WuXi AppTec Biotechnology Co., Ltd.

Five months after Eli Lilly and Company received two important approvals in China for tizepatide -- one for type 2 diabetes and the other for obesity -- it announced plans to expand its production site in Suzhou, China. To meet the demand for these and other drugs in development. The move signals the company's long-term commitment to China and comes as Eli Lilly chooses to continue expanding its presence in the country amid rising geopolitical tensions between the two countries. An Eli Lilly spokesperson confirmed to the press that the company has set aside $200 million to upgrade its Suzhou manufacturing facility. The new expansion will bring Lilly's total investment in Suzhou to nearly 15 billion yuan ($2.1 billion), according to a press release issued by Chinese state media. The plant, with a 28-year history, is Lilly's only production facility in China and currently employs about 500 people. Eli Lilly China said that with the expansion, the company plans to add 120 new jobs at the facility to support the simultaneous supply of products to the Chinese market and the European market. This move will not only strengthen Lilly's manufacturing capabilities in the Chinese market, but also further solidify its global leadership position in the treatment of diabetes and obesity. The move also reaffirms Eli Lilly's commitment to China at a time of tension between the two countries. In March, Eli Lilly CEO David Ricks expressed a willingness to increase investment in China and strengthen research and development cooperation during a meeting with China's Minister of Commerce Wang Wentao. This statement shows Lilly's importance to the Chinese market and its strategy to seek balanced development in the global pharmaceutical industry. At the same time, the domestic political environment in the United States has also had an impact on Lilly's global strategy. Last month, the U.S. House of Representatives voted to pass the BioSafety Act, a bill that seeks to terminate federal contracts with five life science companies with ties to China, including Wuxi Apptec, Wuxi Apptec Biologics, BGI, MGI and Complete Genomics, citing alleged national security concerns. Although the bill still needs to be voted through by the US Senate, it has already attracted a lot of attention and discussion in the industry. In this context, Eli Lilly is not only making large-scale manufacturing investments in Suzhou to meet the market demand for its blood sugar regulation products Mounjaro (for diabetes) and Zepbound (for obesity), but also seeking new growth and cooperation opportunities globally. These efforts are designed to ensure that Lilly can remain competitive in the global pharmaceutical market and provide innovative treatment options to patients.

Although the US Biosafety Act has not yet officially come into effect, its potential impact on domestic pharmaceutical companies is still significant, like a pending sword. According to the British "Financial Times" recently reported that because of the Biosafety Act "as a potential threat to US national security, two well-known" pharmaceutical "companies are considering adjusting their business layout to deal with potential risks. Specifically, Wuxi Apptec is considering the sale of its Advanced Therapies Manufacturing unit (ATU), which focuses on cell and gene therapies, at its four sites in Philadelphia, while Wuxi has also hired professional advisers to assess potential buyer interest in parts of its European production sites, particularly the two German manufacturing plants it acquired and expanded from Bayer AG. Management has expressed concern that these facilities may no longer meet the Company's future strategic development needs. The U.S. House of Representatives voted on the BioSecurity Act (H.R.8333) on September 9 local time, and passed the bill by 306 votes in favor and 81 votes against. The bill limits the federal government's business with some biotech providers on the grounds of "national security," and specifically names five Chinese biotech companies as "subjects of interest," including Wuxi Apptec, Wuxi Biotech, BADA Group, BADA Intelligence and its subsidiary Complete Genomics. In response to this situation, Wuxi AppTec issued a statement on September 10, strongly opposed this non-due process and unreasonable default designation. The company maintains that it has not, does not, and will not pose a national security risk to the United States or any other country, and that it has not been sanctioned by any U.S. government agency. The storm, which began in January 2024, is expected to continue in the coming months. According to the US legislative process, the bill still needs to be voted on by the Senate, and the version passed by the two chambers needs to be reconciled before it is finally submitted to the US President to sign into law. Before then, the bill still needs to be approved by the Senate, where the legislative process is unclear. It is worth noting that in the version passed by the House of Representatives, the named companies actually enjoy a certain buffer period to continue to perform contracts funded by the U.S. government for customers until 2032. Affected by this, the share price of the named "pharmaceutical" company suffered a heavy fall on September 10. Wuxi AppTec's A-shares and Hong Kong shares closed down 5.38 per cent and 10.43 per cent, respectively, while Wuxi Biotech's Hong Kong shares fell 3.88 per cent. In addition, BGI and BGI also closed down 2.73 percent and 1.5 percent, respectively. On the morning of October 8, WuXi AppTec issued a voluntary announcement to respond to the rumor of the sale of WuXi ATU business. The company said it is currently actively evaluating options to ensure the continued operation of the WuXi ATU business, and stressed that no final decisions have been made regarding the sale of the business. At the same time, a company spokesperson said that it will evaluate options to continue operating ATU based on priorities to safeguard the needs of employees and patients in urgent need of time-critical, life-saving treatments. On the other hand, last month the US House of Representatives overwhelmingly passed the BioSecurity Act, which is now awaiting further consideration in the Senate. If the bill eventually becomes law, it is expected to have a profound impact on the biopharmaceutical industry, especially for those companies that are highly dependent on third-party service providers in China. According to GlobalData, the legislation could affect the development of more than 120 U.S. drugs that work with companies mentioned in the BIOSECURE Act, half of which are in clinical trials and a third are in early preclinical research and discovery. From the financial report data over the years, the domestic leading CXO companies such as Wuxi Apptec, Pharmaron, Kelaeeng, etc., their overseas market revenue accounted for more than 70%, and the scope of overseas market expansion has gradually expanded from the United States to Europe, Southeast Asia and other regions. In response to potential market changes, these companies are actively accelerating the pace of overseas layout. For example, Wuxi Apptech has built a R & D and production base in Singapore, Kellein has completed the layout of a European R & D and production base, Botten Shares in Slovenia has also been put into operation, and Kyushu Pharmaceutical has set up wholly-owned subsidiaries in Japan and Germany to build CRO service platforms. Chen Zhisheng, CEO of Wuxi Biologics, previously said that Wuxi Biologics' business in Europe has grown significantly, from the initial market share of less than 5% to 30%, with Switzerland, Germany and the United Kingdom as the main market sources, and the business scale of individual countries has approached the level of the Chinese market.

