BIO Survey Explores US Biopharma's Dependence on Chinese CDMOs Amid Decoupling Threats

U.S. biopharmaceutical companies have increasingly relied on Chinese contractors for research and drug manufacturing services. However, the extent of this dependency remains somewhat obscure. In response to pressures for a U.S.-China decoupling, the Biotechnology Innovation Organization (BIO) is conducting a survey to quantify the reliance of U.S. biopharma companies on Chinese Contract Development and Manufacturing Organizations (CDMOs).

BIO's Chief Science Officer, Cartier Esham, Ph.D., communicated the need for this comprehensive survey to understand the U.S.'s dependence on Chinese CDMOs and to evaluate the efforts required to potentially sever these ties. The survey aims to provide policymakers with better insights into how the biopharma supply chain operates, ensuring that patients continue to have uninterrupted access to necessary medications.

This initiative coincides with the advancement of the BIOSECURE Act, a bipartisan bill designed to prevent certain "biotechnology companies of concern" from receiving federal funding due to national security issues. The bill would prohibit federal agencies from contracting with drugmakers that use biotechnology equipment or services from these companies. If enacted, the law could exclude such firms from the U.S. market, affecting Medicare and Medicaid contracting.

One of the primary targets of the BIOSECURE Act is WuXi AppTec, the largest Chinese contract research and manufacturing organization. WuXi AppTec, along with other companies from China, Russia, Iran, and North Korea, could face greater scrutiny and restrictions. In light of these developments, WuXi AppTec has already exited BIO, reflecting the rising tensions between the two countries.

WuXi AppTec reported that 65% of its 26.1 billion yuan ($3.6 billion) revenue in 2023 came from U.S. customers. Similarly, its sister company, WuXi Biologics, derived about 47% of its 17 billion yuan ($2.4 billion) revenue from North America. Notably, WuXi AppTec is involved in manufacturing the active ingredients for Eli Lilly’s popular diabetes and weight loss drugs Mounajro and Zepbound, and its subsidiary, WuXi Advanced Therapies, assists in making Iovance’s Amtagvi, the first T-cell therapy approved by the FDA for a solid tumor.

Despite WuXi's significant role, it is just one part of the larger Chinese presence in the U.S. drug supply chain. The BIO survey seeks to capture the extent of this presence by asking companies about their programs with Chinese CDMOs, the proportion of these contracts in their commercial and clinical pipelines, and the time required to switch contracts to other vendors. Additionally, companies are asked to estimate the patient impact if services from these CDMOs were disrupted.

BIO expects to close the survey by May 3 and plans to share the results publicly. Alongside the survey, BIO is conducting in-depth interviews and case studies with select member companies to assess the potential impacts of decoupling from Chinese CDMOs.

Cartier Esham emphasized in her communication that BIO supports policies which ensure global biopharma supply chains remain stable and do not jeopardize patient health or the security of patient information, particularly genetic data. BIO continues to engage with lawmakers to inform them about the complexities of supply chain operations and the potential risks, such as drug shortages, posed by the proposed legislation.

The impact of decoupling is predicted to be more severe for small biotech firms compared to larger pharmaceutical companies. For instance, Novartis has already started preparing to reduce its connections with Chinese contractors, and CFO Harry Kirsch described the impact on Novartis as “very manageable.” Similarly, Roche's pharma head, Teresa Graham, noted that the company expects a “fairly minimal impact” and highlighted Roche's robust manufacturing capabilities. Bristol Myers Squibb is also formulating plans to ensure the continuity of its drug supply in light of potential disruptions.

These three major pharmaceutical companies, through their U.S. subsidiaries, are active members of BIO and are navigating the evolving legislative landscape to mitigate any adverse effects on their operations.