U.S. House Passes Biosecure Act: Impacts on WuXi AppTec, BGI, and Other Biotech Firms
By Karen Freifeld
Legislative Milestone: U.S. House Approves Bill Targeting Chinese Biotech Firms Over National Security Concerns
The U.S. House of Representatives has made a decisive move by passing the Biosecure Act, aimed at restricting business dealings with Chinese biotech giants WuXi AppTec, BGI, and several other companies. This legislation, driven by national security concerns, seeks to safeguard Americans' health and genetic data as well as the integrity of the U.S. pharmaceutical supply chain.
Key Points of the Biosecure Act
- Federal Contract Prohibition: The Act prohibits federal contracts with the targeted firms and those that engage in business with them.
- Bipartisan Support: The bill passed with a resounding majority of 306 to 81, surpassing the required two-thirds threshold.
- Next Steps: The legislation now moves to the U.S. Senate for approval before it can be signed into law by President Joe Biden.
Debate and Controversy
During the House floor debate, Representatives John Moolenaar (Chair) and Raja Krishnamoorthi (Ranking Member) of the House Select Committee on China, championed the necessity of the legislation. However, Representative Jim McGovern, known for his stance against China's human rights abuses, opposed the bill. McGovern questioned the criteria used to identify the companies, particularly highlighting that WuXi Biologics is building a facility in his Massachusetts district.
Senate's Position
The U.S. Senate's Homeland Security Committee had previously approved a similar bill in March. However, the timing of a full Senate vote remains uncertain.
Impacted Companies
In addition to WuXi AppTec and BGI, companies like MGI and its California-based subsidiary, Complete Genomics, are also named in the Act. These firms argue that the bill is founded on false allegations and would stifle competition. They firmly deny posing any threat to U.S. national security.
Analysis: What This Means for You
For Investors:
- Volatility: Expect increased volatility in the biotech sector, particularly for companies with ties to China.
- Risk Assessment: Reevaluate your portfolio for exposure to the affected firms and consider the potential long-term impacts on their business operations.
For Consumers:
- Data Security: The bill aims to protect your personal health and genetic information from potential misuse by foreign entities.
- Pharmaceutical Supply Chain: Strengthening the U.S. pharmaceutical supply chain could mean more reliable access to medications and medical innovations.
For Businesses:
- Compliance: Companies will need to navigate new compliance landscapes and evaluate their partnerships and supply chains.
- Competition: The restriction of certain firms could open up opportunities for U.S.-based biotech companies to fill the void.
In summary, the U.S. House's passage of the Biosecure Act marks a significant step toward tightening national security measures in the biotech sector. Whether you're an investor, consumer, or business owner, understanding these changes and their implications is crucial for making informed decisions in this evolving landscape.