Introduction

For most of the modern pharmaceutical era, biotechnology was a healthcare industry; it is no longer treated like one. In a 2025 Executive Order¹, the White House mandated that federally funded biological research must benefit Americans ‘without jeopardising’ national security, economic strength, or prosperity. The economic stakes help explain the shift: while the biotechnology industry generated more than US$230 billion in revenue in 2025, the Organisation for Economic Co-operation and Development (OECD) estimates that the broader bioeconomy has already surpassed US$4 trillion, potentially reaching US$30 trillion by 2050^2,3. 

These reforms are reminiscent of the transition seen in semiconductors. Microchips were once traded freely and manufactured globally under commercial logic; that era ended when governments reclassified them as strategic assets and began regulating the entities that build, buy, and sell them. Biotechnology now faces a similar paradigm shift, exposing a core contradiction: as Washington elevates biology to a national security priority, US pharmaceutical companies are becoming increasingly dependent on foreign partners for innovation, clinical development, and manufacturing. Commercial reality and geopolitical strategy are colliding once again. 

A New Strategic Infrastructure

Biotechnology’s expansion beyond healthcare spans synthetic biology, genomic medicine, biologics, and AI-driven drug discovery. These sectors increasingly spill over into non-medical markets: advanced biomanufacturing extends into chemicals, materials, and agriculture, while AI discovery models cut costs across biopharma pipelines by accelerating hit-to-lead times.  Viewed from a ministry rather than a laboratory, this portfolio underpins five vital national assets: 

1. Health security. COVID-19 demonstrated that vaccine platform capacity is a determinant of national resilience, turning manufacturing speed into a strategic variable. 
2. Industrial competitiveness. Bio-based production routes are directly challenging sectors long dominated by petrochemistry, notably in bioplastics and advanced materials. 
3. Economic resilience. Medicines and key active pharmaceutical ingredients (APIs) share vulnerable supply chains with other critical goods.
4. Military preparedness. Force health protection and countermeasure development are now explicit defence priorities. 
5. Critical infrastructure. Biological security demands protecting raw material integrity, finished products, and sensitive IP such as genomic data. 

These factors drive biology’s transition into a strategic technology: one that evolves from a commercial sector into a general-purpose capability essential to national power. Semiconductors crossed this threshold decades ago; biology is crossing it today. The question is no longer whether biotechnology will be governed strategically, but how. 

China Changing the Equation

For decades, China’s role in global biopharma was clear: a manufacturing hub producing active pharmaceutical ingredients (APIs), generics, and contract services, while commercial innovation remained anchored in the US and Europe.

This dynamic has shifted sharply across several metrics. According to China’s National Medical Products Administration (NMPA), 76 innovative medicines were approved in 2025 – up from 48 in 2024 – including 11 first-in-class therapies, four of which were developed domestically.  China’s innovative pipeline now accounts for roughly 30% of the global total, second only to the US⁴. Western buyers are funding this transition: McKinsey highlights that upfront payments on China-originated out-licensing deals rose from under US$100 million in 2020 to more than $800 million by 2024, indicating a strong inflow of foreign expenditure into the Chinese market⁵.

The underlying research ecosystem is expanding at scale. The World Intellectual Property Organization (WIPO) reports that China’s patent office received 1.8 million applications in 2024: 49.1% of the global total and more than triple the US volume⁶. While patent volume does not guarantee quality, this intensity is significant. Official 2026 data show domestic R&D expenditure reached 3.92 trillion yuan (2.8% of GDP) in 2025, with basic research nearing 280 billion yuan, closing the gross expenditure gap with the US⁷ (Fig. 1).

Fig. 1. China’s expanding scientific enterprise. Research and development expenditure, China versus the United States (left panel), and patent application activity as a share of the global total (centre panel). Average upfront payments in USD for China-originated out-licensing from 2020 to 2024 (right panel). 

