Shares in Australian biotechnology giant CSL Limited (ASX: CSL) are on the move today amid a heating battle between the company and the United States border patrol.
At the time of writing, the CSL share price is trading at $304.61 apiece, which is just under a 2% gain from the open.
CSL has filed an injunction against the US Customs and Border Protection agency after the latter instated new rules governing the mobility of Mexican citizens into the US to donate plasma earlier in the year.
Here we cover the central points of the standoff between the two parties.
What has led us to this point?
In June, the US Customers and Border Protection agency declared that certain visa holders are ineligible to donate plasma if they receive payment for doing so.
The agency claims that donating plasma in this fashion is akin to ‘labour for hire’ and is therefore prohibited for individuals on B-1 and/or B-2 visas – the particular category in question.
CSL has since fired back, teaming up with Spanish pharmaceuticals manufacturer Grifols SA (BME: GRF) in filing an injunction against the agency, effectively for interrupting the biotech’s ongoing business.
From its annual earnings report, plasma collection and separation accounted for roughly 85% of CSL’s earnings in FY21, well ahead of its vaccines and antivenom segments.
Furthermore, the industry is reliant on Mexican nationals entering the US to make plasma donations, with some estimates stating this accounts for 5–10% of all global plasma collections.
It, therefore, stands to reason that any impact to this flow of blood plasma collection could pose a material threat to CSL’s earnings potential, as it also relies heavily on plasma as a raw ingredient to construct its unique formulations.
In its defence, the US agency responded by stating there has never been a policy in situ that governs the mobility of Mexican citizens into and out of the US to donate plasma.
And even though CSL argues that receiving payment after donating plasma signifies ‘international business activity’ rather than the performance of labour, the US agency thinks otherwise.
It reckons that because the transactions take place only in the US, they cannot be considered an international business activity, which is a defining feature of the visas in question.
Nonetheless, CSL is of the firm belief that an ongoing shutdown to its plasma collection in this route could be detrimental to its business, hence why it has filed the lawsuit alongside Grifols.
The biotech’s CEO Paul Perreault was quoted as saying that “It is a bold move, but you know I don’t mind putting my neck out when patients are waiting” in the company’s annual report last month.
As the injunction was heard only last week or so, investors are still awaiting the outcome of any decision from US authorities regarding the matter.
CSL share price snapshot
It’s been a difficult year for CSL and its share price this year, having posted a gain of just 7.5% since January 1.
Over the past 12 months, it has climbed around 6%, a step in behind the benchmark S&P/ASX 200 index (ASX: XJO)’s return of around 25% in that time.