In the past, American pharmaceutical companies and biotechnology firms used to rely on Chinese partners for manufacturing, research, and raw material supply. However, as the tension between the United States and China continues, along with escalating geopolitical tensions, some American pharmaceutical companies have started seeking partners outside of China, gradually parting ways with their Chinese counterparts.
According to a report by The Wall Street Journal on November 1st, these pharmaceutical companies seeking to disengage from the Chinese supply chain include major companies like AstraZeneca and smaller biotechnology companies like Amicus Therapeutics based in New Jersey. These companies have expressed that it is time to reduce risks associated with China, with Amicus Therapeutics currently seeking a non-Chinese company to provide raw materials for its rare disease treatments.
Nello Mainolfi, the CEO of Kymera Therapeutics, told The Wall Street Journal that the company is “making choices to reduce risks of relying on a single or a few countries.” Located in Massachusetts, his company develops cancer and immunology drugs, previously relying on Chinese companies for manufacturing but has now started expanding such operations to Europe, India, and the U.S.
The deteriorating relationship between the Chinese government and Western countries, including the United States, has led to the shifting of supply chains due to factors such as China’s crackdown on foreign enterprises and private companies, as well as arbitrary detention of foreign executives. In addition to this, the U.S. Biosecure Act has been a significant factor driving pharmaceutical companies to disengage from their Chinese partners.
On the evening of September 9th, the U.S. House of Representatives passed the Biosecure Act, citing national security reasons, placing China’s WuXi AppTec, WuXi Biologics, Complete Genomics (a U.S. subsidiary of WuXi AppTec), Pharmaron, and its U.S. subsidiary on a blacklist. The act will prohibit companies receiving government funding or contracts from doing business with these Chinese companies.
The Biosecure Act aims to prevent certain Chinese biotechnology equipment and service providers from entering the U.S. market based on national security considerations. Prior to the House’s approval of the bill, a survey by L.E.K. Consulting in July this year found that confidence in cooperating with Chinese companies among U.S. life science companies had decreased by about 30% to 50%. Of the 73 life science companies surveyed, 26% indicated that they were seeking to break away from their Chinese partners.
Although the prospects of the Biosecure Act in the Senate remain uncertain, Steve Abrams, Global Co-Head of Hogan Lovells’ life sciences practice, told The Wall Street Journal that the outlook of restrictions “creates a chilling effect for businesses considering partnering with Pharmaron or other Chinese companies.”
Located in San Francisco, Vir Biotechnology develops antiviral and cancer treatment drugs. A spokesperson for the company informed The Wall Street Journal that earlier this year, the company ended its manufacturing operations with WuXi Biologics and shifted to collaborating with U.S. manufacturing partners, focusing on internal development and manufacturing.
At the same time, major pharmaceutical companies like AstraZeneca are striving to establish separate supply chains for China and the West.
Amicus Therapeutics relies on WuXi Biologics to produce drugs for treating Pompe disease (a rare disease affecting the heart and muscles), with some of its primary raw material suppliers also located in China. Bradley Campbell, CEO of Amicus, mentioned that while the company is still willing to work with WuXi Biologics, they are also exploring material suppliers outside of China.
A recent survey by the industry organization Biotechnology Innovation Organization showed that nearly 80% of U.S. biotechnology companies have signed contracts with at least one Chinese company.
If the Biosecure Act becomes law in the future, it will also impact the global pharmaceutical industry as most drug supply chains worldwide include active ingredients produced by Chinese biotech companies.