The US-China decoupling: is biotech the next front in contention?

The US House of Representatives recently enacted the Biosecure Act, which represents a major step forward in the endeavor to separate the biotech ecosystems in the US and China.

Strong bipartisan support helped the bill pass, which would forbid federal assistance for US businesses doing business with a number of listed Chinese biotech companies, including industry heavyweights Wuxia AppTec and BGI Genomics.

This action is a reflection of Washington's growing concerns regarding Beijing's access to sensitive genetic and medical data, as well as China's aspirations in the biosciences and the possible threats to national security they may pose.

Act supporters contend that the measure is necessary to uphold American technical superiority and safeguard American interests. Protecting the US government's technological advantage has become a top priority, as seen by comparable legislative actions in other high-tech industries, including semiconductors, artificial intelligence (AI), and clean energy. Within this framework, enacting biosecurity laws is seen as an inevitable progression of these efforts to decouple.

Cutting connections with Chinese biotech firms, however, would impede international scientific cooperation and delay the creation of novel therapies. The biotech sector has grown increasingly integrated, with US companies significantly depending on Chinese CDMOs and CROs (contract research and development manufacturing organizations) for both development and production.

The need for novel medications and therapies is being driven by an aging population, which is making illness management more difficult. The prevalence of diseases like cancer, Alzheimer's, and chronic illnesses is rising, which makes the already drawn-out and expensive drug development process much more difficult. Typically, the procedure takes ten to fifteen years and costs billions of dollars. Roughly five out of every 10,000 to 15,000 substances studied in preclinical stages are thought to be safe for clinical trials, and only one is approved by regulators.

The complexity of the disease, tighter laws, and challenges in finding patients have all contributed to longer development times and higher research and development (R&D) expenses. In addition, these delays shorten the period of patent protection, which in key markets like the US, Japan, and China is 20 to 25 years, allowing businesses less time to recoup their investment.