India’s CRDMOs stand to gain from addition of China’s WuXi AppTec to Pentagon list

Contract research, development and manufacturing organizations (CRDMOs) in India are poised to benefit from last week’s inclusion of China-headquartered WuXi AppTec to a U.S. Department of Defense (DoD) list of “Chinese military” companies, according to analysts.

WuXi AppTec, one of the world’s largest CRDMOs, has operations in Asia, Europe, and the U.S. — the company’s largest market. For 2025, the CRDMO reported a 34.3% year‑over‑year increase in U.S. revenue, with total sales reaching record highs.

However, analysts contend a potential supply chain shakeup is in the offing and India’s CRDMOs could be the beneficiaries of a shift away from WuXi AppTec — though gains for Indian companies will take time to materialize, they say.

“While the development is sentimentally positive for India’s [CRDMO] companies, it would be premature to interpret it as an immediate business opportunity,” Elara Capital analysts wrote in a note to investors. “The transfer of pharmaceuticals manufacturing and supply chains is a complex process that usually takes several years, making it too early to assess any meaningful impact on WuXi’s business.”

The analysts added that “the move could prove to be part of the broader geopolitical and trade negotiations between the U.S. and China, rather than a precursor to significant near-term shifts in industry-sourcing patterns.”

Christopher Hencken, an independent consultant, wrote in a post on LinkedIn that WuXi AppTec is not only a manufacturer but is “one of the largest discovery and early development engines in the world.” As such, he said a potential supply chain shakeup is not easy.

“Reshoring a late-stage process is hard but bounded,” Hencken wrote. “Re-sourcing the whole front end of discovery, across hundreds of small programs at once, into Western capacity that was already tight, is a different kind of problem. You cannot qualify your way out of that in a quarter.”

BIOSECURE Act implications

Last week, DoD added WuXi AppTec to the Pentagon’s 1260H list of “Chinese military companies” operating in the U.S. Although the CRDMO has vehemently denied it is owned or controlled by or affiliated with any government or military organization, WuXi AppTec’s inclusion on the list places it under the provenance of the BIOSECURE Act — signed into law in December 2025 by President Donald Trump — which bans U.S. government agencies from contracting with organizations that use services from companies on the list. 

WuXi AppTec has filed a legal complaint with the U.S. District Court for the District of Columbia challenging the CRDMO’s designation as a Chinese military company by DoD. At the same time, WuXi AppTec has downplayed the potential impacts of the BIOSECURE Act, which it pointed out provides a grandfather period of five years expected to start in 2028.

However, some analysts argue that time is of the essence in transferring pharmaceuticals manufacturing and supply chains.

The BIOSECURE Act’s five-year window is “real and policy this contested could be reversed,” according to Hencken. “But the right response to uncertainty is not to wait for certainty. It is to map your exposure now.”  

“Potential timelines for restrictions extend to 2033, but customers would need to make supply decisions several years earlier, and this further adds to concerns about having Chinese companies within pharma supply chains,” RBC Capital Markets analyst Charles Weston wrote in a note to investors.

Still, taking business away from WuXi AppTec won’t be easy or quick.

According to a 2025 report to Congress from the National Security Commission on Emerging Biotechnology (NSCEB), WuXi AppTec is “so entrenched in American biopharmaceutical supply chains that American firms estimate they would need at least eight years to develop alternative sources for its services.”

India’s CRDMO opportunity

Jefferies analysts in a 2025 report made the case that India’s CRDMOs are “at an inflection point” and well-positioned to take advantage of a “firehose” of opportunities fueled by a “China+1 strategy” in which biopharma companies look to diversify their supply chains and manufacturing operations by focusing on at least one additional country.

That country is India, according to Jefferies analysts, who estimate China’s CRDMO market at $18.7 billion, with approximately 78% of the revenue coming from small-molecule services — which they see as the most relevant segment for Indian CRDMOs.

“Historically, U.S. pharma companies relied heavily on Chinese CRDMOs like WuXi, but geopolitical tensions have prompted a shift toward alternative markets,” the analysts said. “We believe Indian CRDMOs, with their strong small-molecule capabilities and established track record in the segment, are well-positioned to capture this opportunity.”

Jefferies forecasts an 18% compound annual growth rate (CAGR) for fiscal years 2025 through 2030 and estimates that China+1 represents an annual $700 million sales opportunity for India’s CRDMOs as a base case, with the potential of reaching $1.4 billion in a bull scenario.