The Impact of the US Law Banning WuXi on its US Customers
(Thursday, March 21, 2024) For the last few months, a new Law, called the Biosecure Act, has been gaining bipartisan support in the US Congress, which aims to ban business with Chinese biotech companies, the biggest of them WuXi companies. The law could have some serious consequences for the US customers of these companies. WuXi, which owns a few companies with similar names, is China’s biggest biotech company and vendor that has grown its business exponentially in the US. While the company does business worldwide, according to its financial reports, the company makes almost two-thirds of its revenue in the US, indicating that it has multiple clients in the US. So, the ban would affect its US customers negatively. But would it affect China? This ban comes at a time ripe with anti-China sentiments in the US. China has been increasingly accused of theft of US intellectual property and other bad business practices over decades. Chinese companies are closely controlled by its government and maintain strong relations with its military. Being a closed economy, China also bans many Western companies. So, it is not surprising that the US public opinion is not very friendly to China. Last week, the biggest US-based biotech industry group, BIO, terminated its relationship with WuXi and announced that it backs the Biosecure Act. With both political and business support, the law has a high probability of being enacted. But China is also the manufacturing giant that has supplied products to US consumers for more than 50 years. There is practically no commercial consumer good in the US not connected to the Chinese manufacturers. Biotech products are a minuscule fraction of Chinese products in the US. So, while this ban may look like a big deal, it would have minimal impact on the US dependence on Chinese products. A ban on a few companies in China would not do much to affect the growth of Chinese biotech. WuXi will likely transition its business and stay operational while another Chinese vendor will take its place, likely with WuXi’s and the Chinese government’s help. As far as the US customers are concerned, they would need to find another resource. The main reason US businesses go abroad for services is the cost and efficiency available outside the US for certain kinds of services as they are not available locally. The Biosecure Law does little to change that. AUTHOR
Dr. Mukesh Kumar Founder & CEO, FDAMap Email: [email protected] Linkedin: Mukesh Kumar, PhD, RAC Instagram: mukeshkumarrac Twitter: @FDA_MAP Youtube: MukeshKumarFDAMap |
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