House advances bill to restrict Chinese biotech firms, but how will U.S. fill the void?

A House committee voted last week to advance legislation that would ban contracting with five key Chinese biotech firms and set in motion a reordering of how U.S. pharmaceuticals are developed and manufactured.

The House Committee on Oversight and Accountability voted overwhelmingly to approve the Biosecure Act. The. Senate Homeland Security and Governmental Affairs committee already approved similar legislation in March. The bipartisan legislation would end U.S. contracting with Chinese firms such as WuXi AppTec and others deemed a threat to national security by 2032.

“This bill is a necessary step toward protecting America’s sensitive health-care data from the Chinese Communist Party before these companies become more embedded in the U.S. economy,” Committee Chair Rep. James Comer, R-Ky., said.

Supporters say the legislation is needed to keep Americans’ health and genetic information from foreign adversaries, who could weaponize the data, and that it is dangerous for China to dominate the biotechnology supply chain.

Reps. Raja Krishnamoorthi, D-Ill., and Brad Wenstrup, R-Ohio, introduced the proposed legislation.

“U.S. taxpayer dollars should not be funding (Chinese) biotech companies that are actively working with the Chinese Communist Party and the People’s Liberation Army to potentially collect Americans’ genomic data and intellectual property and use that data to further their authoritarian objectives,” Krishnamoorthi said.

The targeted companies countered that the proposed legislation is based on false and misleading allegations and would limit competition. They said they do not pose a threat to U.S. national security and that they should not be included in the bill.

In 2023, Wuxi Biologics earned about 47% of its $2.35 billion in annual sales from North America and about 18% from China, according to its annual report. Two-thirds of WuXi AppTec’s revenue came from the U.S. market in the first nine months of 2023, according to an investor, Complete Genomics.

Although the U.S. biotech industry supports the legislation, filling the void left by the Chinese companies may be a challenge. The government and private sector will need to invest tens of billions of dollars in building up domestic drug manufacturing, said John Crowley, CEO of the Biotechnology Innovation Organization. “It’s going to require a massive and coordinated effort to replace the capacity and capabilities that will go away,” he said, “but we’ve got time to do that.”

Related: Congress targets Chinese biotech, but will drug shortages become even more dire?

The legislation, which still must be passed by the full House and Senate and then be signed into law by President Joe Biden, may be a sign of things to come. “I do think you’re seeing a trade war develop between China and the U.S. on health-related items,” said Chris Meekins, managing director at Raymond James.