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Shares of WuXi AppTec experienced a rise following the company’s announcement that it has filed a lawsuit against the U.S. Department of Defense. The legal action challenges the department’s decision to list it among companies purportedly connected to China’s military, a move WuXi AppTec claims is unwarranted and harmful to its clients, partners, employees, and shareholders.
As of 1:25 p.m. in Shanghai today, WuXi AppTec’s stock was up 2.6%, trading at approximately 99.63 Chinese yuan (roughly $14.72). Earlier in the trading session, the stock had fallen by as much as 2%. Since hitting an intraday low of 88.32 yuan ($13.04) on June 9— the day following the release of the updated “Chinese military companies” list—the stock has rebounded nearly 13%.
The company has initiated legal proceedings in the U.S. District Court for the District of Columbia, demanding that the court nullify and revoke its designation as a “Chinese military company” and remove it from the list. WuXi AppTec contends that the designation lacks factual basis and does not comply with legal standards established by relevant statutes and case law.
On June 8, the Department of Defense included WuXi AppTec and several other Chinese firms on the list of Chinese military companies under Section 1260H of the Fiscal Year 2021 National Defense Authorization Act. The department stated that WuXi AppTec is “indirectly owned by a state-owned asset supervision commission” and has indirect ties to national defense agencies and the People’s Liberation Army.
While being on the list currently limits direct business interactions with the Department of Defense, the immediate impact on WuXi AppTec is expected to be limited. However, the company faces additional restrictions under the Biosecure Act enacted late last year, which automatically classifies listed companies as potential candidates for inclusion on the List of Biotechnology Companies of Concern (BCC). Companies on this list, along with U.S. pharmaceutical firms engaged with them, are barred from doing business with federal agencies. The long-term aim of these measures is to prevent Chinese biotech firms from participating in global drug research and development.
To reinforce confidence in its future prospects and to highlight its value, WuXi AppTec announced a one-year stock buyback program valued at 10 billion yuan ($1.5 billion) starting June 9. The company revealed that it has already repurchased 1 billion yuan (approximately $147.8 million) of shares at prices ranging from 95.59 to 97.54 yuan.
WuXi AppTec provides comprehensive drug development services for global pharmaceutical companies, covering everything from discovery through clinical trials to commercial manufacturing. In its latest financial report, the company noted a 34% increase in revenue from U.S. clients, reaching 31.3 billion yuan ($4.6 billion), which constituted about 72% of its total revenue.
Meanwhile, six other prominent Chinese firms—including Alibaba Group, Baidu, Nio, BYD, BOE Technology Group, and Innolight Technology—issued statements on June 9 expressing confusion regarding their inclusion on the Section 1260H list. They affirmed that they have no equity, business, or other links to the Chinese military.
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