Biosecure Act: Where Trump and Harris May Get Wrong On China’s Innovation Output

One day after the US Congress passed the legislation Biosecure Act, aimed to restrict certain Chinese biotech service providers from doing business in the US, and hours ahead of a highly anticipated presidential debate between the Vice President and Democratic presidential candidate Kamala Harris and former President and GOP presidential candidate Donald Trump, I take a look at where the United States and China stand in biopharma innovation.

Both China and the United States have been leaders in biopharmaceutical patents?count. China has gone leaps and bounds to catch up with Japan and the European Union in the past years, and now China is leading in the number of pharmaceutical patent filings, while the U.S. leading in biotech patents.

In Q2 2024,?China had the largest share of pharmaceutical patent filings, at 46% of the total, followed by the U.S. at 13% and Japan at 6%, data?from Globaldata/Pharmaceutical Technology show. Among the patent applicants,?the Chinese Academy of Sciences filed the most patents, followed by China Petrochemical and Swiss drug maker Roche.?

For patent breakdown, patent?applications in the 2Q in 2023 had?been increasing in the areas of inflammation, diabetes, and Alzheimer's disease. It should surprise no one as autoimmune, endocrinology, and central nervous system treatments are in the hotly pursued therapeutic zones. Diabetes and obesity drugs have emerged as major revenue streams for companies.

Roche aside, Johnson &Johnson is ranked after Zhejiang University as the fifth-ranked entity for the most patents filed in the quarter.

By the end of 2023, China had over 4 million valid domestic invention patents, making it the first country in the world to do so.

On the other hand, from 2015-2020, nearly 38% of global biotechnology patents were filed by US biotech companies, propelling it to a leadership position ahead of competitors from China. Not only U.S. lead in biotech patent filings, but the country’s regulatory agency, the Food and Drug Administration (FDA) also approved more innovative new biopharma drugs from 2009 to 2017 than in the previous eight years.

That shows a clearer picture -- the U.S. and China are both inventors, and their innovative strength lies in different areas.

Understanding the inner dynamics and differentiated strength helps the nation’s top policymakers to make their policies to benefit more patients from both countries, accelerating the launches of newer therapies, and equally importantly, making cutting-edge therapies, such as cell and gene therapies that provide potential cures to life-threatening conditions and rare diseases accessible and affordable.

China is especially good at manufacturing and scaling up, from 1 to 100, but the U.S. remains a giant in innovating and creating, so-called from zero to 1. While China has in recent years taken measures such as patent term extension (PTE), in which the China National Intellectual Property Administration (CNIPA) can extend a patent for up to five years, to compensate for the time it takes for regulatory reviews and market authorization, but the total effective patent term cannot extend over 14 years for a category one new drugs, which is classified in China as a new drug that has yet launched anywhere else.

In the U.S. like the European Union, a pharma patent is valid for 20 years from the date of its fillings and potential PTE for orphan drugs and other designated drugs that have policy incentives support.

The differences mean that the U.S. has more supportive patent policies to encourage innovation in pharma and biotech, while China has its patent linkage system to balance innovation, access, and medical expenditure burdens.

Biosecure Act

Just ahead of the first and only presidential debate, one branch of the U.S. Congress, the House of Representatives passed Biosecure Act. This legislation is to restrict pharmaceutical companies from working with Chinese biotech service providers.

The bill has given them eight years until 2032 to eliminate the dependence on Chinese biotech services and named gene sequencing firms BGI, MGI, and subsidiaries Complete Genomics, as well as contract research and development organizations Wuxi Apptec and WuXi Biologics.

The bill could potentially disrupt the supply chains in the US for biotech products, and force the Chinese companies to turn their investment elsewhere, which has already caused sufficient concerns and prompted at least one Democratic lawmaker, James McGovern (D-MA) to voice opposition to the bill.

The presidential debate is to be focused mostly on American domestic affairs, from healthcare costs to immigration policies, from recent jobs reports to tampering inflation to fed interests cut. Meanwhile, trade tariffs regain the spotlight, and relations with China is expected to be raised by the moderator. No matter the outcomes, the election year politics seem to have one thing in common, increasing America’s competitiveness with China.

In his book, Destined to War: can the US and China Escape Thucydides's Trap, ?Graham Allison previewed a rising power of China that induces similar fears in the U.S., but boiling over conflict is neither inevitable nor necessary.

While China has seen growth slow and biotech sectors encountering capital winter, the U.S. has its challenges such as fear of cooling down consumption and continuously rising healthcare costs. Can the next administration help reign in these issues? China will be a top issue while facing many challenges in the final push of the closely watched election.

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Who Leads the Innovation Charge: Japan or China?