Chinese biotech firm taken from US blacklist

Detailed summary

Biotech firm WuXi AppTec has been removed from a blacklist of companies allegedly linked to China's military following a court challenge, a move expected to ease uncertainty among…

Biotech firm WuXi AppTec has been removed from a blacklist of companies allegedly linked to China's military following a court challenge, a move expected to ease uncertainty among overseas clients and offer a degree of encouragement for other Chinese entities on the list.

In a filing to the Hong Kong stock exchange on Tuesday, Shanghai-based WuXi AppTec said the US Department of Defense had removed it from the Section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 list of "Chinese military companies" after a federal court barred the Pentagon from enforcing the designation in August.

The decision relieves the company of further adverse consequences arising from the listing, WuXi AppTec said.

"We remain committed to serving our customers and enabling the lifesaving and life-improving medicines they make for patients," the company said.

The Pentagon added WuXi AppTec to the list on June 8, citing alleged links to Chinese State-owned and military entities. The company rejected the designation and sued three days later. On Aug 7, US District Judge James Boasberg granted a preliminary injunction, questioning the evidence supporting the Pentagon's decision and recognizing the damage to the company's business, including lost contracts and longstanding partnerships.

Zhan Kai, a partner at Dacheng Law Offices, said the removal had been widely anticipated following the injunction, and the formal notice represented the implementation of the earlier court order.

The decision could ease compliance concerns among pharmaceutical companies that use WuXi AppTec's research, development and manufacturing services. Although inclusion on the 1260H list does not amount to a blanket ban on commercial activity in the US, it restricts Pentagon procurement and can make customers reluctant to maintain business ties.

Citi analysts said the removal was positive for WuXi AppTec and sentiment across China's pharmaceutical outsourcing sector, Bloomberg…

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