The U.S. biotechnology industry is keeping a watchful eye on proposed legislation that, according to some, could disrupt supply chains, reduce investment, limit R&D and cause widespread job losses.

The BIOSECURE Act, introduced in Congress earlier this year, would block federal funding for, and prohibit purchases by the U.S. government from, any U.S. companies doing business with Chinese contract service and contract manufacturing organizations (CDMO’s). According to BioSpace, the most recent version of the Act in the House of Representatives would force U.S. pharma and biotechnology companies to sever ties by 2032 with "biotechnology companies of concern,” specifically WuXi AppTec, WuXi Biologics, Complete Genomics, Beijing Genomics and MGI.  Of note, additional companies could still be added to this list.

BIOSECURE aims to reduce reliance on Chinese pharmaceutical imports (which have been rising dramatically), and spur new investment in the U.S. and other Western CDMOs. However, some fear the proposed legislation could disrupt both U.S. and EU drug and medicine supply chains, dampen innovation, and lead to significant job losses in North America. The Crowell law firm, in a recent blog post, warned “Numerous drugs currently in late clinical-stage trials, could be impacted by the BIOSECURE Act, as well as other pharmaceutical and biotechnology raw materials and end products.”  Others have advised it may require more time than the proposed eight-year deadline for U.S. firms to realign their product supply chains and R&D efforts.

Opponents of the bill have taken heart from recent developments that may push consideration of the new legislation into Congress’s November “lame duck” session when it is thought less likely to be passed. Nonetheless, the bill still has widespread and bipartisan support in Congress (and within BIO, the leading industry trade organization) and many believe a path still exists to approve the legislation before this Congress adjourns.

Despite any uncertainty over the bill, it does appear as if fears of job losses may be coming true.  According to industry observers, while WuXi plans to finish construction of its heavily publicized, massive (1.7 million square feet) new drug manufacturing operation in Middletown, Delaware (“Project Dragonfly”), the company is reportedly delaying occupancy of the facility and deferring hiring of up to 500 employees for the foreseeable future.

Biggins Lacy Shapiro & Company has, over the past two decades, developed a particular expertise in site selection for large-scale biomanufacturing projects. As such, we will continue to closely monitor legislative developments that have the potential to impact location decisions in this critical industry.