On March 7, the CRO plate "blood flowed like a river", WuXi Biologics (02269hk）**21.47%, WuXi XDC (02268.)HK) fell 991%, Tigermed (03347.)HK) also fell 838%。
The ** of the stock price comes from the "black swan". On the evening of March 6, Beijing time, the U.S. Senate Homeland Security Committee held a hearing on the proposal for the Biosecurity Act.
The so-called "Biosecurity Act" was proposed by a senior US Democratic senator, and its core content is to prohibit US federal agencies from signing contracts with BGI, WuXi and other high-profile biotechnology companies, which is equivalent to putting these companies on a blacklist. At the same time, the bill also wants to prohibit ** from entering into contracts with businesses that use these companies' equipment or services to ensure biosecurity in the United States and prevent possible technology breaches and biological threats.
In fact, as early as late January of this year, a proposal for a Biosecurity Bill was circulating in the market, which accused BGI (300676SZ), WuXi AppTec and other companies will pose a threat to the United States.
And only last week did the market get some optimistic signals. According to foreign media reports, Biden signed an executive order that may restrict the activities of gene companies in the United States, but at the same time reduce the pressure on Democrats in the US Congress to support legislation against Chinese contract R&D and manufacturing companies, such as WuXi AppTec and WuXi Biologics.
However, the good times did not last long, and in this hearing, the bill was passed at the meeting with an overwhelming majority of 11 votes in favor and 1 vote against, and there was an uproar for a while. This news undoubtedly brought a huge shock to the domestic biotechnology industry, and WuXi responded sharply, and soon spread to the entire CRO sector, and the capital market chose to "vote with its feet".
According to the information disclosure of the authoritative bill in the United States, the probability of the bill being passed and enacted has increased from 18% previously shown to 23% at this stage. In a short period of time, the repeated sideways jumps of policies have caused market expectations to continue to waver, and investors have been silent.
Some pessimistic voices believe that this reflects the sensitivity of global biosecurity, and that the United States is using its dominant position to try to curb the strong development momentum of the domestic pharmaceutical industry chain, and relevant enterprises may face pressure in the future, so it is advisable to consider "alternatives" as soon as possible to prevent the worst outcome.
However, some analysts pointed out that there are many legislative links in the United States, the cycle is lengthy, and the follow-up needs to be voted by the House of Representatives, voted by the Senate, and signed by the first before it can become law.
Some ** people said that the implementation of the "decoupling" policy in the CRO field is not in line with the interests of the U.S. biomedical industry, and if protectionism is not restricted, it will eventually lead to U.S. consumption
On March 7, the relevant person in charge of Pharmaron also said on the interactive platform that the company does not expect the Biosecurity Act to affect the company's development, and the company's domestic and overseas operations and business development are normal and orderly.
The company previously announced a performance forecast, and it is expected to achieve revenue of 113 in 2023$9.6 billion to $1170.4 billion yuan, a year-on-year increase of 11% to 14%; It is expected to achieve a net profit attributable to the parent company of 15$6.7 billion to $163.6 billion yuan, a year-on-year increase of 14% to 19%. It is not easy for the company to regain its growth momentum after a slight decline in earnings in 2022.
Although WuXi Biologics did not announce its earnings forecast, in January this year, the company released a 2024 annual healthcare conference briefing, which mentioned that its business and financial position remain strong, with 132 new projects added in 2023, bringing the total number of projects to 698.
Some brokerage institutions believe that China's pharmaceutical outsourcing companies have been deeply embedded in the global biomedical industry chain, empowering the R&D and production of new drugs around the world, achieving a win-win situation with global pharmaceutical customers and benefiting patients. The fluctuation of short-term overseas policies does not affect the long-term fundamental logic of China's pharmaceutical outsourcing enterprises, and they may continue to maintain steady development in the future.
Author: Flying Fish.