WuXi AppTec Shares Tumble After Pentagon Adds Firm to 'Chinese Military Company' List

By Jason Chau

Shares of Chinese pharmaceutical major WuXi AppTec tumbled after the U.S. Defense Department added the company to its list of entities deemed to have ties with Beijing's military.

WuXi AppTec's Hong Kong-listed stock fell as much as 8.3% early Tuesday before trimming its declines, trading about 4% lower in afternoon trading. Its shares in Shanghai were recently around 3% lower after dropping as much as 8.0% earlier.

The declines came after the Pentagon updated its "1260H list" of Chinese military-linked companies on Monday, adding roughly two dozen Chinese entities including WuXi AppTec. According to the Defense Department, WuXi AppTec is indirectly owned by a Chinese government entity.

WuXi AppTec, in its response, said the designation was "clearly a mistake" and it will "take immediate actions to challenge and correct this erroneous designation."

Companies included on the list are identified by the U.S. government as aiding the Chinese military and are barred from doing business with the U.S. military. Other prominent additions to the list included internet giants Alibaba Group and Baidu, as well as carmakers BYD and NIO.

The Pentagon's update follows the Biosecure Act passed last December, which prohibits U.S. government agencies from engaging in any business dealings with entities listed as "Chinese military companies." WuXi AppTec wasn't included on the list at the time.

The news will likely weigh on investor sentiment in the near term and could trigger some profit-taking on the stocks, Nomura's China healthcare analyst Jialin Zhang said.

However, the bank remains optimistic about WuXi AppTec's prospects, citing its strong fundamentals. The 1260H inclusion only restricts the U.S. Defense Department from procuring from the company directly or indirectly, but the drugmaker's revenue from this channel is negligible, it said.

WuXi AppTec is one of China's leading pharmaceutical services companies and operates primarily as a contract research, development and manufacturing organization that supports global drugmakers in drug development.

Over the years, the company has partnered with major pharmaceutical firms, including Eli Lilly, Johnson & Johnson and GSK. It has established itself as a vital platform for drug research and manufacturing in the global pharmaceutical supply chain, a position that could help buffer the company against U.S. actions.

"We view [the Pentagon's action as having] minimal impact given MNC pharmas still prefer made-in-China for cost efficiency," said Cui Cui, Jefferies' head of Asia healthcare research.

"WuXi AppTec's earning visibility remains intact," she said.

Write to Jason Chau at jason.chau@wsj.com

(END) Dow Jones Newswires

June 09, 2026 03:12 ET (07:12 GMT)