Even as the BIOSECURE Act charts an uncertain path through the legislative process, the draft bill has already seriously harmed the U.S. biopharma industry's perception of Chinese partners.
Among U.S.-based life sciences companies, confidence in working with Chinese companies has dropped by around 30% to 50%, a new survey by L.E.K. Consulting has found. Firms outside the U.S. are less concerned, showing a milder 20% to 30% decrease in their confidence levels, according to the survey.
For the confidence metric, the L.E.K. team asked biopharma companies to rate their confidence in working with Chinese partners on a scale of 0 to 10. The team took averages from those responses and compared them with baseline levels from before the BIOSECURE Act discussions.
U.S. companies’ confidence in working with Chinese CDMOs saw the sharpest decline at 49%, compared with a 32% drop for CRO partners and 36% for drug developer partners.
The proposed BIOSECURE Act aims to block certain Chinese biotech equipment and service providers from the U.S. market based on national security concerns. While the bill currently only lists WuXi AppTec and WuXi Biologics—which are already major R&D and manufacturing contractors for the industry—plus a few genomics sequencing firms, the fear is that other Chinese firms could be added later.
Meanwhile, an intelligence briefing requested by lawmakers triggered the distant anxiety that biotech drug developers might get dragged into the crackdown, too.
Already, 26% of 73 life sciences companies surveyed by L.E.K. said they are looking to shift away from their Chinese partners, even though only 2% have already started the unwinding process. In addition, 16% of U.S. companies said they’re only going to consider non-Chinese partners for new projects going forward. The firms L.E.K. surveyed included biopharma drug developers, life sciences contractors and investors.
Surprisingly, 11% of the surveyed companies reported no impact on their decision-making, a finding that L.E.K. pegged to the uncertainty of the bill. It’s possible that some companies do not have any Chinese partners—those firms constituted 13% of respondents in L.E.K.’s survey. Some drugmakers, like in the case of Takeda, already have separate supply chains for the Chinese market.
Make no mistake: The bill has received wide bipartisan support. Committee votes in favor of the bill were 11-1 and 40-1 in the Senate and the House, respectively. But an attempt for a House floor vote by including it as an amendment to the 2025 National Defense Authorization Act (NDAA) was not successful in June, raising some uncertainty about the bill’s path forward. The NDAA door remains open in the Senate. Voting on it as a standalone bill is considered difficult, though not impossible.
The L.E.K. survey was conducted from late May to early June, after the committee votes but before the NDAA setback.
“While this Act’s passage before the 2024 US presidential election is unlikely, the advanced planning and the long cycles of the biopharma industry demand that the biopharmas, their service providers and their investors consider the consequences of this significant regulatory action,” the L.E.K. team said in an article summarizing the survey findings.
In L.E.K.’s survey, 68% of respondents said they were already adjusting their operations, including increasing legal and compliance requirements for Chinese partners, diversifying partnerships in other countries and adding background checks for existing partners.
Compared with a third of U.S. biopharmas who said they will not likely partner with Chinese companies on local commercialization in the next three years, around 50% to 60% of those U.S. drugmakers said they likely won’t work with Chinese firms across clinical development, CRO and CDMO tie-ups in that time frame.
The updated House version of the bill offers an eight-year grace period for companies to cut their existing ties with the Chinese firms currently listed, or five years for any potential newly added service providers. The adjustment came after a Biotechnology Innovation Organization survey of its members found heavy reliance on Chinese contractors and a lack of satisfactory alternatives to enable an easy switch.