A photo shows WuXi AppTec in the Waigaoqiao Bonded Area of the Shanghai Free Trade Zone. Photo: VCG

Chinese biotech company WuXi AppTec Co said on Tuesday that it has been removed from the US Department of Defense's (DoD) list of entities allegedly supporting China's military, following a US federal court order — a hard-won legal victory that experts said lays bare the lack of factual basis behind Washington's overstretched "national security" narrative.

According to an announcement filed with the Hong Kong Exchanges and Clearing Ltd (HKEX) on Tuesday, the company was informed on Sunday (US time) that the DoD had decided to remove it from the "Chinese military company" designation under Section 1260H, after the US deputy secretary of defense determined that the department should comply with the court order granting the company's preliminary injunction. 

The decision relieves the company from further adverse effects of the 1260H designation, the filing said.

WuXi AppTec rose sharply in Hong Kong trading on Tuesday, opening more than 6 percent higher and last trading up 6.06 percent at HK$210, with turnover reaching HK$29.465 million. The company's A-shares also climbed, gaining nearly 3 percent in early trading, as of press time.

According to a notice published in the US Federal Register on Monday, the US government's official journal, the US Pentagon said it removed WuXi AppTec from the list following an August 7 court order. The decision was made "without prejudice to relisting the entity on additional or supplementary grounds," according to the notice.

The Pentagon added WuXi AppTec to the 1260H list in June. Several days later, the company sued  the DoD in the US District Court for the District of Columbia, arguing that it had been wrongly labeled and that the designation lacked a factual basis and asking the court to overturn its decision. 

The US federal court said in an August 7 ruling that it had issued an order blocking enforcement of the DoD's  designation.

This is a significant victory not only for WuXi AppTec but for all Chinese companies when facing unjustified US restrictions. It demonstrates that the "national security" label, when stretched beyond facts and law, cannot stand judicial scrutiny," said He Weiwen, a senior fellow at the Center for China and Globalization. He noted that Chinese companies' resort to legal means has proven an effective way to safeguard legitimate rights and counter groundless suppression.

The removal means WuXi AppTec can work on US federal funded projects, and is "significantly positive" for sentiment across the wider sector, according to Citigroup Inc analysts cited by a Bloomberg report on Tuesday.

also underscores the deep interdependence of the global biopharmaceutical supply chain. The global pharmaceutical outsourcing services (CXO) market has surpassed $150 billion, with China representing approximately 25-30 percent of the total share, according to an industry report released by Beijing-based Tianxia Gongchang Research on June 2.

Founded in 2000, WuXi AppTec is a global pharmaceutical contract research, development, and manufacturing organization (CRDMO) providing integrated drug discovery, development and manufacturing services, spanning discovery, development, and manufacturing across Asia, Europe, and the US, according to the company's website.

"A commercial CRDMO company with no military involvement was listed as a military company — this reveals an attempt to suppress China's biotech industry under a pretext. The episode proves both the effectiveness of legal remedies and the irreplaceability of Chinese CXO firms in the US supply chain," He Weiwen said. 

The company's successful challenge underscores the importance of legal process in resolving disputes over US so-called "national security" designations, Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times on Tuesday.

While the Pentagon's move was made under court order rather than as a voluntary reversal, the case highlights the role of judicial review in checking executive action. It also shows that companies facing contested US restrictions may be able to seek relief through the courts, Zhou said.

Zhou also noted that the case could offer a reference point for other firms included on the 1260H list. In the face of potentially unfair treatment, companies should make full use of legal tools and procedural remedies to safeguard their legitimate interests. Such efforts are seen as important for protecting normal business operations and preserving a fair market environment over the long run.

The removal is expected to ease compliance concerns among overseas clients and alleviate market worries about order attrition. Still, analysts cautioned that the delisting addresses one list, not the broader regulatory environment — other restrictive measures targeting Chinese biotech firms remain in place.

The DoD released an updated Section 1260H list on June 8, identifying 188 entities as "Chinese military companies," including Alibaba, Tencent, BYD and WuXi AppTec. A number of Chinese companies named on the list have issued statements rejecting the US designation. 

When asked about US placing several Chinese technology companies on a list of firms that it says aid China's military, Chinese Foreign Ministry spokesperson Lin Jian said that China firmly opposes the US overstretching the concept of national security and formulating various types of discriminatory lists to go after Chinese businesses. 

"We urge the US to correct its wrongdoings, and stop the unwarranted suppression of Chinese businesses. China will do what is necessary to firmly protect their legitimate and lawful rights and interests," said Lin.