If legislation restricting collaborations between U.S. biopharma companies and certain Chinese manufacturers becomes law, it could reshape the global healthcare economy. Its potential disruptions could impact everything from drug manufacturing and clinical trials to university research and scientific exchange, according to industry experts who discussed the topic during the recent 2024 Biofuture conference, held in New York at the Cure headquarters.
"If you look at the big picture, Chinese companies are already very much entangled in U.S. businesses, whether they're [Clinical Research Organizations], [contract development and manufacturing organizations (CDMOs)], innovators or clinical trials. It's going to take time to disentangle," said Arda Ural, PhD, Americas Life Sciences Leader at Ernst & Young LLP.
Exactly what that means for U.S. companies is still up in the air, said Greg Simon, JD, President of Simonovation LLC and former head of the Biden Cancer Initiative. "The problem is we don't have these supply chains here yet. The world is still globally dependent on each other."
Ural and Simon spoke during a panel discussion. "The BIOSECURE Act: Balancing Security and Innovation in Biotechnology," during the conference. Joining them were Seth Flaum, JD, Partner at Wilson Sonsini, and Max Bayer, pharma reporter at Endpoints News.
The legislation, passed by the U.S. House of Representatives in September with broad bipartisan support, is awaiting Senate review. It would prohibit U.S. pharmaceutical and biotechnology companies from contracting with five specific Chinese companies, including two of the world's largest biomanufacturers such as WuXi Biologics and WuXi AppTec, which was involved in 27 percent of the small molecule drugs approved by the FDA in 2023.
Companies are already adjusting their operations in anticipation of the legislation. A survey of 124 companies by the Biotechnology Innovation Organization (BIO), one of the largest industry trade groups, found 79 percent have at least one contract with a China-based CDMO, highlighting the deep interconnections between the two countries' healthcare sectors.
"If you're a biotech and emerging biotech who contracted with one of those companies, then absolutely everything's, like the world, is coming apart," said Ural. "If you are a large pharma, you're entangled with the contractors in the scope, then, obviously, it's concerning."
While the legislation wouldn't require U.S. companies to sever their ties to the Chinese manufacturers for several years after it passes, some companies are already experiencing market shifts in China, Ural said.
In addition, the impact could extend beyond manufacturing to affect research collaboration and innovation with China, particularly at universities.
"I represent a lot of startups. A lot of those assets come from universities. and if the university takes a very conservative position relating to the BIOSECURE Act, that's going to greatly affect biotech, who's coming out of the university," said Flaum.
"That opens up an interesting question: is there potential for pharma and biotech companies to experience retaliation from China for that policy directly?" said panel moderator Virginia Amann, founder of ENTENTE Network.
Legal experts recommend companies begin reviewing their partnerships now rather than waiting for final legislation.
"Everyone really needs to do a thorough audit of their relationships that they have now and the ones that they are going to need to enter into the future. I worry a little bit about competition in the supply chain and if they have to make a move, if they wait too long, they may be in a bad position," Flaum said. "We're advising these people to start looking at their options, being uncertain as to what exactly it'll look like."
Despite concerns about manufacturing relationships, some forms of U.S.-China collaboration are actually increasing.
"The out-licensing of science from China to the U.S. had its highest year ever in 2023 by a significant margin," said Bayer. "When we think about cross-regional collaboration -- the WuXis of the world and the CDMOs and domestic manufacturing -- its one element that's really a part of this bill."
Some panelists pointed to successful examples of international scientific cooperation, like the International Space Station program, as models for maintaining collaboration even during geopolitical tensions. They suggested the focus should be on building bridges through healthcare rather than creating barriers.
"Instead of putting up these barriers, we should be thinking about how do we get the next generation of Chinese leaders on board with our system of scientific research. They're all here, and we're telling them to go away. I just don't think that's a good long-term strategy," Simon said.
"China has the worst cancer burden in the world, and they're going to have the worst diabetes burden in the world," said Simon. "They're going to have the worst Alzheimer's burden in the world. Our greatest export is healthcare. Why would we not use healthcare to build a bridge with China instead of poking them in the eye with it?"