Health & Beauty

On February 7, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) released an updated "Unverified List (UVL)", which will be published on the Internet on February 8. In this "unverified list (UVL)", 33 Chinese units have been added, and CDMO companies WuXi Biologics and WuXi Biologics (Shanghai) are listed.

Affected by this news, WuXi Biologics fell more than 14% at the opening on February 8, and as of press time, the company fell more than 30%. In addition, the CRO sector fell as a whole, WuXi PharmaTech fell by the limit, Pharmaron, Asymchem, Jiuzhou Pharmaceutical, Zhaoyan New Drug, etc. fell.

Regarding this incident, WuXi Biologics issued a response on the official public account on the morning of February 8. The company said in a statement that it has learned of a recent announcement by the U.S. Department of Commerce that two subsidiaries of WuXi Biologics in Shanghai and Wuxi will be added to the department’s “Unverified List” (UVL) on February 8, 2022. The company believes that the U.S. government agency took this action because U.S. government agencies failed to conduct the necessary end-use verifications in order to export certain equipment from U.S. suppliers. The Unverified List is not the more commonly known US Entity List or Black List.

At the WuXi Biologics Current Situation Conference held by CITIC Construction Investment Pharmaceuticals on the morning of February 8, Chen Zhisheng, executive director and CEO of WuXi Biologics, said that due to being included in the list, the company's purchase of bioreactor hardware and a very small number of filters need to go through the United States. Approved by the Ministry of Commerce, other materials will not be affected; and only the Shanghai and Wuxi companies are affected, and the other companies are not affected; the company is actively talking, hoping to accept the US inspection to prove that there is no abuse, and then remove itself from the list as soon as possible. ; The company's business will not be affected, nor will it affect serving customers.

WuXi Biologics' statement also said the company has been importing certain hardware controllers for bioreactors and certain hollow fiber filters for the past 10 years, which are subject to U.S. export controls but have been approved by the U.S. Department of Commerce. . The company complies with all U.S. export control regulations. The company will not re-export or resell these items to any other entity. The Department of Commerce has a routine process to verify that these items are being used properly on the site (ie, for personal use, not for resale). Due to the Covid-19 pandemic, this process has not been completed for the past two years.

WuXi Biologics said this will not affect the company's business or continued services for global partners, and will have little impact on the company's imports, as such equipment is not required after the construction of factories in Shanghai and Wuxi. Companies are welcome to check for removal and removal from this list at any time. The company is also taking temporary steps to remove these affiliates from the list pending inspections.

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) blacklist includes Denied Persons List, Unverified List, Entity List, and Military End-User List. In December 2021, the U.S. Department of Commerce announced that it would add dozens of Chinese units to the Entity List, including some biotech companies, which immediately triggered a slump in WuXi’s stock price. However, the entity list released in December of that year did not include biopharmaceutical companies or CDMO companies, but the Academy of Military Sciences and its 11 affiliated research institutes were included.

It should be noted that the export, re-export, or domestic transfer of any U.S. item to individuals and entities on the Entity List requires a special license from the U.S. Department of Commerce, Bureau of Industry and Security, and license exceptions do not apply. In contrast, the Unverified List is primarily aimed at parties whose end-uses of items cannot be identified in their previous transactions by the U.S. Department of Commerce, Industry and Security, and vary widely in scope and degree of impact. Therefore, in theory, companies listed on the unverified list can be expected to be removed from the list as long as the inspection department can confirm that the traded items are used in compliance.