医药生物行业周报：生物安全法案再遇波折，CXO有望迎来估值修复

Industry Investment Rating - The report maintains a "Stronger than the Market" rating for the pharmaceutical and biotechnology industry [4] Core Views - The US Biosecurity Act, which has caused market concerns, is unlikely to be passed in 2024 due to tight legislative timelines and failed attempts to include it as an amendment to the National Defense Authorization Act (NDAA) [6][7][8] - Even if the Biosecurity Act is passed, its impact on domestic CXO (Contract Research Organization) companies is expected to be limited due to unclear regulatory targets, long grace periods, and uncertainties in the list of affected Chinese companies [20][21][22][23][24] - The CXO industry is expected to see valuation recovery and marginal improvement, driven by the reduced likelihood of the Biosecurity Act passing and the US interest rate cut cycle [9][25] Key Points by Section Biosecurity Act Legislative Progress - The Biosecurity Act, aimed at restricting Chinese pharmaceutical suppliers' business in the US, includes standalone bills (e.g., S.3385, H.R.7085, H.R.8333) and attempts to attach it as an amendment to the NDAA [6][12] - The standalone bill H.R.8333, which has passed the House, faces tight timelines for Senate approval, with only 29 working days left in 2024, making its passage unlikely [7][19] - The Biosecurity Act failed to be included as an amendment in the 2024 NDAA, further reducing its chances of becoming law [8][16] Potential Impact of the Biosecurity Act - The Act does not clearly define the regulated entities or business scope, leaving uncertainties for companies like those in the CXO sector [20] - If passed, the Act would provide a 60-180 day grace period for compliance, with exemptions extendable up to 545 days, and grandfather clauses allowing existing contracts to remain valid until 2032 [21][22] - The list of affected Chinese companies remains uncertain, with significant opposition in the House vote, particularly from Democrats [23][24] CXO Industry Outlook - Global pharmaceutical R&D activity is recovering, with overseas innovation drug financing showing clear signs of revival in 2024, while domestic financing recovery is slower [25][26] - Leading CXO companies, such as WuXi AppTec and WuXi Biologics, reported strong new/backlog order growth in H1 2024, with overseas revenue remaining robust [27][28] - The CXO industry is expected to benefit from reduced valuation pressure as the likelihood of the Biosecurity Act passing decreases and the US enters a rate-cutting cycle [9][25]