BIOSECURE Act for UK and EU life sciences companies: navigating China–US contracting risks

The global biotech market is moving along two conflicting paths. On the one hand, Western pharmaceutical companies are seeking new technologies from China more than ever. On the other, national security concerns and the desire to protect domestic industry are leading governments to tighten controls on supply chains and intellectual property.

Since coming into force in December 2025, the US BIOSECURE Act has brought that tension into sharp focus. In broad terms, the Act is designed to reduce the US government’s exposure to certain biotechnology suppliers linked to foreign adversary governments, particularly — although not exclusively — suppliers with links to the Chinese government. Although it is a US procurement and funding measure, its practical impact can extend well beyond the US.

For UK and EU life sciences companies, the key question is: could using a China-linked CRO, CDMO or other biotech supplier make a US customer, collaborator or other partner unable or unwilling to work with you?

The BIOSECURE Act – What does it do?

At its core, the BIOSECURE Act restricts US executive agencies, federal contractors and recipients of certain US federal grants or loans from procuring or using biotechnology equipment or services from specific companies that are designated as “biotechnology companies of concern” or “BCCs”, with only very limited exceptions.

The Act is not a general sanctions regime. It does not, of itself, prohibit companies from doing business with BCCs. The issue is that US federal agencies, federal contractors and certain grant or loan recipients are restricted from procuring or using biotechnology equipment or services from a BCC — whether procured directly from a BCC, or indirectly through third-party subcontractors, partners or vendors.

In short, using a BCC somewhere in the your supply chain, even if several steps removed, may create a problem if the product or service will ultimately be used for US federal contracts or programs supported by US federal grants or loans.

Why does this matter outside the US?

Many life sciences companies outside the US do not receive US government funding directly. But they often sit in supply chains that do. A UK or EU biotech company, for example, might:

• collaborate with a US university hospital;
• supply products or services into a US federally funded research program (e.g. a project funded by the US National Institutes of Health (NIH)), including where the UK or EU biotech company is a subcontractor;
• use a CDMO for work or materials that feed into a US government contract; or
• seek to partner with a pharma company that is subject to federal procurement rules.

In collaboration, supply or other partnering deals, counterparties with US connections are likely to scrutinise the company’s supply chain more closely for BCC exposure. They may seek extra contractual protections, such as:

• additional representations, warranties and/or disclosures about which suppliers are being used by the company (with associated audit rights);
• stronger approval or veto rights over the company’s suppliers;
• a requirement to notify the counterparty if a supplier is designated as a BCC or otherwise becomes high-risk; and/or
• remedial measures — such as step-in rights, supplier substitution, segregation of US-funded work or termination — if the BIOSECURE-related risks cannot be managed.

A practical example: using a Chinese CDMO

Take a UK biotech that uses a China-based CDMO to manufacture drug substance or drug product for an antibody-based therapy. That CDMO is later designated as a BCC. This will not, by itself, prevent the UK biotech from:

• sponsoring and conducting clinical trials in the US for the product, which it pays for itself;
• getting FDA approval to market the product in the US;
• commercialising the product in the US through certain channels, such as the US commercial healthcare market; or
• taking part in certain US government-sponsored reimbursement programs, namely Medicaid and Medicare Part B, which is a common misconception — on which see further below.

However, relying on a BCC as the single source of manufacturing may become an obstacle to: (a) supplying the product under a contract with a US federal agency, unless a specific waiver or exemption applies, potentially cutting off valuable sales channels; and (b) taking part in projects supported by US federal grants. Crucially, it may also reduce the UK biotech’s flexibility to partner with companies that need to protect their own federal contracts or grants.

So, for instance, if the UK biotech is seeking to be acquired by, or out-license a program to, a third party such as a pharma company, a potential acquirer or licensee may (depending on its business model) insist on a manufacturing technology transfer to an alternative CDMO and/or adjust its valuation to reflect the risk. The later a technology transfer happens in the life cycle of the drug, the more burdensome and disruptive it is likely to become.

