Why Should Delaware Care?
The WuXi STA Pharma campus in Middletown has been hailed as a major economic development win for Delaware and it was backed by the largest taxpayer-backed grant of the Carney administration. Now concerns from the Pentagon over its alleged ties to the Chinese government could essentially prevent it from doing business with American companies.
One of Delaware’s largest economic development projects could be in jeopardy after the Pentagon blacklisted the developer over alleged ties to the Chinese military.
On the southern edge of Middletown, Shanghai-based WuXi STA Pharmaceuticals is nearing completion on a massive, $500 million pharmaceutical manufacturing campus. The company – one of the largest global contract pharmaceutical manufacturers – has eyed the facility as part of its major expansion into the United States. It plans to open it later this year.
But for the plant to survive long-term, it may need to find a way off of the so-called 1260H list, or a list of companies that the U.S. Department of Defense designates as “Chinese military companies.”
Earlier this month, the company sued the Pentagon in federal court to overturn the designation.
The decision came as a bit of a shock, considering WuXi’s parent company, WuXi AppTec, avoided being included in a 2025 federal bill known as the BIOSECURE Act that would have placed the limitations on its clients last year. The bill extends the same prohibitions to any company that the Pentagon places on its 1260H list.
“We are confident this designation is wrong and not supported by the facts or legal criteria and a full and fair review of the facts will vindicate our position. WuXi AppTec is not a ‘Chinese military company,’ and we are working with our advisors to pursue every available remedy,” a company spokesperson told Spotlight Delaware this week.
What is WuXi accused of?
In 2023, the U.S. House of Representatives established a specially organized bipartisan committee, known as the House Select Committee on the CCP, to examine the economic and national security threats imposed by the Chinese government.
Through its first year, it helped to push a ban or sale of the social media platform TikTok, expose the forced labor concerns in low-cost, e-commerce companies Shein and Temu, and argued for the revoking of tariff breaks on a variety of Chinese products.
In early 2024, the committee’s leaders introduced the BIOSECURE Act, which aimed to prohibit federal contracting with certain biotechnology providers connected to foreign adversaries. The bill expressly named five companies, including WuXi AppTec.
The bill claimed that WuXi AppTec “presents a national security threat to the United States” because it has sponsored events featuring military and civil leaders, received investments from a military-linked fund, and granted awards to military researchers.
U.S. intelligence officials later informed senators that they believed WuXi AppTec had also transferred intellectual property to the Chinese government, according to a Reuters report.
The company has adamantly denied all claims that it compromised technology or data, or has any relationship with the Chinese military.
Through negotiations of much of 2024, WuXi AppTec was eventually removed from the BIOSECURE Act that was approved with the annual National Defense Authorization Act and the company’s future looked bright.
But about a year later, it was back in the Pentagon’s crosshairs.
A disinterested administration
According to WuXi’s lawsuit filed in the U.S. District Court of D.C., the company met with Biden administration officials at the Pentagon in August 2024 and reportedly presented evidence that it is not connected to the Chinese government, military or academia.
When the 1260H list was published in January 2025 at the tail-end of the Biden era, WuXi was no longer targeted.
Following the inauguration of President Donald Trump, the company once again sought an audience with the new Pentagon leaders. That meeting was delayed to November 2025 due to the government shutdown, but weeks before that meeting Deputy Secretary of War Steve Feinberg had reportedly already argued to Congressional leaders that WuXi should be added to the 1260H list.
When company leaders read that Bloomberg story, they asked the Pentagon for an explanation and offered to answer any additional questions. The Pentagon told WuXi that it had no comment on the story and never reached out again.
Three months later, WuXi officials were shocked to see the company named on an updated 1260H posted on the Federal Register that was taken down after less than an hour. Nonetheless, the list was spotted and became an international story – one that WuXi argues served an ulterior motive.
The list was posted while Trump and Chinese President Xi Jinping had been negotiating a trade deal and a first state visit of Trump’s second term.
