.
During this period, on February 2, Bank of America Merrill Lynch medical policy analysts also said at the ** meeting that the scope and extent of the impact of the proposal may exceed market expectations: once a bill is formed,It's not just federally funded programs that are directly funded** that are affected, as are biotechnology programs that are linked to U.S. health care.
Drugs that are reimbursed by all types of health insurance in the U.S. may be considered "receiving federal funds." If the scope is extended, it will be difficult for named foreign biotech companies to participate in projects that will be able to obtain U.S. taxpayer funding from any source.
The analyst also notedIt is "only a matter of time" before the bill is legislated"Investors who are still on the sidelines and waiting for a turnaround may be disappointed." ”
For WuXi AppTec, things are getting serious, the U.S. sideFrom the "accusation" of harm on the upper platform to a more direct cut off of business.
On February 2, the company announced that it planned to spend 1 billion yuan to repurchase the company's shares. According to the announcement on the evening of February 5, the repurchase of 1 billion yuan was completed within one day.
Gold and silver** combined with thunder speed, but failed to significantly boost the stock price.
At the same time, on February 5, WuXi AppTec issued another announcement to clarify:The company does not have a human genomics business, does not collect human genomics data in any of its existing businesses, and has no affiliation with any ** or its military organizations.
Maintain the trust of the first party
Concerns have begun to focus on WuXi AppTec's business. According to the financial report, WuXi AppTec serves customers in more than 30 countries around the world. In the first three quarters, the company's revenue from U.S. customers was 1940 billion yuan, accounting for 65 percent of total revenue67%, revenue from European customers 32800 million yuan, 52400 million yuan.
Fitch reminded WuXi AppTec in October last yearThe high proportion of overseas revenue leads to excessive risk exposure of the company, and any regulatory pressure will affect business development.
Nowadays, due to the influence of U.S. political factors, not only American customers may be affected, but other overseas customers may also have concerns.
WuXi AppTec once said in its financial reportThe company has a large and expanding customer base, and the customer stickiness is extremely strong. In the first three quarters of 2023, nearly 99% of the company's revenue came from existing customers.
The CRO market is relatively mature, and large pharmaceutical companies will have many choices. Are these existing clients now following WuXi AppTec and ignoring US provocations, or are they switching to other CROs? I believe WuXi AppTec has already estimated it.
At the ** meeting on the evening of January 26, an investor asked: Will the company's customers be more cautious when cooperating with WuXi AppTec due to geopolitical and other factors? WuXi AppTec management said at the time: "It's too early to guess anything at this point in time. ”
On February 5, WuXi AppTec, which once felt that it was too early, could not sit still and published the "Open Letter from WuXi AppTec's Management Team to Customers" through various channels, directly issuing clarifications to customers.
Can WuXi AppTec win this defense battle?
Written by丨Li Ao.
Edited by Jiang Yun Jia Ting.
Operated by Han Jinrui.
Photo source: Visual China.
Disclaimer: Original content of the Health Knowledge Bureau, please do not do it without permission**