Analysts suggest the Pentagon's blacklist of WuXi AppTec will have minimal impact on multinational pharmaceutical companies' collaborations with Chinese firms. Cost efficiency remains a primary driver for outsourcing to China.

The Pentagon added Chinese pharmaceutical contractor WuXi AppTec to a list of entities it alleges are linked to the country’s military, but the blacklisting will not stop multinational drug makers from collaborating with China’s biopharmaceutical firms, according to analysts. “We view minimal impact given multinational [companies] in pharma still prefer made-in-China for cost efficiency,” said Cui Cui, head of healthcare research for Asia at Jefferies. “Meanwhile, Wuxi AppTec earnings visibility...