Recently, the United States included China's genome analysis corporations BGI and the contract development and manufacturing organization (CDMO) WuXi AppTec on a list of "Chinese military companies." China has moved to review regulations on the transfer overseas of advanced biotech such as antibody and cell and gene therapies.
Analysts say the U.S.-China power struggle over rare earths and semiconductors is spreading into biotech. In Korea's pharmaceutical and biotech industries, expectations are rising for windfall gains, while concerns are also mounting about facing new competitive pressures.
◇ U.S. designates BGI and WuXi AppTec as "Chinese military companies"
The Ministry of National Defense on the 8th (local time) released on its website and in the Federal Register a list of 188 "Chinese Military Companies" that operate directly or indirectly in the United States.
The list, known as the "1260H List," includes leading Chinese corporations such as Alibaba, Baidu, and BYD, and in biotech, BGI Group, MGI Tech, and WuXi AppTec.
The Ministry of National Defense assessed that BGI Group is directly linked to the People's Liberation Army (PLA) and is also connected to the Ministry of Industry and Information Technology and the People's Liberation Army. It further evaluated the group as a "military-civil fusion corporations" that contribute to China's defense industrial base with support from the Chinese government in science, technology, and industry.
In response, WuXi AppTec, a Chinese biopharmaceutical contract research, development, and manufacturing (CRDMO) corporations, pushed back immediately. WuXi AppTec said it would file a lawsuit against the Ministry of National Defense, saying, "We are an independent publicly listed company providing services to customers in more than 30 countries."
What the industry is watching is that this move aligns with the Biosecure Act, which finally passed in the United States in Dec. The Biosecure Act bars U.S. administrative agencies from procuring or contracting for equipment and services produced or provided by "of-concern biotech companies."
Under the bill, corporations on the 1260H List, which the Ministry of National Defense publishes annually, are one of the key criteria for designation as of-concern biotech companies. The Office of Management and Budget (OMB) must publish the list of of-concern biotech companies within one year after the National Defense Authorization Act takes effect.
If targeted by the Biosecure Act, Chinese corporations would effectively face a crisis of having to shut down their U.S. operations.
The Biosecure Act allows not only the corporations concerned but also their subsidiaries, parent companies, affiliates, and successor companies to be included in the scope of regulation. WuXi Biologics, a CDMO specializing in biopharmaceuticals that was spun off from WuXi AppTec in 2017, could also be included in future regulations.
U.S. checks on China's biotech industry are expanding beyond sanctions on specific corporations to investment and technology cooperation.
The Council on Foreign Relations (CFR) on the 2nd, in a national strategy report, sounded the alarm that the U.S. pharmaceutical and biotech supply chain is excessively dependent on China.
The Council on Foreign Relations said, "The United States should treat the biotech supply chain as a national security asset like semiconductors," and argued, "The United States should reduce dependence on China by expanding domestic manufacturing capacity, building a CRDMO ecosystem centered on allies, and training biotech manufacturing personnel."
◇ China strengthens industry promotion while policing core technologies
To promote new drug development and the biotech industry, China is making its clinical and approval systems more flexible, while simultaneously pursuing an "opening and control" strategy that raises barriers to the transfer overseas of advanced biotech and clinical data.
The National Medical Products Administration (NMPA) in Sept. last year revised the implementation rules of the Drug Administration Law to cut the clinical trial application review period from 60 days to 30 days.
China's Ministry of Commerce was reported to have held closed-door consultations with some pharmaceutical companies late last month to review regulation of the transfer overseas of advanced biotech.
It reportedly discussed adding four biotechnologies—antibody technology, small-molecule targeted therapy technology, small nucleic acid (siRNA) therapy technology, and cell and gene therapy technology—to the "catalog of technologies prohibited and restricted for export."
Industry watchers said the intention is to boost China's competitiveness and bargaining power in biotech. However, the Chinese government has not officially announced related policies.
In the first quarter of this year, China's business development (BD) transaction volume for new drugs totaled $61.4 billion (93 trillion won), already surpassing the full-year 2024 transaction volume of $59.0 billion. The concern is that if the country's advanced platform technologies leak overseas, China could remain a "research and development outsourcing base" in the global biotech industry.
However, some say it will be difficult to implement such regulations because the move could burden the survival and business activities of biotech corporations that rely on exporting technology overseas.
◇ Will K-bio see windfall gains
As the biotech industry emerges as a key battleground in the U.S.-China strategic competition, there are expectations that Korean corporations could reap windfall gains.
As U.S. corporations move to diversify supply chains to avoid regulatory risk and reduce dependence on China, domestic corporations such as Samsung Biologics, Lotte Biologics, Celltrion, and ST Pharm could benefit.
Jeong I-su, an analyst at IBK Securities, said, "If Chinese CDMO corporations are excluded from global pharmaceutical companies' supply chains, it could, in line with supply chain diversification strategies, create opportunities for large-scale order expansion for domestic CDMO corporations."
Jeong noted that because WuXi Biologics' U.S. sales amount to about 2 trillion won, Samsung Biologics and others could absorb part of that volume.
However, a burden is that the United States' ultimate goal is not merely to exclude Chinese corporations but to build a U.S.-centered biotech supply chain.
An industry official said, "Along with sanctions on Chinese corporations, the United States' ultimate goal is to reorganize the biotech supply chain within the country," adding, "In particular, the Trump administration is using tariffs and security regulations simultaneously to pressure U.S. corporations with production bases overseas, and the trend of demanding expanded local production and investment from European and Asian corporations has grown evident."
In the short term, domestic corporations may see more order opportunities, but in the long term, as the United States and China each work to build home-centered ecosystems, the competitive environment is expected to become even more complex.
Lee Seung-gyu, vice chair of the Korea Bio Association, said, "Just as semiconductors have been recast as a national security asset, there is a growing trend of viewing biotech as a security industry," and predicted, "Competition will likely intensify not only among corporations but also among countries over supply chains."