Chinese CDMO Wuxi AppTec, which has so far avoided US scrutiny, is once again the target of government scrutiny. The company is now listed on the U.S. Department of the Army’s newly updated list of “Chinese military companies,” which are considered to support the Chinese military while having business ties to the United States.
“WuXi AppTec is indirectly owned by SASAC and indirectly affiliated with SASTIND and the People’s Liberation Army,” the Department of Defense explains in the listing, referring to the State Council State-Owned Assets Supervision and Administration Commission (SASAC), a policy-making civilian agency under China’s Ministry of Industry and Information Technology called the State Administration of Science, Technology and Industry (SASTIND), and the People’s Liberation Army (PLA).
WuXi AppTec’s inclusion on the Department of Defense’s so-called 1260H list automatically makes WuXi AppTec one of the “biotechnology companies of concern” under the BioSecure Act. The BioSecure Act restricts U.S. federal procurement and subsidies for equipment and services provided by these companies.
Meanwhile, WuXi AppTec maintains that its listing along with the “purported basis for the designation” is “clearly false,” a spokesperson said in an emailed statement, adding that the company will “take immediate action to correct this erroneous designation.”
“We do not meet the legal criteria to be designated as a ‘Chinese military enterprise,'” the spokesperson continued, stressing that WuXi AppTech “is not owned, controlled by, or affiliated with any Chinese military or government agency.” We do not provide services to the Chinese military. And we have no connection to China’s defense industrial base or military-civil fusion programs. ”
In an open letter to customers and partners, the company further explained that it has “never been placed on any government sanctions list” and that none of its management or board members have ties to the military or political parties. In 2025, WuXi AppTec passed over 50 inspections by government regulators and “hundreds of customer audits” with “no material findings.”
“We will pursue all remedies to correct this erroneous designation,” the letter signed by the CEOs continued. “We are confident that the facts will prevail and that WuXi AppTec will prove that it does not meet the statutory criteria for the 1260H listing and that we will be removed through due process.”
CDMOs have been defending themselves against similar U.S. accusations since the BioSecure Act was introduced in 2024, a bill aimed at keeping U.S. taxpayer funds out of the hands of “foreign adversarial biotechnology companies with U.S. national security concerns.” The bill initially targeted WuXi AppTec and WuXi Biologics, among other China-based manufacturers.
The legislation that was ultimately passed adopted a softer tone and did not directly name companies such as WuXi AppTec, but covered any vendor of biotechnology equipment or services and is included on the Department of Defense’s 1260H list of companies of concern.
Jefferies analysts believe WuXi AppTec’s addition to the list is “unsurprising” and sees “minimal impact” as major pharmaceutical companies “still prefer Chinese products from a cost-effectiveness standpoint,” the analysts wrote in a June 9 note to clients.
The BioSecure Act does not prohibit U.S. companies from receiving federal contracts simply because they do business with publicly traded companies. This applies when federal funds are used to procure equipment or services from these restricted companies. However, simultaneously maintaining relationships with designated companies and the U.S. government would pose a regulatory burden for biopharmaceutical customers.
Because Wuxi AppTec was just added to the list, it is subject to a five-year grandfather clause that would protect any such contracts entered into before the effective date of the ban until 2031. This will allow companies to “fulfill obligations and adjust supply chains without immediate disruption,” analysts said in a separate note.
Analysts also pointed to Wuxi AppTec’s “Plan B” to continue its expansion path in the United States “in case the policy environment is unfavorable.” CDMO’s manufacturing campus in Delaware will be operational by the end of this year, with further expansion expected in 2027.
In an open letter to customers, the company said, “No ongoing customer programs are affected by this incorrect designation by the Department of Defense.” “All of our facilities continue to operate normally and our scientists remain focused on advancing breakthrough treatments.”
WuXi Apptec expects revenue to increase 28% compared to the first quarter of this year, with total revenue of 51.3 billion to 53 billion yuan ($7.6 billion to $7.8 billion) in 2026. The company’s full-year revenue in 2025 was 45.5 billion yuan.
WuXi AppTec shares fell 2.62% in the Shanghai market on Tuesday following the US announcement.
Meanwhile, another team of Jefferies analysts noted that WuXi AppTec’s inclusion on the list could position the Indian manufacturer to win “particularly in the small molecule and peptide space,” the analysts wrote. The India-based contract research, development and manufacturing organization space is estimated to represent a market size of $6.9 billion by 2030, according to Jefferies.
