On February 7, the Bureau of industry and security (BIS) of the U.S. Department of Commerce issued a statement announcing the inclusion of 33 entities headquartered in China in the so-called “unverified list” (UVL). In this “unverified list” (UVL), Hong Kong listed companies and CXO Longtou pharmaceutical listed organisms are listed.
On February 8, affected by this news, the secondary market of YaoMing biology once fell by more than 30%, and trading was suspended in the intraday until the closing. The share price fell by nearly 23% on that day, and the market value fell below HK $300 billion to HK $262.4 billion.
Yaoming biology held investor meetings and media briefings on the morning and noon of February 8. Chen Zhisheng, CEO of the company, told the Securities Daily that the “unverified list” is not a more well-known American “entity list” or “blacklist”. In the past, Chinese enterprises were removed after entering the “unverified list”. This matter has no impact on the company’s business or the continuous service of global partners.
Affected by the above news, the shares of many listed companies in CXO also fell. In this regard, Chen Zhisheng told reporters: “this is only a case and will not have an impact on the whole pharmaceutical outsourcing industry. What international customers value is the service ability of the enterprise”.
giants enter the “unconfirmed list”
Yaoming biology is the leading enterprise of China’s biopharmaceutical CXO track, with a total market value of more than HK $500 billion. Being included in the “unverified list” made Yaoming biological worth less than HK $300 billion.
For the sudden Black Swan incident, Yao Mingsheng clarified that the “unverified list” was mainly based on the fact that the U.S. agency could not verify the “legitimacy and reliability of all parties accepting U.S. exports”. The list is not an entitylist or blacklist.
According to the reporter, unlike the list of entities and the list of those who refuse to trade, being included in the unverified list does not mean a comprehensive embargo. Without special circumstances, enterprises still have the opportunity to continue their business while meeting some additional procedural requirements; And the procedures and requirements for the application to be removed from the list are relatively easy to meet and complete.
At the same time, another giant Wuxi Apptec Co.Ltd(603259) of YaoMing department was also shot in the above “unverified list” incident. On February 8, Wuxi Apptec Co.Ltd(603259) A shares fell by the limit and H shares fell by more than 11%.
In this regard, Wuxi Apptec Co.Ltd(603259) urgently issued a Clarification Announcement, saying that neither the company nor its subsidiaries were included in the “unconfirmed list” by the U.S. Department of Commerce. The current production and operation of the company is normal. Yaoming biology is an independent listed company, and the company does not hold any shares of YaoMing biology.
“In the past ten years, Yaoming bio has been approved by the U.S. Department of Commerce to import some disposable bioreactor controllers and hollow fiber filters. We strictly abide by relevant export regulations and have never re exported or resold to any other legal entity. The U.S. Department of Commerce aims at the rational use of these products (i.e. self-use, no resale) There is a routine verification procedure, but it cannot be completed in time in the past two years due to the covid-19 pneumonia epidemic. ” Chen Zhisheng said.
Yao Mingsheng said in a Chinese statement that the services provided by the company to global customers will not be affected by the inclusion of the two subsidiaries in the “unverified list”, and all businesses are progressing steadily. The company is ready to respond to the verification inspection of the U.S. Department of commerce at any time, and is also actively taking temporary measures to remove the two companies from the “unverified list” before the inspection.
overall callback of CXO industry
Recently, any disturbance in the upstream and downstream of the industrial chain and at the policy level has affected the sensitive nerves of the CXO industry, thus affecting the secondary capital market.
At the end of 2021, the U.S. Department of Commerce announced plans to add dozens of additional Chinese companies to the entity list, including some biotechnology companies. This also triggered the association of the market. Many CXO leading enterprises have started the deep callback mode: since December 2021, as of February 7, 2022, the overall decline of Hong Kong listed companies Joinn Laboratories (China) Co.Ltd(603127) , Hangzhou Tigermed Consulting Co.Ltd(300347) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Pharmaron Beijing Co.Ltd(300759) has exceeded 20%. If the time is prolonged, the retreat will be greater.
Despite market concerns, CXO’s leading performance is very beautiful.
Yaoming biological released the performance forecast for 2021 on February 7, saying that it is expected that the company’s profits and profits attributable to equity shareholders of the company last year will increase by more than 105% and 98% respectively year-on-year. According to the performance forecast released on January 16, the company expects the annual revenue to be 4.505 billion yuan – 4.662 billion yuan, a year-on-year increase of 43% – 48%, of which the revenue in the fourth quarter was 1.675 billion yuan – 1.73 billion yuan, a year-on-year increase of 57% – 62%; Excluding the impact of exchange rate, it increased by 52% – 57% and 62% – 67% in the whole year and the fourth quarter respectively.
CXO’s revenue mainly comes from the R & D expenditure of pharmaceutical giants outside China. As a “water seller” behind innovative drugs, under the background of the continuous outbreak of biomedical innovation, the emergence of new technologies and new paths, and the increasing demand for international pharmaceutical R & D outsourcing, CXO racetrack has stood at the tuyere. Especially in the current covid-19 epidemic, China’s CXO track is booming, and the overall business revenue and profit are still growing at a high speed.
For the impact of this incident, Shi lichen, a medical strategy expert, told the Securities Daily that it will have an impact on some CXO enterprises focusing on overseas business. An analyst who asked not to be named told reporters: “entering the ‘unconfirmed list’ will indeed cause investors to worry about the company, especially the whole sector. However, as the State encourages pharmaceutical innovation, especially the transfer of pharmaceutical outsourcing industry to China is more obvious, temporary changes will not change the real trend.”
