The United States' crackdown on Chinese biotech companies has drawn sharp criticism from industry experts, who warn that "de-risking" measures could trigger drug shortages, increase costs for new product development and hamper critical academic collaborations.

The Biosecure Act, which halts federal funding to organizations working with businesses flagged as "companies of concern", was signed into law in December as part of the National Defense Authorization Act for Fiscal Year 2026. The move targets Chinese biotech firms over what officials call "national security" concerns.

Industry insiders, legal analysts and policy experts have raised alarm about the law's potential consequences. Their primary concerns focus on the risk of drug shortages, steep transition costs and regulatory uncertainty in the implementation process. Most urgently, critics warn that "decoupling" from Chinese suppliers is technically difficult and could ultimately harm patients.

"Decoupling doesn't work that easily, especially since the pharmaceutical industry operates globally," said Joseph Scheeren, a member of France's National Academy of Pharmacy. "Diseases don't stop at borders. They spread everywhere."

Companies continue investing in China deals "because most novel, first-in-class compounds are now available there", he said. "For pharmaceutical companies, it's 'innovate or die' — you must source compounds wherever they're available, which increasingly means China."

Many US life sciences companies rely on foreign contract research organizations and contract development and manufacturing organizations for new product development, clinical trial support, and manufacturing finished drugs, biologics and devices for US patients.

A large share of the contract research, development and manufacturing market is concentrated in China because of cost advantages and the availability of specialized technical capabilities.

Law firm Akin Gump said in an analysis that some contract research organizations and contract development and manufacturing organizations in China would be included on the list of "companies of concern", which could increase costs for new product development and production, as alternative providers not designated as companies of concern may be able to charge a premium.

The firm also pointed to the high cost of decoupling, saying, "Building out the physical infrastructure and recruiting appropriate technical expertise to meet the ensuing demand is expensive and will take time."

Supply disruptions

Legal experts at law firm Osborne Clarke warn that many US drugs currently in mid-to-late-stage trials rely on Chinese contract development and manufacturing organizations for manufacturing or data services, meaning a forced switch now could "prove disruptive".

The new legislation could "compel substantial supply chain reengineering, technology transfers and regulatory revalidations, potentially leading to increased costs, delays and drug supply disruptions", the experts said in an analysis.

By forcing US researchers to cut ties with Chinese companies, the act could also hinder academic collaborations and harm US competitiveness, according to an article published in Science that cited multiple scholars.

"In many fields, engaging with top-tier science increasingly means engaging with China, rather than cutting ties with Chinese firms,"Abigail Coplin, an international science policy expert at Vassar College in New York state, told the journal.

Scheeren, whose pharmaceutical industry career spans more than 35 years in research and development and global executive positions in the US, Europe and Asia, highlighted China's biotech innovation to illustrate why decoupling is difficult in practice.

"China has developed the capability to accelerate drug development, particularly in preclinical phases. The timeline from compound discovery to IND (Investigational New Drug) application is now approximately six months, which is unheard of in the Western world," he said.

"We weren't able to achieve that. It's not that they're using more innovative methods, but rather they're utilizing available tools much more effectively. This enables them to move significantly faster."

Despite the intensified scrutiny, Chinese contract research company WuXi AppTec has achieved remarkable growth in the US market. In the first nine months of 2025, the company's revenues in the US, its largest market, climbed 31.9 percent to about $3.2 billion, its report said. The US market contributed 68 percent of its total revenue during that period.

While the US law is now active, its implementation is subject to a multiyear timeline, legal experts said. The specific company lists and procurement bans are expected to roll out over the next two to three years, creating a window of uncertainty for the industry.

Scheeren offered a measure of hope for those concerned about long-term effects.

"Administrations are temporary; they typically remain in power for four years before new leadership arrives. This should be viewed from a relative and long-term perspective, as circumstances can change," he said.

liazhu@chinadailyusa.com