(Bloomberg) -- WuXi Biologics Cayman Inc. will sell a vaccine facility in Ireland to Merck & Co. for about $500 million as the Chinese company seeks to enhance its margins while continuing to navigate geopolitical tensions.
The site at Dundalk, Ireland, which has been under construction since 2019, was designed as a dedicated facility to meet Merck’s commercial manufacturing needs, according to a filing to the Hong Kong stock exchange. Merck can now integrate vaccine production within its own manufacturing network to supply global markets while WuXi Biologics focuses on providing contract vaccine services from its sites in Suzhou, China.
The decision comes amid looming US curbs on Chinese biotechnology companies under the proposed Biosecure Act. Although the bill failed to be passed into law under the Biden administration, the threat of the legislation has made WuXi firms an outcast among companies seeking American federal contracts.
Late last month, its sister company WuXi AppTec Co. announced a separate deal to sell its cell and gene therapy unit to a private equity firm for an undisclosed sum.
WuXi Biologics shares fell 3% in trading Tuesday, tracking peers. The stock is yet to rebound since the late 2023 introduction of the bill, which seeks to cut ties between WuXi firms and US biotech and pharmaceutical companies.
“This transaction would help WuXi Bio to optimize capacity resources and is unaffected by the Biosecure Act,” Jefferies analysts including Cui Cui wrote in a note, citing the management.
WuXi Biologics had previously said it would invest $240 million on the facility. The net book value of the facility is now $487 million, according to the filing. The sale is expected to be completed in the first half of 2025.
The 15,520 square-meter site housed in a three-story building comprises of facilities to manufacture drug substance and drug products, as well as quality control labs. It currently employs around 200 people, and Merck plans to hire another 150.
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