A federal judge in Washington has stopped the US Defense Department from acting on its decision to label WuXi AppTec, a Shanghai-headquartered contract research and manufacturing group that works for drug developers, a “Chinese military company”.
Chief Judge James Boasberg granted a preliminary injunction on 7 August, barring the department from enforcing or implementing the designation under Section 1260H of the fiscal 2021 defence authorisation law while WuXi’s lawsuit runs its course. He found the company was likely to show the listing was arbitrary and capricious under the Administrative Procedure Act.
How the listing came about
The Pentagon added WuXi AppTec to the list on 8 June, in an annual update that took it to 188 entities. The department said the Shanghai-based company was indirectly owned by China’s state-asset regulator SASAC and indirectly affiliated with the People’s Liberation Army, claims WuXi strongly rejects. The company sued on 11 June and sought an injunction on 29 June.
According to a DLA Piper analysis of the case, the ownership argument rested on a 5.32% figure linked to the state-owned aviation group AVIC. The firm says that number was WuXi’s weight in AVIC’s portfolio, not AVIC’s stake in WuXi, which amounted to roughly 0.001%, or about $200,000 of publicly traded shares.
For Chinese biotech suppliers, the BIOSECURE era is being decided as much in US courtrooms as in procurement rules.
Commercial damage and the BIOSECURE link
Boasberg noted that customers and suppliers had cancelled contracts, ended relationships or moved work to rivals after the listing, harm he said a later ruling could not undo. WuXi said the decision relieved it of the immediate consequences during the litigation and that its operations remain fully functional.
The stakes go beyond Pentagon contracts. Under the BIOSECURE Act, enacted on 18 December 2025 as part of the fiscal 2026 defence law, biotechnology firms on the 1260H list automatically count as companies of concern, which would bar them from many federal contracts, grants and loans. A second route runs through the Office of Management and Budget, which must publish its first list by 18 December 2026.
What to watch
- Whether the Defense Department appeals the injunction.
- Whether OMB names WuXi AppTec on its own BIOSECURE list in December.
- How US drug developers that rely on WuXi adjust their supply contracts while the case continues.
