On January 20th Eastern Time, President elect Trump will hold his inauguration ceremony, and the highlight of the ceremony - Trump's swearing in ceremony and inauguration speech - will take place at 12 noon Eastern Time (i.e. 1 am Beijing Time on January 21st), at which time Trump will officially begin his second presidential term.

According to media reports, during a two-hour meeting with Senate Republicans, Trump stated that he has prepared about 100 executive orders and plans to sign them on his first day of office on January 20, 2025. These administrative orders may involve multiple sensitive areas such as tariffs and borders, and will set the tone for the global financial market.

Since Trump nominated "vaccine skeptic" Robert Kennedy Jr. as the next Secretary of Health and Human Services last month, the US pharmaceutical industry has been shrouded in gloom.

In September of this year, Kennedy Jr. published a signed article in The Wall Street Journal, elaborating on his "MAHA" philosophy and specific plans. The core mission of MAHA is to reverse the spread of chronic diseases and blame it on large food and pharmaceutical companies in the United States, believing that these industries use lobbying power to maximize profits at the expense of national health.

After the news came out, the stock prices of globally renowned vaccine manufacturers plummeted, with Moderna falling 6%, Pfizer falling nearly 2%, German company BioNTech closing down 7%, and UK based GlaxoSmithKline falling 2%. The US Biotechnology Index (XBI) has also experienced a continuous decline, with a drop of over 10%.

In addition, the tariff war and uncertain internal and external environment have also made the future situation of the domestic biopharmaceutical industry uncertain

01
CXO's top brother 'sharp sword' hangs high

During his campaign, Trump made it clear that he would "take a series of reform measures to completely eliminate America's dependence on China in all key areas. This means that the United States may continue to take a tough stance in the pharmaceutical industry, especially under the guise of "national security", and restrictions on Chinese biotechnology companies may increase.

This is not good news for WuXi AppTec.

How much impact will the US sanctions have on WuXi AppTec's business? Since the beginning of 2024, the "sanctions" incident has repeatedly escalated, causing the stock price of WuXi AppTec to continue to decline, with a cumulative decline of over 20%.

WuXi AppTec's business is highly dependent on American customers. According to the financial report, in the first three quarters of 2024, WuXi AppTec achieved a revenue of 27.7 billion yuan, a year-on-year decrease of 6.23%; The net profit attributable to the parent company was 6.533 billion yuan, a year-on-year decrease of 19.11%. Among them, the revenue from American customers was RMB 17.62 billion, accounting for 64% of the company's total revenue of RMB 27.702 billion.

And due to the significant influence of the United States in the downstream global innovative drug market, it holds a 61% market share. So, under US sanctions, if WuXi AppTec cannot take orders from American customers, even if it seeks alternative regional customers outside the US market, it is clear that customers who only account for 40% of the market share outside the US cannot fully fill the "gap" in the US market.

What impact does the Trump administration have on the legislative evolution of the Biosafety Act after the US election? At the Q3 performance briefing held by WuXi AppTec, as a leading domestic CXO and directly related party to the Biosafety Act, many investors constantly asked questions about the progress of the Act and the company's business prospects in the United States.

Hu Zhengguo, Vice Chairman and Global Chief Investment Officer of WuXi AppTec, said, "The Biosafety Act was initiated by the current Congress during its term, and the US election has no direct impact on the Biosafety Act that is still in the legislative process. There is still uncertainty about whether the bill can be passed during the current Congress term

In fact, this is also the case. Currently, the so-called sanctions imposed by the US are not easy to operate.
At the end of 2023, the Biosafety Act was passed, and subsequently, both houses of the US House of Representatives and Senate pushed for legislative processes aimed at prohibiting foreign biotechnology companies from doing business in the United States under the guise of "national security", with WuXi AppTec among them.

The threat has always existed, but the number of American customers of WuXi AppTec is actually increasing. In the first quarter of 2023, customer revenue in the United States accounted for 60.1% of Pharmaron's revenue, and in the first quarter of 2024, it reached 61.4%.
In 2024, WuXi AppTec added more than 800 new customers, with orders in hand of 43.82 billion yuan in the first three quarters, a year-on-year increase of 35.2%, setting a new historical high. Based on the 12-18 month conversion cycle of orders in hand, the company's performance recovery in the medium and long term is very optimistic.