This growth in capability is reinforced by execution speed. A dense network of contract research organisations (CROs) and contract development and manufacturing organisations (CDMOs) enables rapid movement from discovery to clinic, an efficiency built on regulatory reforms initiated in 2015. Two reviews in Nature Portfolio journals concluded that these changes have reshaped China’s clinical-trial landscape, transforming a generics-dominated market into an integrated global player in frontier drug development^8,9. This serves as the fundamental catalyst of the current global regulatory reform.

Markets without Borders

If China’s story is one of state-led ascent, America’s is one of commercial dependence, catalysed by the impending patent cliff. By 2030, many of the world’s top-selling therapies will lose exclusivity, exposing over US$200 billion in annual branded revenue to generic and biosimilar competition¹⁰ (Fig. 2). For big pharma, this is less a revenue problem than a pipeline crisis: replacing blockbusters demands speed, driving companies toward external acquisitions and cross-border licensing over slow, uncertain internal R&D. This is reflected as a surge in cross-border dealmaking, with China as one of its principal centres. 

Fig. 2. The patent cliff, 2025–2030. Annual branded sales of the ten highest-revenue medicines facing loss of exclusivity by the end of the decade, coloured by therapeutic area. 

Reporting by Axios in July 2026 highlighted that early-stage drug development in China remains significantly faster and cheaper than in the US¹¹, driving continued heavy investment from multinationals¹². This pattern persists because capital market decisions optimize for speed, cost, and scientific return; a business development team does not price geopolitical risk like a national security council. Consequently, biopharma is pulled toward global integration even as policy headwinds intensify: a classic operational trap.

Governance and the Guillotine

Government intervention follows a clear principle: once a technology is deemed strategic infrastructure, commercial efficiency ceases to be the sole objective. State-drawn boundaries define market limits, and in biotechnology, this boundary forms a regulatory demarcation line separating acceptable global participation from unacceptable risk. 

Washington’s policy operates on two fronts. To strengthen domestic capability, the National Security Commission on Emerging Biotechnology (NSCEB) issued 83 recommendations in January 2026 to modernise regulation and accelerate innovation¹³, complemented by the Department of Health and Human Services’ ‘Operation TrialBlazer’¹⁴. To constrain foreign engagement, the House Select Committee on the CCP proposed extending outbound investment screening via the Biotech Investment National Security Act of 2026¹⁵, while opening inquiries into pharmaceutical partnerships, such as Merck’s clinical trials in China¹⁶.  

The BIOSECURE Act represents Washington’s most ambitious attempt to formalise this border. After stalling as standalone legislation in 2024, it passed as Section 851 of the FY2026 National Defense Authorization Act (NDAA). Rather than banning products outright, it creates a risk-based framework targeting entities based on ownership, military ties, data access, or strategic links. Federal agencies are prohibited from procuring equipment or services from designated Biotechnology Companies of Concern (BCCs) or awarding contracts, grants, and loans to them¹⁷. Crucially, ‘equipment or services’ is defined broadly, encompassing genomic sequencing, data storage, software, contract research, and manufacturing.

The most significant evolution occurred during the legislative process itself. Earlier drafts named five Chinese companies; the final Act abandoned this static blacklist for a dynamic designation system. The centrepiece is Section 1260H, which originally required the Department of Defense to identify Chinese military companies operating in the United States, and which now serves as the principal pathway to BCC status. In June 2026, the Department updated the list to include the previously targeted entities alongside numerous affiliates. WuXi AppTec’s inclusion drew particular attention: as one of the world’s largest contract research, development, and manufacturing organisations (CRDMOs), it serves hundreds of pharmaceutical companies worldwide. The Department cited indirect ownership links to Chinese state entities and affiliations with defence-related organisations; WuXi has since sued for removal.

BIOSECURE thus integrates biotechnology into the US national security apparatus, establishing a dynamic regulatory boundary. The central challenge for policymakers is maintaining security oversight without dismantling the global innovation ecosystem on which biopharma depends.

