US Senate committee sets hearing on China's WuXi AppTec, BGI bill

By Karen Freifeld

(Reuters) -A U.S. Senate committee said on Monday it will hold a hearing on March 6 on a bill that would prohibit federal agencies from contracting with China's BGI, WuXi AppTec and other biotechnology companies of concern.

The bill would also stop the government from entering into contracts with companies that use the Chinese companies' equipment or services. News of the Senate bill, and similar legislation in the House, has sent shares of WuXi AppTec tumbling in recent weeks on fears it would hurt the company's large U.S. business.

The legislation is intended to prevent foreign adversaries from stealing American genetic data and personal health information, according to a statement on the U.S. Senate Homeland Security and Governmental Affairs Committee website.

The committee's hearing is a procedural step, also called a mark-up, to discuss next steps on the bill, which was sponsored by Democratic Senator Gary Peters.

A House bill introduced by Republican congressman Mike Gallagher, chair of the House select committee on China, accuses the companies of aiding Beijing's military.

WuXi AppTec has denied ties to China's military and said its business does not pose national security risks to any country.

WuXI AppTec operates in more than a half-dozen U.S. states including Pennsylvania, California and Delaware, where a subsidiary is investing some $500 million in a manufacturing facility. Two-thirds of its revenue came from the U.S. market in the first nine months of 2023, according to an investor

The company, which also has sites in Europe and China, offers a wide range of services to the pharmaceutical and healthcare industry.

BGI Group has said that statements alleging it is controlled by the Chinese government or military are false. It has said it supports protecting personal data, but that the legislation will not accomplish that goal because it "will effectively drive BGI from the U.S. market."

Earlier this month a bipartisan group of lawmakers told top Biden administration officials that the U.S. should review WuXi AppTec for sanctions.

The lawmakers told Treasury Secretary Janet Yellen, Defense Secretary Lloyd Austin and Commerce Secretary Gina Raimondo that the company's links to China's Communist Party and military threatened U.S. national security.

WuXi AppTec shares have fallen 36% in the last month.

(Reporting by Karen Freifeld in New York; Editing by Chris Sanders, Scott Malone and Matthew Lewis)