Until the end of 2024, the United States announced that the Biosafety Act was not included in the final agreement text of the 2025 National Defense Authorization Act. This means that the time for possible sanctions on WuXi may be extended by another year.

It is still unknown whether the US' sanctions' will be implemented, but WuXi AppTec has already started preparing for a new round of prosperity.

At the 43rd J.P. Morgan Healthcare Conference held in the United States in January 2025, WuXi AppTec expressed confidence that the company will perform better in 2025 than in 2024. WuXi AppTec is confidently preparing to expand its capital expenditures: the company will continue to accelerate global capacity construction, and is expected to double its D&M capital expenditures by 2025. Currently, there are six sites under construction worldwide to better meet the growing demands of global customers.

As a "water seller" in pharmaceutical innovation, WuXi AppTec helps innovative pharmaceutical companies conduct research and development, production, and sales, and the industry's prosperity depends on the investment heat of the pharmaceutical industry. At the JPMorgan Healthcare Conference in January this year, WuXi AppTec revealed a set of "terrifying" data, proving the company's current dominant position in the global innovation drug outsourcing field:

In 2024, the FDA approved 60 new drugs and 31 small molecule new drugs, with WuXi AppTec producing 6, accounting for 19%. Among the top 10 most influential molecules of 2024 published in the "Hunter" magazine, WuXi AppTec produced 7 of them. It can be said that WuXi AppTec has become an indispensable partner for global pharmaceutical giants.

02
Biosafety bill 'haze' or long-term existence

At the 43rd JPMorgan Healthcare Conference held recently, many preliminary interpretations and adjustments of the pharmaceutical industry regarding Trump 2.0 regulation were revealed. Some experts believe that after Trump takes office, China's potential for innovative drugs is expected to be further unleashed.

But there is also a voice that the legislative process of the Biosafety Act is likely to make a comeback in 2025.

This viewpoint has been endorsed by many industry insiders. Yang Tao, a senior executive of a listed biopharmaceutical company, said, "It is highly likely that the bill will be presented next year to intimidate domestic CRO companies, and some lawmakers will once again join forces to initiate the legislative process. Against the backdrop of intensified competition between China and the United States, the United States is trying to maintain its advantage in segmented fields, and the judgment of relevant US lawmakers on China's biopharmaceutical field is biased, which cannot be reversed in the short term

Starting from early 2024, domestic CRO companies have been forced to accept the fact that relevant members of the US Congress have officially proposed the legislative process for the Biosafety Act, which has become a shadow over domestic CROs throughout the year.
Subsequently, the hype surrounding the bill was accompanied by intermittent appearances by relevant US lawmakers, constantly disrupting the stock prices of CRO companies represented by WuXi AppTec, which have a high proportion of revenue in the United States. Taking WuXi AppTec as an example, the lowest point of its stock price this year reached 36.36 yuan, and its market value once shrank by more than one-third.
At the end of the US congressional session at the end of the year, with separate legislation for the Biosafety Act and attempts to free ride the National Defense Authorization Act and CR Act for fiscal year 2025 failing, the stock prices and market values of WuXi AppTec and CROs finally saw some recovery.
On January 17, 2025, Chinese CRO giant WuXi AppTec announced the sale of its medical device testing business in the United States. It will sell its two factories located in Atlanta, Georgia and St. Paul, Minnesota to NAMSA, a medical technology testing, clinical, and regulatory consulting company headquartered in Ohio.

This is the third time in the past month that the WuXi AppTec has sold off overseas assets. These actions can also be seen as measures to address the risks of the Biosafety Act:

On December 24, 2024, WuXi AppTec announced that it had signed an Equity Purchase Agreement to transfer all of its equity holdings in the US operating entity of WuXi ATU business and the UK operating entity of WuXi ATU business to a US equity investment fund called Altaris for cash consideration.
On January 6, 2025, WuXi Biologics announced an agreement with MSD International GmbH regarding its Irish vaccine factory. According to the agreement, Merck will acquire WuXi AppTec's vaccine factory in Ireland for a total transaction amount of approximately $500 million.