“The lack of justification and the haphazard posting of the 1260H List illustrate the arbitrary and capricious manner in which the [Department of War] is managing [Chinese military companies] designations amidst political pressure,” the company wrote in its lawsuit. “The slapdash posting demonstrates that the 1260H List is being used as a political pawn during negotiations with China, rather than a legitimate, evidence-based national security determination.”
On June 8, WuXi once again wrote to Feinberg to deny allegations of its ties to the Chinese government and offered to meet. Instead, within hours of that email, the Pentagon posted its final 1260H list naming WuXi among the problematic companies.
U.S. Sen. Chris Coons (D-Delaware) told Spotlight Delaware last week that he has not been briefed on what evidence the Pentagon may have to defend the designation, but has asked for a classified update.
“If there is concrete evidence that WuXi is utilizing biological or other sensitive or private data of Americans in the United States, then I will voice my support for this designation. But at the same time, I welcome investment in manufacturing in Delaware so I think we have to be cautious,” he said.
What could happen?
If WuXi cannot convince a judge to reverse course on the designation, it could be significantly damaging to the company’s operations.
As a named 1260H company, WuXi now faces Pentagon contracting restrictions, but its bigger issues lie with parallel clauses in the BIOSECURE Act.
Under the BIOSECURE Act, WuXi would be prohibited from receiving government contracts, grants or loans – and critically extends those prohibitions to clients of WuXi. That means pharmaceutical companies that receive federal dollars for research, development or manufacturing of a drug could not work with WuXi on it.
But, WuXi also received some relief when legislators exempted Medicare and Medicaid agreements from the prohibitions.
The company will also have time to launch a legal defense, because the BIOSECURE Act has not been put into force yet. It could be up to three years before it clears the necessary federal compliance regulations, depending on how quickly the Trump administration wants to advance it.
And even at that point, WuXi would be allowed to work with existing clients for up to five years as part of a grandfathering period.
But the reality is switching contractors to work on manufacturing and testing new drugs is a lengthy and expensive process. That’s why the mere threat of future prohibitions has convinced many clients of Chinese-based biotech companies to begin exploring alternatives – a 2024 survey of the industry, taken at the height of BIOSECURE Act concern, found that more than two-thirds of companies were looking.
“This updated list of Chinese military companies is a warning to American businesses, all levels of government, and the American people. These Chinese companies are working with the Chinese military against our national interests,” Rep. John Moolenaar (R-Michigan), the chair of China Select Committee, said in a statement after WuXi was added to the 1260H list.
Prohibition, or even diminished market share in the U.S. could be particularly damaging for WuXi, which saw two-thirds of global revenue come from America last year.
Indeed, WuXi says as much in its lawsuit, writing, “The limitations of the BIOSECURE Act will likely cause many of [WuXi’s] customers to consider taking their business to companies without the limitations, which would be detrimental for the company.”
Middletown project proceeds
Over the last four years, WuXi has been building a 1.74 million-square-foot campus in Middletown where it plans to employ nearly 500 people.
The state’s economic development team worked for years to land the project at a 190-acre parcel in the fast-growing town. After all, the company is a heavyweight in its field, working on blockbuster drugs like AstraZeneca’s diabetes drug Farxiga or Pfizer’s COVID drug Paxlovid.
To lure WuXi to the First State, officials approved $19 million in taxpayer-backed grants for the project. It was the largest grant approval made during former Gov. John Carney’s term, totaling nearly four times that given to Amazon for its massive Boxwood Road fulfillment center.
Earlier this month, WuXi hosted an open house at the Middletown facility for industry executives, according to a social media post. The company has been hiring for months to launch its drug research facility this winter for clinical and commercial drugs.
Following the initial building, the Middletown site is expected to continue growing next year, adding sterile manufacturing space for vials, cartridges and pre-filled syringes.
A WuXi spokesperson dismissed concerns that a BIOSECURE Act-spurred financial hit could impact the Middletown project, saying, “Our U.S. presence …reflects a long-term strategic commitment to U.S. patients, U.S. jobs, and U.S. innovation. This commitment does not rest on the outcome of this legal proceeding.”
