US bill targeting Chinese biotech firms WuXi AppTec, BGI hits delay

By Karen Freifeld and Michael Martina

(Reuters) – A bill in the U.S. Congress that sparked a sell-off in shares of China’s WuXi AppTec hit a delay in the Senate this week, a Senate aide and three other sources said on Friday.

The bill would prohibit federal agencies from contracting with China’s BGI Group, MGI, Complete Genomics, WuXi AppTec, their subsidiaries and other biotechnology companies of concern. It would also stop the government from entering into contracts with companies that use their equipment or services.

It sent shares of Wuxi AppTec tumbling 21% overnight.

The bill, sponsored by Democratic Senator Gary Peters, did not move out of committee this week, as expected. It will be considered at a future date, said a majority aide for the Senate Committee on Homeland Security and Governmental Affairs, which Peters chairs.

The bill is not expected to move out of committee for at least a few weeks, said another congressional aide.

A companion bill proposed by Republican Congressman Mike Gallagher, chair of the House select committee on China, accuses the companies of aiding Beijing’s military.

No date has yet been set to move the House bill out of committee, that congressional aide said.

The Chinese biotech companies pose a threat to how sensitive American data and personal health information can be accessed by the Chinese Communist Party, the Senate aide said on Friday.

Shares of WuXi AppTec and WuXi Biologics (HK:) tumbled on Friday as investor fears grew over the draft legislation targeting the China biotech giants.

WuXi AppTec, which provides drug R&D and manufacturing services, has denied any ties to China’s military and said its business does not pose national security risks to any country.

WuXi AppTec said last week that company-related content in proposed U.S. legislation on biosecurity is not appropriate or accurate. The company is “closely watching” the development of the bill, it said in a filing to Shanghai bourse.

BGI Group said last week that it supports protecting personal data, but the legislation “which will effectively drive BGI from the U.S. market will not accomplish this goal.” The company added that in the U.S. it does not collect patient samples or have access to personal or genetic data.

Units of BGI Group appear on a U.S. Department of Commerce export control list over allegations that they pose a “significant risk” to contributing to Chinese government surveillance.

Reuters also has reported that BGI was collecting genetic data from millions of women for sweeping research on the traits of populations, and collaborates with China’s military.