Media, page-658

Thank you for reading, Drew Armstrong Executive Editor, Endpoints NewsConcentrated risk(This is a preview of Post-Hoc, our latest newsletter with analysis and dispatches from our journalists. To get future editions, click here.)In the last few weeks, the US has moved closer to either banning or restricting WuXi's work with American biotech and pharma companies. It's a step that's certain to change the industry's relationships with its China-based business partners. As Jared Whitlock reported in his must-read piece last week, WuXi AppTec and its related companies have built a biopharma superstore, winning customers by providing research, manufacturing and other outsourced services to companies large and small. They are, by one estimate, the dominant player in the contract research market and a backbone of the biopharma startup ecosystem. At first glance, the easy comparison to the challenge WuXi faces is TikTok. US lawmakers seem inclined to punish the social media platform for its alleged ties to the Chinese government. But that's not the right analogy.This is WuXi's Silicon Valley Bank moment.Last year, US tech and bio startups went through a several-week crisis when a trusted, critical business partner — Silicon Valley Bank — experienced a bank run. In the end, things were (mostly) fine: The bank was taken over by federal regulators, its accounts were moved to other institutions, and depositors were largely made whole. But the SVB crisis revealed that a lot of companies had nearly all of their cash in the hands of a single institution. For startup founders and boards, bank failure was something that happened to other people — right until it happened to them.A year later, the idea that any company would be so reliant on a single institution for such a critical function seems insane. But that same wake-up is almost certainly happening in biopharma right now (Amicus Therapeutics, for example, relies entirely on WuXi for a key ingredient). Executives across research, development and manufacturing are likely taking a good hard look at the risk posed by concentrated relationships with a single outside supplier.How it ends is anyone's guess. WuXi may escape from politicians' crosshairs. Existing contracts might get grandfathered in by lawmakers who don’t want to burn the industry. Or a new president could reverse his or her position on the company. But just like SVB forced a rethink of startup financial relationships last year, it seems certain that few of WuXi’s business partners are going to look at their contracting relationships the same way ever again.-Drew