WuXi AppTec, a leading Chinese contract development and manufacturing organization (CDMO), has been removed from the U.S. Defense Department's blacklist of Chinese military companies.
According to Reuters on November 11, the U.S. Defense Department announced on November 9 that WuXi AppTec was excluded from the list via a government publication. The decision followed a ruling from a federal court in Washington that ordered the Defense Department not to enforce the designation against WuXi AppTec.
This action is the result of a lawsuit filed by WuXi AppTec after it was added to the blacklist in June. The company argued that its designation as a Chinese military company was unfounded, arbitrary, and politically motivated, prompting it to sue the Defense Department.
On June 8, the Defense Department expanded its list of Chinese military companies under Section 1260H of the National Defense Authorization Act (NDAA), increasing the total number of designated companies to 188. This list identifies companies believed to be linked to the People's Liberation Army of China.
The Defense Department had determined that WuXi AppTec was indirectly controlled by the State-owned Assets Supervision and Administration Commission (SASAC) and had connections to the Ministry of Industry and Information Technology (SASTIND) and the People's Liberation Army. It cited that a fund under the state-owned Aviation Industry Corporation of China (AVIC) holds a 5.32% stake in WuXi AppTec and pointed to research collaborations with defense-related universities and the General Hospital of the People's Liberation Army.
In response, WuXi AppTec filed a lawsuit in the U.S. District Court for the District of Columbia on June 11, arguing that the legal basis for its designation was insufficient and the facts were incorrect. On August 7, the court granted WuXi AppTec's request for a preliminary injunction. Judge James Boasberg indicated that the Defense Department's rationale for the designation could be seen as arbitrary and capricious under the Administrative Procedure Act. He also noted that the designation had caused irreparable harm, as clients and suppliers were canceling contracts and shifting business to competitors.
WuXi AppTec stated in a disclosure to the Hong Kong Stock Exchange that the decision would help avoid further negative impacts and that it would continue to provide drug development and manufacturing services to its global clients.
However, this decision does not signify the end of the legal dispute between WuXi AppTec and the U.S. government. The Defense Department has indicated that it could re-add WuXi AppTec to the list if additional or new evidence is obtained.
* This article has been translated by AI.
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