Shenzhen, China – Wuxi Biologics (2269.HK) has announcedthe sale of its Irish vaccine facility to a subsidiary of Merck for a total consideration of approximately $500 million. The announcement was followed by a nearly 6% decline in Wuxi Biologics’ share price during intraday trading on January 7, 2025.
The Irish vaccine facility was originally designed and built by Wuxi Biologics specifically to produce commercial vaccine products for Merck to meet their business needs.
In 2020, Wuxi Biologics subsidiary WuXi Vaccines (Cayman) Inc. (Wuxi Vaccines) entered into a 20-year vaccine production supply contract with a global vaccine giant (Merck). The contract involved the construction of a new, dedicated vaccine production facility in Ireland to serve the global market, with a total contract value of approximately $3 billion.
Originally, the Irish vaccine plant was scheduled to commence operations in 2022. However, the plant is still under construction and is now being sold to Merck.
On January 8, 2025, Wuxi Biologics told the China Business News that the transaction was a strategic decision that will further enhance the asset efficiency and profitability of Wuxi Vaccines. The company will now focus on its Wuxi Vaccines Suzhou faciin 20-Year Production Contract
The assets sold by Wuxi Biologics to Merck include the Irish vaccine plant’s production equipment, contractual interests related to the Irish vaccine plant, work in process inventory, and other intangible assets.
As of the date of the announcement, the Iriy control (QC) laboratories.
The initial term of the cooperation production agreement between Wuxi Vaccines and Merck was 20 years, with a total contract value exceeding $3 billion.
Regarding this strategic partnership, Chris Chen Zhi-sheng, CEO of Wuxi Biologics, had previously stated that the vaccine CDMO business was one of Wuxi Biologics’ new growth points and that the launch of the project would drive its vaccine business, further contributing to the company’s continued rapid growth.
In its 2024 half-year report, Wuxi Biologics indicated that its vaccine business platform (Wuxi Vaccines) had maintained stable growth momentum since 2018.
However, in August 2024, Wuxi Vaccines was divested by its shareholder, HaiLi Bio (603718.SH). According to the announcement, HaiLi Bio sold its entire 30% equity stake in Wuxi Vaccines to Wuxi Biologics for approximately $109 million.
After the transaction, Wuxi Biologics would hold a 100% stake in Wuxi Vaccines.
Regarding the reason for selling the equity stake, HaiLi Bio stated in the announcement that it had limited influence on Wuxi Vaccines’ production and management decisions and future development plans. The asset’s impact on the listed company’s future earnings was uncertain.
New Order Worth $925 Million
Some investors believe that Wuxi Biologics’ decision to sell its Irish vaccine plant at this time may be related to the impact of the U.S. Biological Security Act.
In early 2024, Wuxi Biologics and Wuxi AppTec (603259.SH) were embroiled in the legislative turmoil surrounding the U.S. Biological Security Act. The bill imposed restrictions on business dealings between the U.S. federal government and certain biotechnology providers on national security grounds, implicating Chinese biotechnology companies such as the Wuxi group and the BGI group.
In late 2024, according to an announcement by the U.S. House of Representatives, the Biological Security Act was not included in the 2025 National Defense Authorization Act (NDAA).
However, the industry still has concerns about this.
Wuxi Biologics did not comment on whether the sale of the Irish vaccine plant was related to the impact of the aforementioned act.
It is worth noting that a day after announcing the sale of its overseas plant (January 7, 2025), Wuxi Biologics announced a $925 million order from Can…