That matters to investors too. If a company is heavily dependent on a BCC, investors may worry about the cost and disruption of a future technology transfer, reduced partnering flexibility, and possible limits on federal business opportunities or exit value.

Medicaid and Medicare reimbursement

It is important to distinguish federal procurement from Medicare and Medicaid reimbursement. The BIOSECURE Act is primarily aimed at restricting certain federal agencies, contractors and funding recipients from procuring or using products or services involving BCCs. It is not, at least at the time of writing, a general prohibition on Medicare or Medicaid reimbursement for FDA-approved drugs manufactured using a BCC.

This point caused some concern during the legislative process because participation in the Medicaid Drug Rebate Program is linked to certain obligations under the Veterans Health Care Act. The final legislation includes a narrow exception designed to avoid excluding a manufacturer from Medicaid solely because the Act may restrict supply under the Veterans Affairs program. The practical point is that BCC exposure may affect some federal procurement channels, including Veterans Affairs supply, but should not by itself prevent reimbursement through Medicaid or Medicare Part B (for outpatient care).

So, which companies are BCCs?

The Act does not include a fixed list of BCCs. Instead, it creates a process by which BCCs are designated.

An entity is considered a BCC if it is included in a dedicated, comprehensive list of BCCs to be published by the Office of Management and Budget (OMB). Broadly speaking, the relevant criteria focus on whether the entity is:

• subject to the control of the government of a foreign adversary;
• involved in the manufacturing, distribution, provision or procurement of biotechnology equipment or services; and
• considered to pose a risk to US national security. 

The first list is due to be published by December 2026 and will be updated at least annually.  The restrictions also catch subsidiaries, parents or successors of a BCC where they meet the relevant criteria.

The head of an executive agency has the power to waive the Act’s restrictions on a case-by-case basis for up to 365 days (with a possible 180-day extension) with the approval of the Director of OMB. 

Another important list to monitor is the US Department of Defense’s “1260H List”, which is updated twice annually. At the time of writing, BGI, MGI Tech, Complete Genomics, Novogene and Origincell — and most recently WuXi AppTec — are among those named on that list. Inclusion on the 1260H List does not automatically make an entity a BCC. However, if the OMB determines that an entity on the 1260H List is involved, to any extent, in manufacturing, distributing, providing or procuring biotechnology equipment or services, it will meet the criteria to be formally designated as a BCC.

The key point is that the list of BCCs can change. Companies should not assume that today’s position will remain stable over the life of a multi-year clinical, manufacturing or collaboration arrangement.

Other high-profile Chinese CROs and CDMOs, including WuXi Biologics, have also featured prominently in the US policy debate. Even if they are not currently designated as BCCs or included on the 1260H List, counterparties may still treat their use as a diligence issue and seek additional contractual protections.

For companies that are affected, the Act provides a five-year grandfathering period for existing contracts (including previously negotiated options) with companies that are later designated as BCCs. The five-year period begins when that designation becomes effective under the relevant US federal procurement rules.  This mechanism is not available for existing contracts with entities named on the 1260H List as of December 2025.

Key takeaways

BIOSECURE is not a blanket ban on using BCCs, let alone on Chinese outsourcing more generally. Nevertheless, it creates a new fault line in life sciences contracting. For non-US companies, the risk is often indirect: a US partner, funder, customer or collaborator may be unable or unwilling to accept BCC exposure in the relevant supply chain.

There is also uncertainty about how much the BCC list may grow over time, or whether future US measures may expand the scope of the BIOSECURE Act or impose further restrictions on China-linked procurement.

Biotech and other life sciences companies will need contingency plans that can, within reason, flex around the geopolitical and regulatory uncertainty. They will need to balance the advantages of China-based providers — including strong technical capabilities, integrated CRO/CDMO services, speed and/or lower cost — against the risk of downstream contracting issues.

Where possible, in contracts with any entity that is or could become a BCC, companies should reserve the right to use a second supplier and consider qualifying that second supplier at a relatively early stage. The mechanism for switching supplier should include detailed technology transfer and transition-assistance provisions from the first supplier, and a practical timetable for transfer.