If Trump can’t stop WuXi AppTec, what will happen to the Democratic Party?

In the pharmaceutical outsourcing industry, looking at orders is often better than looking at revenue to predict a company’s trend.

On June 8, 2026, the U.S. Department of Defense updated the 1260H list, and WuXi AppTec was newly included. At that time, the market was not worried about current performance, but was anxious about whether overseas orders would be interrupted.

According to Section 1260H of the U.S. National Defense Authorization Act for Fiscal Year 2021, the U.S. Department of Defense publishes a list of “Chinese military companies operating directly or indirectly in the United States” every year. Once a company is on the list, it may be restricted from procurement by the United States. At the same time, companies that may enter the U.S. Office of Management and Budget’s (OMB) “Biotech Companies of Concern” (BCC) list face broader restrictions.

Within ten days of being included on the list, one U.S. biopharmaceutical customer suspended all business dealings with WuXi AppTec, another suspended all cooperation projects, and another customer suspended clinical stage work. Two customers made it clear that they “need to retain or obtain government funding.”

Even so, the third quarter report shows that WuXi AppTec’s orders have not decreased but increased, reaching 76.74 billion yuan at the end of September 2026. New orders signed in a single quarter increased by more than 80% year-on-year.

“The recovery in the industry has provided a basis for growth, and the company’s own competitiveness has brought benefits that exceed those of its peers.” A secondary market pharmaceutical analyst told Caijing that global demand for innovative drug research and development has continued to recover since the second half of 2025, and WuXi AppTec’s order growth is significantly faster than the industry. The proportion of small molecule late-stage and commercialization projects in the order structure has increased, and growth is more certain.

JPMorgan Chase raised the target price of WuXi AppTec H shares after its third quarter report. One of the core reasons is that “geopolitical risks have declined.” The agency also reminded a procedural detail: According to the Biosafety Act, if the United States plans to include a company on the BCC list, it must notify the company in advance and give it a 90-day objection period. The legal deadline for the first list is December 18, 2026. WuXi AppTec’s management confirmed at the results conference call on October 27 that no relevant notification has been received so far. Therefore, it is most likely not on the list.

Caijing wrote to WuXi AppTec to learn more about the progress of litigation related to the 1260H list, whether it has had any contact with OMB, etc. As of the time of publication, it had not received a reply.

The U.S. Biosafety Act is the biggest uncertainty facing the CXO industry in recent years. Will the changes in the U.S. midterm elections bring major changes?

The answer is no. The House version of the U.S. Biosafety Act was originally proposed by both Democratic and Republican members.

The U.S. government’s restrictions on China’s biopharmaceutical supply chain have never been divided along party lines. The executive order signed by the Biden administration in 2022, like Trump, lists expanding local biomanufacturing and reducing reliance on foreign supply chains as federal goals.

Political risks in the U.S. market may be downgraded

According to a review by multiple investment banks, the focus of legislation and supervision after the Democratic Party regains control of both houses of Congress is currently focused on the field of artificial intelligence (AI). “Medicine is not a big topic for the time being.” A secondary market analyst who focuses on the pharmaceutical industry told Caijing that the current pharmaceutical-related issues are mainly directed at the United States, especially drug prices, rather than China’s supply chain.

Therefore, political risks in the U.S. market may be downgraded.

When the U.S. House of Representatives passed the Biosecurity Act in September 2024 by a vote of 306 to 81, 79 of the members who voted against it were from the Democratic Party. Jeffries, the Democratic leader of the House of Representatives, objected on the grounds that the bill “names specific companies without due process.”

WuXi AppTec also counterattacked based on the four words “due process”.

As soon as the 1260H list was announced, WuXi AppTec issued a clarification announcement, saying that the relevant determinations were “completely inconsistent with the facts.” On June 11, it sued the U.S. Department of Defense in the U.S. District Court for the District of Columbia, requesting that the determination be declared invalid and removed from the list; on June 29, it further applied to the court for a preliminary injunction.

On August 7, the court approved a preliminary injunction. The main reason was that WuXi AppTec was likely to win the case and prove that it was not a “Chinese military enterprise.” (For details, see Caijing’s August 10 report “Tough on the U.S. Department of Defense, WuXi AppTec Wins the First Game.”)

An industry insider once analyzed to Caijing that considering future performance, it is more important to obtain an interim ruling through litigation and give a clear signal to the company’s more than 1,000 customers in the United States than to wait silently for the final result. The “reassurance” is working – new orders signed in the third quarter increased by more than 80% year-on-year.

In recent years, one of the actions WuXi AppTec has been taking is to prevent geopolitical risks.

At the end of 2024, WuXi AppTec sold the US and UK entities of its cell and gene therapy business (WuXi ATU), which is most directly affected by policy risks, to the private equity fund Altaris; in October 2025, it sold clinical contract research (CRO) assets to Hillhouse’s funds for 2.8 billion yuan. These are so-called “sensitive assets” that may attract attention from U.S. politicians.

In August 2026, WuXi AppTec reduced its 4.23% stake in WuXi United through a block transaction, cashing out approximately HK$3.92 billion and investing it in its main contract research and development and manufacturing (CRDMO) business and global production capacity construction.

However, WuXi AppTec also faces another layer of political risk – tariffs.

In September 2025, the Trump administration announced in accordance with Section 232 of the Trade Expansion Act that it would impose 100% tariffs on imported brand-name drugs. The only clear exemption channel is “pharmaceutical factories under construction in the United States.”

