After dodging a layer of U.S. scrutiny thus far, Chinese CDMO WuXi AppTec is back in the government’s crosshairs. The company is now listed in the U.S. Department of War’s newly updated roster of “Chinese military companies” that it believes assists the Chinese military while having business ties to the U.S.
“WuXi AppTec is indirectly owned by SASAC and is indirectly affiliated with SASTIND and the PLA,” the Pentagon explains in its list, referring to China’s State-owned Assets Supervision and Administration Commission of the State Council (SASAC), a policy-making civilian agency under Chinese Ministry of Industry and Information Technology called the State Administration of Science, Technology and Industry for National Defense (SASTIND) and the People’s Liberation Army (PLA).
Inclusion on the Pentagon’s so-called 1260H list automatically makes WuXi AppTec one of the “biotechnology companies of concern” under the Biosecure Act, which restricts U.S. federal procurement and grants involving equipment or services provided by those firms.
WuXi AppTec, meanwhile, maintains that its place on the list, along with the “alleged basis for the designation,” was “clearly a mistake,” a spokesperson said in an emailed statement, adding that the company will “take immediate actions to correct this erroneous designation.”
“We do not meet the statutory criteria for designation as a “Chinese military company,”’ the spokesperson continued, emphasizing that WuXi AppTech is “not owned or controlled by or affiliated with any PRC military or government entity; we do not provide services to the PRC military; and we are not associated with the PRC’s defense industrial base or military-civil fusion programs.”
In an open letter to its customers and partners, the company further explained it has “never been placed on any government sanctions list” to date and that none of its executive team or board members has any military or political party affiliations. In 2025, WuXi AppTec passed more than 50 inspections by government regulators and “hundreds of customer audits” with “no critical findings.”
“We will pursue all available remedies to correct this erroneous designation,” the letter, signed by its CEOs, continued. “We are confident that the facts will prevail, demonstrating that WuXi AppTec does not meet the statutory criteria for the 1260H list, and result in our removal through due process.”
The CDMO has been playing defense against similar U.S. accusations since the Biosecure Act was floated in 2024 as a bill aimed at keeping U.S. taxpayer dollars out of the grasp of “foreign adversary biotech companies of U.S. national security concern.” The legislation initially targeted WuXi AppTec and WuXi Biologics, among other China-based manufacturers.
While the law that eventually passed adopted a softer tone and didn’t directly name companies such as WuXi AppTec, it treats any vendors of biotech equipment or services and included in the Pentagon’s 1260H list a company of concern.
Jefferies analysts consider WuXi AppTec’s addition to the list “not a surprise” and sees “minimal impact” as large pharma companies “still prefer made-in-China for cost efficiency,” the analysts wrote in a June 9 note to clients.
The Biosecure Act does not bar a U.S. company from receiving federal contracts simply because it does business with listed companies. It applies when federal money would be used to procure equipment or services from those restricted firms. But to maintain a relationship with a designated company and the U.S. government at the same time would be a regulatory burden on any biopharma clients.
Since WuXi AppTec was just added to the list, it will be covered under a five-year grandfather clause that allows any such contracts inked before the effective date of the ban to be protected through 2031. This allows firms to “fulfill obligations and adjust supply chains without immediate disruption,” the analysts explained in a separate note.
The analysts also point to WuXi AppTec’s “plan B” as it continues its U.S. expansion tear “in case of an unfavorable policy environment.” The CDMO’s manufacturing campus in Delaware is expected to be operational by the end of this year with further expansions slated for 2027.
“None of our ongoing customer programs will be impacted by this unwarranted designation by DOD,” the company said in its open letter to clients. “All our facilities continue operating normally, and our scientists remain focused on advancing your breakthrough therapies.”
WuXi Apptec is expecting total revenues of 51.3 billion to 53 billion yuan ($7.6 billion to $7.8 billion) in 2026 after swelling its revenue by 28% over the first quarter of this year. In 2025, the company generated full-year revenues of 45.5 billion yuan.
The U.S. announcement sent WuXi AppTec shares down 2.62% in Shanghai Tuesday.
Meanwhile, another team of Jefferies analysts noted that the list’s inclusion of WuXi AppTec hands Indian manufacturers a win, “especially in the small molecule and peptide space,” the analysts wrote. The India-based contract research, development and manufacturing organization space is estimated to make up a $6.9 billion market size by 2030, according to Jefferies.