Is the Proposed BIOSECURE Act Good or Bad for US Drug/Biotech Companies Dealing with China?

Currently, in the US House and Senate, a potential BIOSECURE Act is on the table. This Act while not finalized or implemented yet, will likely affect US drug and biotech companies and their relationships with China (and to a much lesser extent our dealings with other countries of concern like Cuba, Russia, and North Korea). There are concerns that the transmission of sensitive medical data may allow China and other adversarial nations to access vast amounts of American genetic information, intellectual property, and other critical data. This appears to be a reaction to China’s HGRAC regulations, which govern the transfer of genomic data from China to Western countries. If this legislation passes, US government federal contracts, loans, and grants will no longer be granted to American drug/biotech firms that use biotech equipment or services from China when fulfilling government contracts. Drug/biotech companies may then need to choose to deal with the US government or stop working with certain Chinese suppliers.

Specifically, the draft legislation discusses US firms working with WuXi AppTec, BGI Group, MGI, or Complete Genomics – but other Chinese companies may be added in the future. BGI, formerly known as Beijing Genomics Institute, operates in over 100 countries and is a major supplier of human DNA sequencers. WuXi AppTec is a leading manufacturer of drugs and medical devices for U.S. companies.  In response, in anticipation of this legislation passing, Novartis has severed some ties with Chinese contractors. AstraZeneca has reported that they will make drugs in the US for the US only and in China for China only. In another sign of trade protectionism, John Crowley, CEO of the Biotechnology Innovation Organization (BIO), said – “American and our allies cannot let this happen”, referring to Chinese companies stealing American technology and data. Accordingly, WuXiAppTec recently left the BIO council. This raises a critical question – will this legislation successfully keep secrets away from China, or will it inadvertently hurt the many drug/biotech companies who rely on China for APIs, finished drugs, R&D, and other medical services, and hence lead to serious drug shortages and supply chain disruptions? Will US companies that rely on cheap supply of Chinese drugs during the drug development process lose momentum on developing new innovative global drugs?