In 2022, when geopolitical risks are beginning to emerge, WuXi AppTec’s production base in Middletown, Delaware, USA, has officially started construction, with an investment of approximately US$600 million. It is scheduled to be put into production of oral solid preparations by the end of 2026, and the production capacity of sterile injections will be increased in 2027. Once completed, it will be WuXi AppTec’s largest operating base in the United States.

As of August 2026, WuXi AppTec operates six facilities in the United States and employs approximately 450 people.

JPMorgan Chase pointed out in a research report that tariffs are nominally borne by pharmaceutical customers, but customers have therefore turned “localized production” into a requirement for suppliers. WuXi AppTec’s expansion of U.S. production capacity is in response to this demand.

The preparations produced at the Middleton site are the last process before pharmaceuticals leave the factory. This process is completed in the United States, and the finished drug can be counted as “Made in the United States.”

Select cutting-edge businesses in an inherently global industry

“CXO” is an industry born out of the R&D difficulties of global pharmaceutical companies.

Deloitte’s annual study tracking the world’s top 20 pharmaceutical companies shows that the expected return on investment in new drug research and development dropped to 1.2% in 2022, the lowest point since the start of this study that lasted more than ten years; during the same period, the average cost of developing a new drug rose to US$2.284 billion.

With increasing investment and decreasing returns, it has become a common choice for large pharmaceutical companies to outsource R&D and production to the most cost-effective professional contractors around the world.

According to Frost & Sullivan, the global pharmaceutical R&D outsourcing rate has increased from 34.8% in 2015 to 51.9% in 2024, and is expected to further increase to 65.6% in 2034.

In particular, a group of multinational pharmaceutical companies facing patent cliffs will have a batch of patents expire from 2025 to 2029. How to make up for the possible decline in profits caused by the impact of generic drugs, reducing costs and increasing efficiency through outsourcing has become a common choice. This makes the customers of the CXO industry naturally distributed around the world. At the same time, its technical threshold is constantly rising.

Because drug molecules are becoming more and more complex, the process requirements for synthesis, analysis and production far exceed those of traditional small molecules. Some small and medium-sized emerging companies may only have R&D capabilities but not large-scale production capabilities. In addition, drugs are iterating faster and faster, and it is not cost-effective to develop a production system by yourself.

Currently, about 70% of the world’s antibody drug conjugates (ADCs) choose to outsource, as do new molecular types such as peptides and oligonucleotides.

This also means that you must have strong technical capabilities, extremely fast iteration speed and global layout at the same time, in order to be able to undertake the new and iterative needs of multinational companies.

A research report obtained by “Caijing” shows that Eli Lilly’s weight loss drug Tilpotide gave production orders to European suppliers and WuXi AppTec at the same time. Within three years, WuXi AppTec expanded the relevant production capacity by about ten times, and the European supplier’s expansion was 60%. “If (WuXi) AppTec is not used, the terminal will be out of stock.”

Peptides are the hottest thing right now. While Samsung Biologics is still replenishing its capabilities through the acquisition of Swiss peptide company PolyPeptide, WuXi AppTec’s TIDES (polypeptides, oligonucleotides and related conjugates) business revenue in the first three quarters has reached 11.52 billion yuan, exceeding the full year of 2025.

This difference in speed in following global hot spots may come from the “molecular funnel” formed by the integrated business model of outsourcing services. WuXi AppTec has been involved in customers’ molecules from the early stages of drug discovery, which not only allows it to sense the world’s most cutting-edge research and development trends, but also accompanies candidate “star molecules” through the entire process of synthesis, testing, process development, and commercial production, thereby more quickly keeping up with the pace of big pharmaceutical companies.

“The CRDMO model provides the company with a forward-looking perspective and prepares production capacity layout in advance.” WuXi AppTec’s management said at the interim results meeting.

“The large-scale synthesis of peptides is inherently difficult. Going from laboratory gram level to industrial ton level is not a simple scale-up, especially because the quality control requirements are very high.” An investor in the pharmaceutical and chemical industry told Caijing.

From 2022 to 2024, tilpotide was once included in the shortage list of the US Food and Drug Administration (FDA) due to insufficient production capacity. In those years, whoever had a ready-made reactor could receive orders. WuXi AppTec ultimately undertook approximately 35% of the peptide API and 85% of the active ingredient production orders for Tilpotide.

Currently, WuXi AppTec has 24 glucagon-like peptide (GLP-1) projects, 15 of which have entered late-stage clinical trials. In a popular track that has given birth to two global drug kings, its next round of large orders may already be in the funnel.

Regarding the current situation of the CXO industry, one practitioner believes that “the current more accurate description is K-shaped recovery.” Orders and profits are accelerating towards leading companies with mature platforms, project experience and global compliance capabilities, while small service providers that lack differentiation continue to be left behind.

In the first half of the year, Swiss CDMO leader Lonza’s revenue increased by 16% at constant exchange rates and confirmed full-year growth guidance of 11%-12%; South Korea’s Samsung Biologics’ third-quarter revenue increased by approximately 18.5% year-on-year, raising its full-year growth guidance to 20%, with cumulative contract orders exceeding US$21.9 billion.

WuXi AppTec is becoming the fastest growing company in this K-shaped recovery.

Editor | Zhang Shengting

Related Reading

• World, line up to sell goods to China!2026-11-12
• Ni Runfeng, the “King of Color TV”, passed away. From a workshop technician to the head of a state-owned enterprise, his ups and downs in half a life defined an era of home appliances.2026-11-12
• Original “Fearless” Wang Jianlin regains control of Wanda Business Management, and his net worth has evaporated by 200 billion in ten years2026-11-12
• Original: The middle-class people are crazy about grabbing Archaeopteryx in Sam2026-11-12
• There is no more double 11 in the world, leaving businesses miserable2026-11-11