Fig. 3. The policy arc of BIOSECURE and Section 1260H. Timeline of major events leading up to, and including, the enactment of BIOSECURE as Section 851 of the FY2026 National Defense Authorization Act and the June 2026 update to the Section 1260H list.

Can Biotechnology Follow the Semiconductor Playbook?

The policy alignment between biotechnology and semiconductors is no coincidence; the structural mapping indicates deliberate borrowing. Huawei’s placement on the United States Department of Commerce’s Entity List in 2019 prefigures the BCC designations of 2026: named companies, excluded from federal ecosystems¹⁸. The October 2022 export controls on advanced computing chips and fabrication equipment prefigure procurement restrictions: both regulate participation in a technology system rather than banning trade outright¹⁹. The CHIPS and Science Act of 2022, which committed roughly US$52.7 billion to rebuild domestic manufacturing²⁰, finds its echo in the NSCEB recommendations and Operation TrialBlazer; the biotechnology equivalent however is strikingly weaker in fiscal terms and heavy on regulation. Outbound investment screening already exists for semiconductors under a 2023 programme covering chips, quantum computing, and artificial intelligence²¹; the proposed Biotech Investment National Security Act would extend the same architecture to biology. Even the vocabulary has been inherited: chokepoints, de-risking, strategic competition.

Whether the template fits is a separate question, and the differences are structural rather than cosmetic:

1. Chokepoint geometry. Semiconductor controls succeed because Western allies control key nodes: ASML’s EUV lithography monopoly, Taiwan and South Korea’s leading-edge foundries, and US design software. Washington restricts what Beijing can buy. In biotechnology, concentration sits on the opposite side: China’s dense CRDMO network is the bottleneck, meaning US policy restricts what Western firms can buy. Restricting an adversary’s access to a tool you control is fundamentally different from legislating away reliance on one they control; the latter is slower, costlier, and harder to sustain. 
2. Asset nature. Microchips are discrete physical products: countable, shippable, and licensable at the border. The core asset of biotechnology is knowledge: protocols, data, and talent, which travel through people and partnerships rather than shipping containers. Entity lists can target corporate structures, but cannot easily embargo ideas. Tellingly, the October 2022 semiconductor rules did restrict American persons from supporting Chinese fabrication, the template’s closest approach to regulating knowledge itself¹⁹. No biotechnology equivalent yet exists, although the House committee’s inquiry into Merck’s clinical trials indicates where the boundary may move next.
3. Substitution economics. A semiconductor foundry costs US$20 billion to construct, but microchips are standardized inputs with interchangeable second sources. Biologics are fundamentally different: the process is the product. Modifying a manufacturing site or expression system requires rigorous comparability testing, process validation and potentially supplementary clinical data. The end consumer similarly differs: semiconductor policy reallocates industrial inputs, whereas biotechnology policy touches medicines, where restriction collides with patient access and healthcare budgets. The latter carries a political constraint the semiconductor playbook never had to price.

In sum, while policy instruments are intentionally copied, divergent industrial structures mean outcomes will not replicate. Whether political mandate or economic reality prevails is best judged against recent market evidence. 

De-risk, not Decouple

Despite the geopolitical rhetoric, the evidence points to diversification and selective de-risking rather than complete separation. The reason lies in the nature of biotechnology itself: drug discovery, clinical development, biologics manufacturing, regulatory approval, and commercial production are embedded in global networks built over decades. A survey by the Biotechnology Innovation Organization (BIO) found that 79% of US biotechnology companies currently work with at least one China-based or China-owned contract development and manufacturing organisation (CDMO). Many respondents reported that no equivalent alternative suppliers presently exist for critical manufacturing or development activities, warning that rapid disengagement would disrupt clinical development, delay commercial manufacturing, and ultimately reduce patient access to new medicines²².