Pictured: Dragon and eagle flank a throne of swords/Taylor Tieden for BioSpace As the House Oversight and Accountability last week marked up the BIOSECURE Act that targets China-based biotech companies such as WuXi AppTec and now WuXi Biologics, I couldn’t help but feel a sense of déjà vu from watching Game of Thrones. With a key player switching sides and providing an unexpected assist at a critical moment, the saga of U.S.-China relations in the biopharma world is beginning to look like an episode based on the tumultuous fictional continents of Westeros and Essos. In March 2024, WuXi AppTec separated from BIO after the industry trade association changed its position to support the proposed BIOSECURE Act. Recently, BIO surveyed its members to propose eight years as a “reasonable timeframe for companies to decouple from China-based biomanufacturing.” This timeframe was adopted in last week’s markup, setting a deadline of 2032 for U.S. biopharma companies to sever ties with Chinese contract development and manufacturing organizations (CDMOs) named in the act. This provides a much-needed reprieve for the Chinese companies named in this act and their U.S. customers should this act be signed into law. A floor vote is expected in the next 30 days, and countermoves are already afoot. For example, two WuXi Biologics executives—manufacturing senior vice president William Aitchison and director of public relations Elizabeth Steele—have registered to lobby in Congress. They are not alone, with almost 20 biopharma and life sciences companies registered to lobby on this proposed bill, according to federal records. Professional habits die hard, and as the lead consultant of a boutique PR agency who previously led international communications for a leading Chinese biotech company, I understand that these companies are seeking to strike a balance. If they draw too much attention, they risk being portrayed in an emotional and unpatriotic manner, but if they don’t speak up at all, the bill in its current form will impact their businesses in undesirable ways. With the BIOSECURE Act likely to be passed into law later this year, how can China-based CDMOs and the U.S. biopharma industry speak up to ensure the legislation doesn’t cripple their businesses while avoiding potentially costly mistakes? Walking That Fine Line Nearly 80 percent of U.S. biopharma companies have at least one contract or product with a China-based CDMO/CMO, according to BIO’s survey, which included 124 firms. The survey also revealed that these firms estimate it will take up to eight years to switch manufacturing partners to avoid potentially affecting patients—hence the eight-year decoupling grace period that these companies advocated for and won (for now). But what more can PR professionals do to sharpen their key messages to policymakers and other target audiences? If we take a step back, the U.S. biopharma industry has played its PR cards in a low-key and astute manner to influence this proposed bill through an industry association. Given the tight window to influence the House, I imagine the industry is actively engaging BIO and other associations in the next month to seek additional federal funding required for decoupling. It might be helpful to draw a comparison with the CHIPS Act, which requires that U.S. companies pivot to domestic semiconductor manufacturing and provides $200 billion in funding over the next 10 years to support those companies currently relying on foreign partners. As for WuXi AppTec and Wuxi Biologics, while this grace period represents a reprieve, they are intensifying communications efforts to reiterate that they do not pose a security risk to the United States or any other country while delivering innovative medicines that meet the highest regulatory and quality standards. By registering two additional members of its U.S. team to lobby in Congress, WuXi is continuing a full-court press to get its message out. WuXi AppTec has also added a prominent “U.S. Policy Brief” banner on its website, with easy access to its voluntary statements, investor announcements and a Q1 earnings presentation that included its commitment to data privacy, quality and compliance standards in response to accusations in this bill. Meanwhile, China-based CDMOs not named in this act are also at risk of losing business. A BioCentury survey published in March indicated that 66% of U.S. respondents are unlikely to sign a new contract with a China-based CDMO. Given the potential sensitivity of this bill, these CDMOs are likely to adopt a low-key approach like the U.S. biopharma industry—not making themselves visible by lobbying in Congress, while forming internal cross-functional teams to manage ongoing communications with existing clients. These materials can include third-party audits, certifications and data points related to the companies’ key business areas. This proactive outreach, backed by specific examples, should help to assuage their U.S. biopharma clients’ potential concerns. In addition, China-based CDMOs must prioritize international communications, further reassuring existing clients while also broadcasting more widely that these companies are committed to the global market during the long and potentially unpredictable legislative process. I advise focusing on industry publications and LinkedIn, where audiences are more likely to be professional and less emotional than on X, but however they do it, now is the time to break the communications radio silence that less-established CDMOs tend to adopt by default. As a floor vote is expected soon, PR professionals should focus on strategic, well-calculated moves that could potentially influence outcomes without drawing too much attention or taking undue risk. A series of small yet thoughtful actions could better position the U.S. biopharma industry and China-based CDMOs on separate paths to sustainable growth while enhancing health outcomes. As Lord Varys from the Game of Thrones noted: “A small man can cast a large shadow.” JX (Jaxon) Tan founded Momentum AI Communications, a boutique PR consultancy based in Singapore, with a mission to simplify science and spark engagement with strategic communications. He was previously based in China, where he led international communications for a leading biotech company. Reach him on LinkedIn.