Two leaders on the House’s Select Committee on the CCP last week requested an intelligence briefing on the CDMO GenScript and its three related businesses over suspicions that the firms are linked to the Chinese government. Legend Biotech, as a subsidiary of GenScript, became part of the questioning. The move marks the first time that a drug developer has been publicly named as a potential target of interest in the ongoing biosecurity crackdown, and it raises the faintest possibility of a potential expansion of the proposed BIOSECURE Act.
The Biotechnology Innovation Organization, under the new leadership of CEO John Crowley, recently backed the BIOSECURE Act. The bill has so far only targeted certain Chinese biopharma service and equipment providers, including two prominent firms that help research and manufacture many of the industry’s medicines.
Should Congress eventually decide to drag biotech companies into the fold, it’d bring the crackdown to a whole new level and potentially stop U.S. firms from in-licensing drug candidates from Chinese biotechs.
“I have expressed to Congress my view that any further companies that would be added as companies of concern have to have very clear and convincing evidence for why they would be added to the list,” Crowley said in an interview with Fierce Pharma on the sidelines of the BIO International Convention 2024 in San Diego.
BIO, as the world’s leading biotechnology organization with more than 1,200 members worldwide, champions biotechnology and advocates for its members. Under Crowley, the organization counts seven priorities, including “biotechnology as a national security imperative.”
A BIOSECURE Act covering drug developers?
Crowley didn’t directly answer whether BIO would support adding biotechs to the BIOSECURE Act target list. But he did note that the legislation features a mechanism to add new firms.
“We just want to make sure that it was an appropriate process, that it does no harm to biomedical research or to patients,” Crowley said.
I would hope it would be creative destruction. — BIO CEO John Crowley on the BIOSECURE Act
The draft legislation proposes banning federal agencies from directly or indirectly procuring any “biotechnology equipment or service” provided by a named company of concern. The bill has a definition for what constitutes a “service,” but it also would allow the government to add any other service involved in the research, development, production or analysis of biological materials that it deems appropriate.
While developing a drug’s intellectual property or laying the R&D groundwork prior to a licensing deal could be broadly considered a type of “service,” the U.S. government likely wouldn’t go there, according to Kevin Noonan, Ph.D., who co-chairs the law firm MBHB’s biotech and pharma practice.
Even if the bill could be expanded to cover drug developers, “it would surprise me greatly if the law, exactly that way, was ever enacted,” Noonan said in an interview with Fierce Pharma. “This would put the federal government in a horrible political position. To abide by the law, they would have to deny drug coverage to like veterans.”
Noonan raised a hypothetical scenario where a PTSD drug developed by a Chinese biotech wouldn’t be able to get reimbursement under the VA system thanks to the BIOSECURE Act.
“I think that a lot of times when you get these little hypotheticals, never underestimate the political context,” Noonan said. “Because if ... an American is going to benefit from it, and the federal government is seen to be preventing, that’s a political problem.”
It’s worth noting that the proposed BIOSECURE Act also includes an exception clause, where the executive agency executing the law, after certain approvals, could waive prohibitions on a case-by-case basis.
Rebuilding the CDMO ecosystem
Still, in the bill's current form, it proposes a radical reshaping of the U.S. supply chain that could risk disrupting drug R&D and medicine availability for U.S. patients. The two primary contractors being targeted—WuXi AppTec and WuXi Biologics—are major industry players that would be hard to replace. And the risk of new targets being added would force drug developers to continually adapt to the changing landscape.
In 2023, WuXi AppTec’s revenue reached 40.3 billion Chinese yuan ($5.6 billion), including 26.1 billion yuan ($3.6 billion) from U.S. customers that tapped the group to assist with their research or development activities. By comparison, its U.S.-based contract research competitor Charlies River Laboratories recorded $4.1 billion in total 2023 revenue.
On the manufacturing front, WuXi Biologics’ revenue was 17 billion Chinese yuan ($2.35 billion) in 2023. By comparison, Catalent, another large CDMO, recorded nearly $4.3 billion revenue in its 2023 fiscal year that ended in June 2023.
In a recent survey conducted by BIO, many members of the trade group said it would take them up to eight years to switch production of marketed drugs from Chinese partners, and up to six years to change vendors for their preclinical and clinical projects.
Biopharma companies enjoy the cost and speed that these Chinese firms provide, plus the quality and reliability of their service. If the BIOSECURE Act becomes law, there’s a question whether their competitors could match their service on the same scale.
To Crowley, containing the Chinese CDMOs may have its cost but is a necessary move because “biotech is a national security imperative” to the U.S.
“China will continue to be an important part of a vibrant biotechnology ecosystem,” Crowley said. “They can’t be the dominant player, and they can’t be the leader. That has to continue to be led by the United States. If we don’t do that, I don’t believe we’re going to have the best cutting-edge medicines. And I worry that it would be used for political advantage of other states.”
However, taking a softer tone later, the BIO helmsman said he hopes the tensions between China and the U.S. will begin to ease.
“I’ve been to China on many occasions [and] met with patient groups. There’s so much need over there. There’s so much good stuff we can do together,” Crowley said. “So I hope at levels way above my paygrade that they can ease those tensions, find a way that we don’t get into a cold war or deeper cold war, trade wars or God forbid worse. That’s in nobody’s interest.”
Crowley argued that some U.S. service providers may lag their Chinese peers because they weren’t given the capital, the regulatory infrastructure and the workforce to reach the same scale.
“That’s what we need to address,” Crowley said. “If we don’t do that, we’re going to fail. We could potentially harm people.”
The BIOSECURE Act serves as a call to re-domicile important parts of the U.S. biopharma supply chain, “and to make sure we do this so that we can benefit the entire world,” Crowley said.
“We’re going to take out big parts of the supply chain over the next eight years,” Crowley continued. “What goes in its place, not just for now, but for the next 20 years? So that’s a big deal. And that’s where […] it has to be massive, coordinated and done exceptionally well.”
BIO’s revamped role
An updated House version of the BIOSECURE Act would give companies eight years to cut their existing ties with the two WuXi firms and five years to end contracts with any potential new additions. Lawmakers were originally considering a two-year grace period until BIO, using its data and research, convinced them to extend it into eight years, Crowley said.
Being an educator, data collector and communicator is a role Crowley envisions his organization playing during the multi-year overhaul of the U.S. biopharma contract research and manufacturing ecosystem.
“I would hope it would be creative destruction,” Crowley said, “and that it’s reimagining a system, reimagining an important part of the ecosystem, unleashing the entrepreneurial spirit in the United States.”
Crowley recently restructured BIO to better serve its purpose, leading to the departure of 30 people, including its chief policy officer, chief science officer, and chief public affairs and marketing officer. Crowley had previously served on BIO’s board for more than a decade before being named the organization’s CEO in December.
BIO now has eight centers of excellence whose leaders report directly to Crowley. Among the changes was the promotion of Phyllis Arthur, who was previously the group’s VP of infectious disease and diagnostics policy. She is now a senior VP heading up healthcare policies and programs.
Crowley also elevated the federal government affairs function and its leader Aiken Hackett, who is now a senior VP reporting to the CEO.