Relief for Chinese biotechs as BIOSECURE Act delayed

Legislation in the US that could have a dramatic impact on the businesses of five biotechs with links to China has been left out of a key bill, introducing a delay that will likely extend into the next administration.

The BIOSECURE Act, which will prohibit businesses in the US from contracting with various Chinese firms on national security grounds, has not been included in a defence budget bill viewed as probably the last chance to pass the bill in 2024 before Congress goes on recess.

In its current form, the BIOSECURE Act would prohibit the federal government from contracting with, or providing grants to, companies that do business with a “biotechnology company of concern.” It specifically mentions five biotechs – WuXi AppTec and WuXi Biologics, as well as BGI Group and its subsidiaries MGI Tech and Complete Genomics.

It failed to make it onto the amendments of the mammoth $886 billion National Defense Authorisation Act (NDAA), a basket of legislation that also includes provisions for aid to Ukraine and received strong bipartisan support in the House of Representatives last week and has now been sent to Outgoing President Joe Biden to sign.

Shares in WuXi AppTec, WuXi Biologics, and MGI Tech all rose on the back of the latest twist in a meandering legislative tale that was widely expected to reach its conclusion this year.

The US House voted in favour of the proposed legislation in September by 306 to 81 votes, easily reaching the two-thirds majority needed to keep the Act in play, although there has been pushback from House Democrats who have opposed naming companies directly in the legislation.

The bill has already been progressively watered down since its first iteration amid concerns that it would disrupt the biopharma sector by raising costs, potentially lead to loss of access to some medicines, and disproportionately affect smaller biopharma companies and start-ups, which are less likely to be able to bid for contracts with alternative suppliers than their larger counterparts.

Changes in recent months include the introduction of a waiver programme that can be applied in certain circumstances and a grandfathering clause that would give companies until 2032 to sever ties with the Chinese firms.

If the BIOSECURE Act doesn’t make it through before President-Elect Donald Trump takes office, it expires and the new administration would have to re-activate it, which is by no means certain.