WuXi AppTec's CEO pledges to 'do the right thing' as sales slip following US biosecurity scrutiny

With WuXi AppTec’s very existence under threat from proposed biosecurity legislation in the U.S., the Chinese CDMO giant is standing its ground on its quest to preserve its business and “do the right thing,” the company’s CEO, Ge Li, said in the company’s first-quarter earnings report.

Since WuXi AppTec’s founding in 2000, the company has “remained fully committed to the highest quality and compliance standards, prioritizing our customers’ needs, protecting their intellectual property (IP), and abiding by the laws and regulations in the countries in which we operate,” Li said in a statement Monday.

The CEO’s comments come at a moment of great uncertainty for WuXi and other Chinese biotechs following the reveal of the BIOSECURE Act in late January. The bill—which was forwarded by the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party and specifically names WuXi AppTec—seeks to keep federal funding out of the hands of so-called “foreign adversary biotech companies of U.S. national security concern.”

Besides preventing WuXi AppTec from receiving federal contracts, BIOSECURE would likely limit the ability of drugmakers participating in Medicare and Medicaid to work with the CDMO, effectively cutting WuXi out of the U.S. market.

In Monday’s earnings release, Li noted that the proposed legislation could “create short-term uncertainty for the company, our customers and the global pharmaceutical and life sciences industry.”

But despite misgivings about the bill, WuXi AppTec “remains steadfast in ‘doing the right thing and doing it right,’” Li said, adding that the CDMO would continue to support its customers against the backdrop of a hazy political climate.

After defending itself against the “misguided” efforts of the BIOSECURE Act in early February, WuXi AppTec last month tried to assuage investors and customers with a surprisingly upbeat 2024 forecast in which the company predicted it would continue to see revenue growth and expansion projects unfold as planned for the year.

WuXi AppTec released the forecast as it reported 2.5% revenue growth in 2023 to 40.34 billion Chinese yuan ($5.6 billion). The vast majority of WuXi’s sales stemmed from the U.S., according to the company’s earnings report.

In 2024’s first quarter, WuXi’s sales clocked in at roughly 8 billion Chinese yuan (about $1.1 billion), signaling an 11% decline over the sum the company generated for the same period in 2023.

Despite the initial sales downturn, WuXi AppTec is standing by its previously stated goal to reap between 38.3 billion Chinese yuan and 40.5 billion Chinese yuan for all of 2024, Li said.

To further calm customers about the company’s data protection efforts, WuXi AppTec also pointed out in its first-quarter earnings release that it underwent 748 customer quality audits and inspections in 2023 and achieved a 100% pass rate. The company also received 83 information security audits over the same stretch, which yielded “no critical findings.”