Morgan Stanley: The latest biosafety bill in the United States is more favorable for Chinese CDMOs.

Morgan Stanley released a research report stating that the US Senate recently passed a motion to include the "Biosecurity Act" in the "National Defense Authorization Act." The revised version is relatively mild, allowing named companies to defend and appeal, and does not specifically target Chinese biotech companies. The bill still needs to be passed by both houses of Congress and signed by the president to become law. The bank expects that the shares of Chinese contract development and manufacturing organizations (CDMO) involved in pharmaceuticals will experience fluctuations in the early stages, as on the surface the bill gives the US government new tools to restrict cooperation between local companies and Chinese suppliers. However, compared to the previous version of the bill last December that was blocked by the Democratic Party in the House of Representatives, the current outcome is more favorable. Chinese CDMO stocks have risen by 84% this year, partially reflecting investors' expectations of easing geopolitical tensions and decoupling risks.