US bill to restrict business with China’s WuXi AppTec, BGI passes House

By Karen Freifeld

(Reuters) -The U.S. House of Representatives passed a bill on Monday that aims to restrict business with China’s WuXi AppTec, BGI and several other biotech companies on national security grounds, drawing condemnation from Beijing.

It was the first floor vote for the Biosecure Act, which would prohibit federal contracts with targeted firms and those that do business with them.

Supporters argue the measure is necessary to protect Americans’ personal health and genetic information as well as U.S. pharmaceutical supply chains.

The bill passed by 306 to 81, easily topping the two-thirds majority necessary under the process. The legislation must pass the U.S. Senate before it can be sent to President Joe Biden to be signed into law.

In a debate on the House floor earlier on Monday, Representatives John Moolenaar and Raja Krishnamoorthi, the chair and ranking member of the House Select Committee on China, respectively, were among those who argued in favor of the legislation.

Representative Jim McGovern, a critic of China’s human rights abuses, opposed the bill, arguing that he could not get a clear answer for how the companies were identified. WuXi Biologics, which is targeted, is constructing a facility in his district in Massachusetts.

Describing the bill as “discriminatory”, the Chinese foreign ministry said the U.S. should stop making “excuses” to suppress Chinese enterprises.

“China will continue to firmly safeguard the legitimate rights and interests of its companies,” said Mao Ning, a ministry spokesperson, at a regular news conference on Tuesday.

WuXi Biologics did not immediately respond to a request for comment.

WuXi AppTec said in a statement it was “disappointed” in the House vote which it said “pre-emptively and unjustifiably designates our company without due process.”

Hong Kong-listed shares of WuXi AppTec and WuXi Biologics slumped as much as 11% and 9%, respectively, on Tuesday.

The U.S. Senate’s Homeland Security committee voted in March to approve a similar bill, but it is unclear if and when the full Senate will vote on the legislation.

The targeted companies have all maintained the measure is based on false and misleading allegations and that it would limit competition. They deny posing any threat to U.S. national security and each say they should not be included in the bill.

“We are disappointed that the U.S. legislative process is being used to pick winners and losers,” BGI Group said in a statement that reiterated it posed no national security risk.

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Other companies named are China’s MGI and its California-based subsidiary Complete Genomics.

“As we have stressed repeatedly, MGI and Complete Genomics as equipment vendors, do not have access to, collect, or maintain the patient genetic data, our customers retain full control over any data they generate,” MGI said in a statement.

A spokesperson from Complete Genomics said that “geopolitics instead of facts” drove the House passage of the bill.

“We and many across the pharmaceutical and life sciences industry are deeply concerned about the legislation’s impact on U.S. leadership in biotechnology innovation, drug development, and patient care,” the spokesperson said.

(Reporting by Karen Freifeld; Additional reporting by Kanishka Singh in Washington, Colleen Howe in Beijing and Casey Hall in Shanghai; Editing by Chris Sanders, Leslie Adler, Jamie Freed and Muralikumar Anantharaman)