The dominant strategy has thus become “China + 1”: maintaining existing Chinese capabilities while simultaneously building additional manufacturing and research capacity elsewhere. Major pharmaceutical companies are expanding production in the US, Europe, India, and Singapore while preserving established Chinese operations where commercial and regulatory realities make immediate substitution impractical. Companies such as AstraZeneca are developing parallel supply chains for China and Western markets rather than attempting complete disengagement; this directly relieves concentration and thus reliance, but carries a cost in operational expenses and complexity. 

This pattern aligns closely with broader international assessments of supply-chain resilience. The OECD argues that recent geopolitical disruptions demonstrate the need to strengthen and diversify critical supply chains, but cautions that resilience should not be confused with autarky²³. The number of products dependent on a narrow group of suppliers is now 50% higher than it was in the late 1990s, illustrating why diversification requires addressing strategically. The exact speed and trajectory of this shift will depend on whether alternative countries can overcome existing structural barriers and establish the necessary capacity to support the ecosystem.

In reality, even the most optimistic projections suggest that restructuring will be measured in years rather than months. Jefferies estimates that Chinese CDMOs will continue to enjoy strong order books through 2026 and 2027, while meaningful replacement manufacturing capacity outside China is unlikely to emerge before 2029 at the earliest. Existing supply chains possess a degree of inertia that cannot be legislated away, and requires extensive infrastructural work before restructuring can maintain effectiveness and throughput independently. 

Beijing, for its part, is pursuing a dual strategy of greater self-reliance alongside continued international engagement. A 2026 Nature commentary²⁴ argues that calls for China to isolate itself technologically would represent a step backwards, noting that the country has already become one of the world’s leading centres for frontier development and research. That approach is reflected in China’s 2026 Government Work Report, which simultaneously calls for breakthroughs in core technologies and greater scientific self-reliance while pledging to “open wider to the outside world.”²⁵ Rather than retreating from global biotechnology, China is investing further domestically on the assumption that a more fragmented international environment will reward countries with comprehensive innovation ecosystems.

Conclusion

Biotechnology has undoubtedly crossed the same political threshold as semiconductors: governments regard it as a strategic technology requiring active governance. The comparison that frames this article survives, but only in part: carbon is following silicon’s political trajectory, with the reclassification of biology as strategic infrastructure real and likely irreversible. At the level of industry, however, the playbook is proving harder to copy. Whether governments eventually force the economics to bend, or the economics force the governance to adapt, remains the open question.

References and Notes:

1. Executive Order 14292, “Improving the Safety and Security of Biological Research,” 90 Fed. Reg. 19611 (May 5, 2025).
2. OECD. (2025). Financing instruments and policy levers to harness biomanufacturing for climate, biodiversity and growth. OECD Publishing. https://www.oecd.org/en/publications/financing-instruments-and-policy-levers-to-harness-biomanufacturing-for-climate-biodiversity-and-growth_48bec995-en.html
3. UNEP. (2025). Climate technology progress report 2025: Advancing biobased technologies in the bioeconomy. United Nations Environment Programme. https://www.unep.org/technical-highlight/un-report-outlines-roadmap-advancing-bio-based-technologies
4. National Medical Products Administration (NMPA). (2026). 2025 annual drug evaluation report. China Food and Drug Administration.
5. McKinsey & Company. (2025, October). The emerging epicenter: Asia’s role in biopharma’s future. https://www.mckinsey.com.br/en/our-insights/the-emerging-epicenter-asias-role-in-biopharmas-future
6. World Intellectual Property Organization (WIPO). (2025). World intellectual property indicators 2025. https://www.wipo.int/web-publications/ip-facts-and-figures-2025/en/patents-and-utility-models.html
7. National Bureau of Statistics of China. (2026). Statistical communiqué of the People’s Republic of China on the 2025 national economic and social development. https://www.eol.cn/news/yaowen/202602/t20260228_2719991.shtml
8. Tan, R., Hua, H., Zhou, S., Yang, Z., Yang, C., Huang, G., Zeng, J., & Zhao, J. (2025). Current landscape of innovative drug development and regulatory support in China. Signal Transduction and Targeted Therapy, *10*(1), 220. https://doi.org/10.1038/s41392-025-02267-y
9. Tan, L., Song, K., & Lu, B. (2026). China’s innovation in translational medicine: Rethinking early-stage clinical development. Nature Biotechnology, *44*, 521–524. https://doi.org/10.1038/s41587-025-02998-x
10. Evaluate. (2025). 2025 world preview report.
11. Owens, C. (2026, July). Pharma’s China tradeoff. Axios. https://www.axios.com/
12. Reuters. (2026, July 23). AI shortens drug discovery to around 1 year in China, Insilico CEO says. https://www.reuters.com/business/healthcare-pharmaceuticals/ai-shortens-drug-discovery-around-1-year-china-insilico-ceo-says-2026-07-23/
13. National Security Commission on Emerging Biotechnology (NSCEB). (2026, January 13). The future of biotechnology regulation. https://www.biotech.senate.gov/wp-content/uploads/2026/01/NSCEB-Future-of-Regs-Overview-FINAL.pdf
14. U.S. Department of Health and Human Services (HHS). (2026, June 22). Operation TrialBlazer [Cross-agency initiative]. FDA. https://www.fda.gov/industry/fda-actions-support-and-strengthen-domestic-drug-manufacturing
15. H.R. 9102, Biotech Investment National Security Act of 2026, 119th Cong. (2026). https://www.govinfo.gov/app/details/BILLS-119hr9102ih
16. House Select Committee on the CCP. (2026, June–July). Investigation into U.S. pharmaceutical companies’ clinical trial operations in China.
17. H.R. 8854, National Defense Authorization Act for Fiscal Year 2026, Pub. L. No. 119-60, § 851 (2025). https://www.congress.gov/bill/119th-congress/house-bill/8854
18. U.S. Department of Commerce, Bureau of Industry and Security. (2019, August 19). Addition of certain entities to the Entity List and revision of entries on the Entity List. Federal Register, *84*, 43486. https://www.govinfo.gov/content/pkg/FR-2019-08-21/pdf/2019-17921.pdf
19. U.S. Department of Commerce, Bureau of Industry and Security. (2022, October 7). Implementation of additional export controls: Certain advanced computing items; supercomputer and semiconductor end use. Federal Register.
20. CHIPS and Science Act of 2022, Pub. L. No. 117-167, 136 Stat. 1366 (2022). https://sites.ecse.rpi.edu/ieee/nexus/2025/01/14/CHIPS-and-Science-Act.html
21. Executive Order 14105, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern,” 88 Fed. Reg. 54867 (August 9, 2023).
22. Biotechnology Innovation Organization (BIO). (2024, May). Membership survey on China-based contract manufacturing relationships. https://cen.acs.org/business/outsourcing/2024-Biosecure-Acts-impact-became/102/i38
23. OECD. (2025). OECD supply chain resilience review. OECD Publishing. https://www.oecd.org/en/about/news/press-releases/2025/06/elevated-risks-require-co-ordinated-efforts-to-strengthen-supply-chains-oecd-evidence-shows.html
24. Lee, L. C., & Qian, J. (2026). China’s biotech boom: Why the nation must collaborate to stay ahead. Nature, *650*(8101), 296–298. https://doi.org/10.1038/d41586-026-00387-1
25. State Council of the People’s Republic of China. (2026, March 5). 2026 Government Work Report [Delivered to the 14th National People’s Congress]. Beijing. http://big5.cctv.com/gate/big5/english.cctv.cn/2026/03/05/ARTIMdEm27sPrA10yvv0YVRo260305.shtml

Disclaimer: the author has work experience at WuXi AppTec, a contract research, development, and manufacturing organization (CRDMO) mentioned in this article. This series reflects the author’s independent research and analysis and does not represent the views, positions, or strategies of WuXi AppTec or any of its affiliates. All data, interpretations, and conclusions are solely the author’s own.