The U.S. House of Representatives has passed the Biosecurity Act aimed at sanctioning China's bioindustry. Amid anticipated seismic shifts across the global Contract Development and Manufacturing Organization (CDMO) industry, significant benefits are expected for the domestic sector as well.
On the 9th (local time), the U.S. House held a plenary session and passed the Biosecurity Act with 306 votes in favor and 81 against. After passing the Senate plenary session and being signed by President Joe Biden, it is expected to be finalized as law. The bill had already passed both the House and Senate committees and was designated as a "suspension of the rules" bill in the House, indicating overwhelming bipartisan support from both Democrats and Republicans, leading to expectations that the law could be enacted as early as this year.
The Biosecurity Act is being promoted with the intent to significantly restrict the activities of biotechnology companies hostile to the U.S. in order to prevent the leakage of Americans' genetic information and other sensitive data. Once enacted, Chinese companies specified in the bill, such as Beijing Genomics Institute (BGI·Huada), its subsidiary Huada Zizhao (MGI), and Wuxi AppTec, will be prohibited from conducting transactions with U.S. administrative agencies or companies supported by the U.S. government.
The bill also includes Wuxi Biologics, considered one of the global 'Big 4' CDMOs, as a target for sanctions, which is seen as a positive development for domestic CDMO companies classified as U.S. allies. This could attract demand from global companies seeking new CDMO partners. The active search for partners by many Korean CDMO companies such as Samsung Biologics, Lotte Biologics, SK Pharmteco, and ST Pharm at the Bio International Convention (BIO USA) held in the U.S. last June is also viewed as an effort to capitalize on this anticipated benefit.
There are cases of companies benefiting even before the bill’s passage based on such efforts. Last month, ST Pharm was selected as a supplier of active pharmaceutical ingredients (APIs) for a global pharmaceutical company. The company explained the selection background, stating, "The new drug previously sourced its raw materials from China, but due to the impact of the Biosecurity Act, ST Pharm was chosen as an alternative raw material supplier. Although the decision on supply was expected after an audit at the end of this year, the likelihood of the Biosecurity Act passing the House in September accelerated the selection process."
An industry insider said, "If the bill becomes reality, pharmaceuticals related to sanctioned companies will no longer be supplied through U.S. public insurance. From the perspective of global pharmaceutical companies, it is expected that supply lines will shift to CDMOs in Korea, Europe, or Japan, which are free from such restrictions."
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