WuXi AppTec (HKEX: 2359) has won a temporary reprieve from its designation as a Chinese military company after a US federal judge blocked the Department of Defense (DoD) from enforcing the classification while the drug services giant challenges it in court, as per a company release. Reuters reported that the court found WuXi AppTec had shown it was likely to succeed in arguing that the DoD's inclusion of the company on the so-called 1260H list was arbitrary and capricious.
The US District Court for the District of Columbia granted WuXi's preliminary injunction on August 7, following a lawsuit filed against the DoD in June. The 1260H list identifies entities the DoD considers to be Chinese military companies. Designation does not amount to broad US sanctions, but carries restrictions on DoD contracting and, for biotechnology companies, has potentially wider consequences under the BIOSECURE Act, which uses the 1260H list as one route for identifying biotechnology companies of concern. WuXi told the court that the designation had already cost it contracts and business relationships, with the company serving more than 1,000 US customers and deriving around 70% of its revenue from the US. The injunction therefore alleviates an immediate commercial overhang while the legality of the designation is litigated.
WuXi AppTec, a China-based contract research and manufacturing organization that provides drug discovery, development, and manufacturing services to pharmaceutical and biotechnology companies globally, said the injunction "relieves the Company from the immediate adverse consequences of the 1260H Designation during the judicial process." The company said its operations remain fully functional and characterized the original designation as erroneous.