After many months of uncertainty related to the Biosecure Act and associated security efforts in Washington, D.C., Chinese life sciences contracting juggernaut WuXi AppTec faces new concerns that its extensive business ties to the U.S. could be imperiled.
In a letter to Congress two months ago, the Pentagon identified the contract research, development and manufacturing organization as one of eight companies that assist the Chinese military while also conducting business in the U.S., according to a report last week from Bloomberg.
In his letter, the U.S.' deputy defense secretary Stephen Feinberg reportedly urged the House of Representatives and the Senate Armed Services Committee to include the companies on the Department of Defense’s 1260H list, which is updated annually and cites firms that pose supply chain and security risks. While the roughly 130 companies on the 1260H list are not subject to tangible penalties, the designation can damage the business prospects of the firms in the U.S.
In fiscal year 2024, WuXi reported that 64% of its sales came in the U.S. Through the first three quarters of this year, WuXi achieved (PDF) sales growth of 19% to 32.9 billion Chinese yuan ($4.7 billion).
“Our company is not affiliated with any government or military institutions and does not meet the statutory criteria for designation on the 1260H List,” a company spokesperson wrote in an email. “Our business integrity and operations are subject to regular review by multiple U.S. and international regulatory authorities. In 2024 alone, we underwent 69 successful inspections by U.S. and other national regulators.”
For the last two years, WuXi has sweated out potential sanctions in the U.S. It was among five China-based life sciences companies initially targeted by the Biosecure Act, which sought to halt federal contracts to certain companies because of security concerns.
The House overwhelmingly supported the measure in September 2024, but, three months later, it was absent from a key defense spending bill. Then, two months ago, the Senate passed a new iteration of the Biosecure Act, which has significantly less bite and does not name WuXi.
Last year, trade groups warned that sanctions against certain Chinese companies would hamstring a U.S. industry that is highly reliant on outsourcing manufacturing and research through companies such as WuXi.
There are no other life sciences companies identified by the Pentagon in its recent letter. The other firms include technology specialists Alibaba, Baidu and RoboSense as well as manufacturers BYD, Eoptolink, Hua Hong Semiconductor and Zhongji Innolight.