BIOSECURE act forces US pharma to re – evaluate China manufacturing reliance : GlobalData

While the Act remains a topic of debate, some anticipate potential onshoring benefits, while others foresee disruptions to the existing supply chains

As the BIOSECURE Act progresses through the US legislative process, the US pharmaceutical industry finds itself at a crossroads. With heavy reliance on Chinese contract manufacturers, US companies are reevaluating their partnerships amidst the proposed regulations aimed at safeguarding national security interests.While the Act remains a topic of debate, some anticipate potential onshoring benefits, while others foresee disruptions to the existing supply chains, finds GlobalData.

Reducing dependence on Chinese pharma manufacturing will prevent US taxpayer dollars from funding “foreign adversary biotech companies of US national security concern.” Chinese contract manufacturing companies, like WuXi, as well as US pharma companies that outsource their manufacturing to China, have reportedly launched lobbying efforts around the bill. 

GlobalData’s report, “The State of the Biopharmaceutical Industry 2024 Edition (mid-year update)”, reveals that pharma companies are not consistent in their responses regarding the likely impact if the Bill passes, reflecting industry confusion and uncertainty around the legislation.”

Adam Bradbury, pharma analyst at GlobalData, states, “While half of North American pharma insiders said that the Act will have no effect on them, the rest were divided, with 32 per cent saying they would benefit from it, for instance through winning more contracts, and 19 per cent said they would be hurt by it, through losing funding or contracts.”

Healthcare industry professionals in Asia-Pacific (APAC) are more inclined to highlight the negative impact than those in North America.

“When asked about the wider implications of the BIOSECURE Act, the biggest proportion of healthcare industry professionals highlighted that they expect more manufacturing to move to US ally or neutral countries. This answer was particularly visible with APAC healthcare industry professionals, with 73 per cent of that group expecting manufacturing to move,” adds Bradbury.

A recent amendment to the US BIOSECURE bill would allow the existing contracts with Chinese companies to be “grandfathered” in for eight years, reducing disruption to pharma supply chains. A grandfather clause exempts certain pre-existing things from the requirements of a piece of legislation.

On May,15 2024, the US House Committee on Oversight and Accountability voted in favour to advance the BIOSECURE Act to the full US House of Representatives’ floor, with amendments that allow existing contracts with Chinese “companies of concern” to continue until 2032. A previous version of the bill would have denied federal funding or contracts to firms that had deals with certain named Chinese biotechs.

“The BIOSECURE Act marks a significant juncture for the US pharmaceutical industry. Ultimately, the Act’s impact will shape not only supply chains but also the broader geopolitical dynamics of the pharmaceutical sector, ”states Bradbury.