China CXO Another wave of headline noise

Research evidence excerpt

27 November 2025

Equity Research Report

China CXO

Equities

Health Care Providers &

Srvcs

Another wave of headline noise

China

◆ The proposed CMC list may lead to trading fluctuations but

more due to sentiment than fundamentals

◆ December’s Biosecure Act update and non-US capacity

expansion are key upcoming events to monitor

◆ Correction with opportunities; reiterate Buy on covered CXOs

Wh ’ n w? H d n n

n , b largely within our expectations: The

Pentagon’s recommendation to add several Chinese firms – including Wuxi AppTec –

to the Chinese Military Companies list is still broadly what we had expected from the

December Biosecure Act update, 14 October 2025. While this latest move may trigger

near-term volatility and create softer investor sentiment, we view it largely as an

extension of the 2026 National Defense Authorization Act (NDAA) regulatory narrative,

rather than a material escalation in policy rigour. Moreover, the latest update still

lacks clarity in terms of enforcement, which could potentially alter sector fundamentals.

Therefore, we expect the short-term market reaction as sentiment-driven rather than

fundamentals-driven.

Linda Shu*, PhD (Reg. No. S1700522120001)

Head of China Healthcare Research

HSBC Qianhai Securities Limited

Oliver Wang* (Reg. No. S1700523100003)

Analyst, China Healthcare Research

HSBC Qianhai Securities Limited

Evie Liu* (Reg. No. S1700119110001)

Associate

Shenzhen

* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

Limited impact on fundamentals; our previous analyses still hold true: We believe

the implications on China Contract Development and Manufacturing Organisation

(CDMOs) remain manageable and have already been priced in as an effect of the

previous US policy moves. In our previous analysis we suggested that the US DoDlinked revenue exposure of CMDOs is negligible, and even under the strictest

interpretation of the full Biosecure Act/NDAA enactment, revenue at risk remains at the

low-single-digit percentage level, which the market already prices in. Supply chains,

client diversification and overseas facility build-outs continue to provide effective

…