If you haven’t read U.S. District Chief Judge James Boasberg’s ruling last week granting a preliminary injunction blocking the Pentagon from enforcing its “Chinese military” company designation against WuXi AppTec, you need to. It is required reading for anyone in the contract research, development, and manufacturing organization (CRDMO) industry — and more broadly, anyone that cares about fairness in this country.

As Boasberg wrote in his legal decision, WuXi AppTec has suffered “reputational injury” from a “government-inscribed scarlet letter” at the hands of the U.S. Department of Defense (DoD) and its updated 1260H list of “Chinese military” companies.

“A scarlet letter sends a clear message: keep away,” the judge’s ruling states. DoD’s branding of WuXi AppTec by including the CRDMO on the 1260H list is “not merely incidental: the list was designed, at least in part, to ‘name and shame’ designated companies and thereby discourage others from dealing with them” and that’s what has happened, according to Boasberg.

WuXi AppTec’s inclusion on the 1260H list “officially brands” the company as “an instrument of the Chinese military,” Boasberg wrote, and that label is “now producing significant commercial losses.” He noted that WuXi AppTec customers and suppliers have subsequently “canceled contracts, terminated longstanding relationships, and moved their business to competitors.” The judge added that the company’s designation on DoD’s 1260H list is “inflicting harm on WuXi that later relief cannot repair.” 

Why would DoD want to cause reputational injury to WuXi AppTec? The answer is clear: the China-headquartered company is a formidable competitor in the global CRDMO market with double-digit annual growth and a strong U.S. customer base that is helping Chinese firms to challenge America’s leadership.

U.S. customers accounted for approximately 70% of WuXi AppTec’s 2025 revenue, compared with 15% from China and 11% from Europe. WuXi AppTec serves more than 1,000 U.S. customers, many of which hold federal contracts or receive federal funding and for whom reliance on a 1260H-designated supplier strains relations with agencies and “invites precisely the scrutiny a federal contractor most wants to avoid,” the legal document stated.

For now, WuXi AppTec has won the initial round of its legal battle with DoD based on Boasberg’s decision to grant a preliminary injunction. The judge wrote that the CRDMO established a likelihood that DoD’s 1260H list designation “was arbitrary and capricious under the Administrative Procedure Act” as the litigation process continues.

Unfortunately, damage has been done to WuXi AppTec with customers “suspending, canceling, and redirecting work while this case proceeds, and the supplemental record shows that those losses continue to mount,” Boasberg wrote, adding that a “sliver of customer actions alone implicates millions of dollars in annual revenue, existing commitments, and both long- and near-term programs.”

No later judgment from the court can make WuXi AppTec whole for its losses, according to Boasberg, “nor, given how pharmaceutical outsourcing works, will prevailing later bring business back: a customer that moves its programs elsewhere is, as a practical matter, likely gone for good.” In the end, it seems that DoD’s mission has been accomplished.

WuXi AppTec is clearly the victim of geopolitics and the escalating tensions in U.S.-China relations. Ultimately, DoD should be held accountable for its 1260H blacklist. More than 72 years ago, a nationwide TV audience watched as then-Senator Joseph McCarthy was confronted in the Army-McCarthy hearings for making false charges of communism and treason. It’s time to do the same with DoD and put an end to these kinds of smear tactics.