By Karen Freifeld
(Reuters) -A Washington-based global trade association representing biotechnology companies is taking steps to "separate" from Chinese member Wuxi AppTec , according to a letter from its new CEO on Wednesday.
The Biotechnology Innovation Organization (BIO) also said it would support proposed legislation that restricts U.S. business with WuXi AppTec and other biotech companies of concern, changing its position from last month.
WuXi AppTec, in a letter to BIO dated Tuesday that it provided to Reuters, said it was ending its membership in the organization.
Shares in Wuxi AppTec in Hong Kong dropped 7.7% on Thursday, while its Shanghai shares fell 4.6%.
A U.S. Senate committee voted to approve a bill last week that could prohibit federal agencies from contracting with Wuxi AppTec and other Chinese biotech companies on national security grounds. A companion bill was introduced in the House in January.
The bill is designed to keep Americans' personal health and genetic information away from foreign adversaries. It drove a sell-off in the shares of WuXi AppTec after news about it reached Chinese markets last month.
BIO has an "unwavering commitment to the national security of the United States and our allies," John Crowley, who became BIO's CEO and president last week, said in the letter to Representative Michael Gallagher, chair of the select committee on China in the U.S. House of Representatives.
"BIO will support the BIOSECURE Act and work with you and other members of Congress as this legislation progresses," Crowley wrote. "BIO is taking steps now to separate from Wuxi AppTec regarding membership in the organization."
Last month, then BIO CEO Rachel King wrote a letter urging the committee to reconsider the proposed legislation, and took issue with companies being named in it.
WuXi AppTec has said the bill "relies on misleading allegations and inaccurate assertions."