Recently, Chinese CRO giant WuXi AppTec announced the sale of its U.S. medical device testing business. It sold its two facilities in Atlanta, Georgia and St. Paul, Minnesota, to NAMSA, an Ohio-based medical technology testing, clinical and regulatory consulting firm. Financial details of the transaction were not disclosed.

　　#01

Optimize the company's strategic business portfolio

WuXi AppTec's medical device business in the U.S. is primarily conducted through its wholly-owned subsidiary, AppTec (WuXi AppTec USA). AppTec has laboratories in Philadelphia, São Paulo and Atlanta, focusing on providing medical device testing services and overseas precision medicine R&D and production services.

WuXi AppTec's medical device testing services cover all aspects of the entire process, from preclinical safety consulting to product design, testing, and commercialization. These services include material selection and evaluation, product efficacy and property assessment, biocompatibility testing, toxicology analysis, sterilization/inactivation validation, packaging integrity validation, and raw material validation. In addition, WuXi AppTec provides comprehensive testing services to customers through its cGMP and GLP R&D facilities in Minnesota.

WuXi AppTec's medical device business is small in the U.S. market, but it is growing rapidly. According to Sullivan data, the revenue of medical device testing in the United States will reach $590 million in 2022, a year-on-year increase of 15.1%, with an average annual compound growth rate of about 16.3%. WuXi AppTec's medical device testing services have been audited by the FDA, OECD and CNAS, and its testing centers have received multiple international accreditations.

WuXi AppTec said in the announcement that the divestiture is intended to optimize the company's strategic business portfolio, enabling the company to focus more on and position itself to further invest in its core CRDMO business in the U.S. and beyond. At the same time, this initiative also strengthens WuXi AppTec's unique CRDMO model in the pharmaceutical field.

Steve Yang, Co-CEO of WuXi AppTec, said, "This transaction supports the optimization of our strategic business portfolio and strengthens our global CRDMO service capabilities. ”

In an email to employees, Rick Connell, president of WuXi AppTec in the U.S. and European Union, praised the employees who will be moving to the new company, saying that they are leaders in the field of medical device testing. Connell stressed that the company will only agree to the acquisition after finding a partner who is committed to growing the business in a way that benefits employees and customers. "We strongly believe that this partnership will not only facilitate continued business growth, but will also provide better service to our life sciences customers, supporting them in developing therapeutics and devices that meet the needs of their patients," he wrote. ”

The acquirer, NAMSA, is a globally renowned medical technology CRO. Founded in 1967, it provides medical device manufacturers with full product development and research, risk management, quality management and other services. With more than 1,400 professionals experienced in cardiovascular, orthopedics, ophthalmology, dentistry, diagnostic reagents and many other fields, nearly 120,000 devices are tested every year, and its laboratories have obtained several accreditations.

It has branches in the United States, Germany, France, Belgium, Spain, Japan, China and other places, serving more than 3,000 companies from more than 50 countries.

ACQUIRER NAMSA HAS BEEN AGGRESSIVELY EXPANDING THROUGH ACQUISITIONS IN RECENT YEARS, ESPECIALLY SINCE IT WAS ACQUIRED BY ARCHIMED, EUROPE'S LARGEST PRIVATE EQUITY FIRM IN THE HEALTHCARE SECTOR IN 2020. The acquisition of WuXi AppTec's U.S. business is NAMSA's ninth acquisition since that year. Previously, NAMSA had acquired a contract research organization (CRO) in Germany and a scientific consulting firm in Spain.

André-Michel Ballester, CEO of NAMSA, expressed high expectations for the collaboration with WuXi AppTec. "We are very pleased to announce our agreement with WuXi AppTec as it allows us to expand our portfolio of clinical research and testing solutions for our customers," he said. While NAMSA and WuXi AppTec's medical device testing businesses differ in their areas of expertise, we serve the same customer base and will further enhance the customer experience through the integration of capabilities. ”

　　#02

The shadow of the Biosafety Act

On January 25, 2024, the U.S. Senate and House of Representatives, citing the "protection of genetic data and national security", proposed a proposal to target WuXi AppTec, BGI (300676. SZ), MGI (688114. SH) and other Chinese biotech companies. If the bill is passed, the U.S. will restrict these Chinese biotech companies from obtaining U.S. genetic information from U.S. federally funded medical institutions. WuXi AppTec's stock price fell 10% on the day and fell in the following week, falling 35% for the week to $45.

In response, WuXi AppTec issued a clarification announcement on February 18, clearly emphasizing in bold and bold type: "WuXi AppTec has not, is and will not pose a national security risk to the United States in the past, and will not pose a national security risk to the United States in the future, and will come to the same conclusion even if the U.S. government reviews the company again." In fact, WuXi AppTec is one of the key contributors to the global pharmaceutical and life sciences industry. ”

WuXi AppTec said in the announcement that the company noted that on February 12, 2024, a U.S. congressman sent a letter to the U.S. Department of Commerce, the Treasury Department and the Department of Defense concerning the company. WuXi AppTec has always welcomed regulatory oversight of its industry, and the company has successfully passed multiple U.S. government scrutiny in the past. However, the Company strongly opposes misleading allegations, inaccurate determinations, and pre-judgment actions without due process.

In addition, WuXi AppTec reiterated that it does not have a human genomics business and that its existing businesses do not collect human genome data. The company provides contract-based research, development and manufacturing services dedicated to advancing new drug discovery and bringing life-saving medicines to patients by empowering the global pharmaceutical and life sciences industries. WuXi AppTec's clarification statement aims to dispel misunderstandings and highlight its positive contributions and compliant operations in the global pharmaceutical and life sciences industries.

The Biosecurity Act passed the U.S. House of Representatives last September, but the subsequent process stalled in the Senate. The bill, if passed, would prohibit U.S. companies that receive federal funding from working with certain Chinese biotech service providers, including WuXi AppTec and WuXi Biologics, as well as BGI Group, MGI and Complete Genomics.

For WuXi AppTec, the advancement of this bill has undoubtedly brought a lot of market pressure. However, the latest news shows that WuXi AppTec "passed the risk" this time. On December 7, a bicameral committee finalized the final National Defense Authorization Act (NDAA) for fiscal year 2025, and the Biosecurity Act was not included. This means that, at least for now, the bill has not passed, and Chinese biotech service providers such as WuXi AppTec have temporarily avoided the fate of being banned from working with U.S. federally funded companies.

Against this backdrop, WuXi AppTec's revenue has been affected to a certain extent, but the company is still actively pursuing new business opportunities. For example, in order to meet growing customer demand, WuXi AppTec plans to build a pharmaceutical manufacturing campus in Delaware this year, which is expected to be operational in 2026 and eventually provide about 500 jobs. "We are also looking at other locations in the U.S. to continue to invest in new drug discovery, development and manufacturing facilities to better serve our customers," Connell said. ”

The divestiture of the U.S. medical device business follows reports that WuXi AppTec has been considering the sale of certain businesses to address the possible impact of the Biosafety Act. At the end of December last year, WuXi AppTec announced a deal with New York-based investment firm Altaris to sell its U.S. and U.K. cell and gene divisions (WuXi Advanced Therapies) for an undisclosed amount. The transaction is expected to close in the first half of this year.

In summary, WuXi AppTec has further optimized its strategic business portfolio and strengthened its CRDMO service capabilities globally through the sale of its U.S. medical device testing business. At the same time, the company is actively seeking new business opportunities to meet the growing demand of its customers.

(Redirected from: CHC Medical Media).