WuXi Biologics halts trading after US Commerce Department list sparks record 32 per cent slump

Trading in WuXi Biologics was halted on Tuesday following a record drop in its shares, after the company was added to the US Commerce Department’s “unverified list”.

Bruised by US-China tensions, WuXi Biologics sank by as much as 31.8 per cent, its steepest decline, erasing US$77 billion in market value. It last traded at HK$62.25 before trading was suspended, pending the release of an announcement related to certain inside information.

The pharmaceutical company said in a statement on WeChat on Monday that being put on the US Commerce Department’s “unverified list” will have no impact on its business or services to partners.

“We welcome inspection at any time for the clearance and removal from such list,” the company said in its WeChat statement. “We are also pursuing interim measures to remove these subsidiaries from the list prior to inspection.”

The US Commerce Department on Monday announced restrictions on transactions with 33 Chinese entities, placing them on a so-called “unverified list”. The companies are primarily hi-tech manufacturers and were added to the red-flag list as end-use checks could not be completed satisfactorily for reasons outside the US government’s control.

WuXi Biologics said it has been importing certain hardware equipment for bioreactors that are subject to US export controls, and has obtained approval for the past 10 years.

“The Commerce Department has a routine process to verify the proper use of these on site. This process has not be completed in the last two years due to the Covid-19 pandemic,” the company said in a statement.

WuXi Biologics CEO Chris Zhisheng Chen pictured in June 2017. Photo: David Wong

WuXi Biologics’ chief executive Chris Chen Zhisheng was quoted by the local media as saying that the company’s legal team in the US was preparing to negotiate with the Commerce Department on Wednesday, in the hope of removing its name from the list.

The slump in WuXi Biologics’ shares came a day after the firm announced a 98 per cent increase in profits for 2021, compared with a year ago, according to an exchange filing on Monday.

Wuxi AppTec, a biotech contracting firm controlled by the founders of WuXi Biologics, slumped 15.1 per cent despite not being on the unverified list, wiping out US$39 billion of market value.