The Biosecure Act Could Disrupt US Healthcare and Life Sciences

The impending Biosecure act, which has bipartisan support in Congress, proposes to end government contracts for firms that count Chinese biotech companies as clients or suppliers. American officials have previously said they want to guard a “small yard” of sensitive technologies with a “high fence”. This bill illustrates that the yard is getting bigger, with sorry consequences for American consumers.

While the act initially appears to focus on safeguarding sensitive technologies, it has broader implications that could affect American consumers, especially those relying on affordable healthcare products.

The act mentions four Chinese companies by name, including BGI, the largest sequencer of human DNA worldwide, which supplies prenatal tests and diagnostic swabs for COVID-19 and other diseases. Despite BGI's claims that sensitive information is stored privately and not accessible by the government, the new legislation aims to prevent any potential misuse.

Implications for American patients

The Biosecure Act's broader scope could lead to several negative outcomes for American consumers. The legislation extends beyond BGI, targeting other Chinese companies that manufacture medical equipment and large-molecule drugs, such as Wuxi AppTec, a major provider of contract drug discovery and manufacturing services. This broader ban could have unintended consequences for drug availability and pricing in the United States.

One of the biggest concerns is the potential for drug shortages and delayed clinical trials. Many Western pharmaceutical companies rely on Chinese manufacturers for drug production and development, including the world's largest pharma firms. If the act is implemented, these companies would need to find new partners, disrupting established supply chains. This disruption could lead to higher drug prices and limited access to essential medications, impacting consumers who rely on affordable healthcare products.

?Key Areas affected

The implications are far wider than many people realise. Below are some examples of disruption in a wide-ranging areas:

1. Diagnostic Test Kits

Chinese firms supply various diagnostic test kits, including those for COVID-19, influenza, and other diseases. BGI, one of the companies mentioned in the Act, provides these types of kits, which are crucial for medical diagnostics and public health efforts.

2. Medical Swabs and Consumables

Medical swabs used for diagnostic testing, like those employed during the COVID-19 pandemic, are often manufactured in China. Disruptions in supply chains could lead to shortages of these essential consumables.

3. Medical Equipment

Chinese companies produce a wide range of medical equipment, from basic instruments to advanced diagnostic devices. These include items like blood pressure monitors, stethoscopes, and thermometers.

4. Sequencing Machines and Equipment

Sequencing machines, used in genomics and genetic testing, are also produced by Chinese firms like BGI. These machines are vital for medical research and personalized medicine, and disruptions in their supply could impact healthcare innovation.

5. Large-Molecule Drugs

Chinese biotech firms such as WuXi AppTec and WuXi Biologics manufacture large-molecule drugs, including biologics and injectable medications. These companies serve as contract manufacturers for Western pharmaceutical firms, and their products are used in treatments for chronic diseases like diabetes and arthritis.

6. Prenatal and Genetic Testing Kits

Chinese firms supply prenatal testing kits and other genetic testing products, used by healthcare providers to assess and manage pregnancy risks and genetic conditions.

7. Medical Gloves and Personal Protective Equipment (PPE)

Medical gloves, masks, and other PPE are often produced in China. The Biosecure Act could lead to supply disruptions, affecting healthcare workers' safety and patient care.

8. Medical Furniture and Supplies

Basic medical furniture, like hospital beds, examination tables, and wheelchairs, along with related supplies, are also manufactured by Chinese firms.

This is both a huge risk to US and wider supply chains, but also poses a great opportunity for other countries to fill this gap. For US patients and consumers, the hope is the government has a plan to quickly fill this void to avoid huge disruption.

Jilani Gulam - life sciences and biotech investor