U.S. Congress Targets Chinese Biotech Partnerships with Three Legislative Moves

The U.S. Congress has initiated three significant actions to scrutinize and potentially restrict partnerships between American biopharma companies and Chinese biotech firms, citing growing bipartisan concern over national security and supply chain dependencies. These moves come as U.S. companies increasingly turn to Chinese biotech firms for novel drug candidates and research partnerships to replenish their pipelines.

The first step is the COINS Act, enacted in late 2025, which restricts outbound investments and transactions into certain countries of concern, particularly China, in designated technology sectors. While biotechnology was not initially a "covered sector," the law grants Treasury discretionary authority to expand the list through rulemaking. Several members of Congress have urged the Treasury Secretary to add biotechnology, citing recent out-licensing arrangements between Chinese biotechs and U.S. pharma companies. Treasury has not publicly indicated it intends to exercise this authority, and the initial rule would need to be proposed soon to meet a March 13, 2027, deadline. Notably, pre-existing deals are likely grandfathered, as the COINS Act expressly excludes transactions completed before its enactment.

Seeking to force the issue, Congress has introduced the bipartisan Biotech Investment National Security Act of 2026 (BINSA). If enacted, BINSA would amend the COINS Act to add biotechnology, including pharmaceutical and biological product development, as a new covered sector. It would also expand the categories of reviewable transactions to include licensing deals and joint ventures, and direct Treasury to issue implementing regulations within one year. The legislation is framed as necessary to protect American pharmaceutical supply chains and prevent U.S. capital and technology from flowing to entities under Chinese government direction and control. In its current form, BINSA does not apply retroactively, so pre-existing deals would likely survive.

On a parallel track, report language in the House’s FY 2027 FDA appropriations bill would bar the FDA from accepting clinical trial data from China in support of investigational new drug applications, with a one-year transition period after enactment. Some experts believe the FDA already has this authority. While this measure would not technically affect existing or future deals, it could severely undermine their economic rationale.

These legislative efforts unfold against a backdrop of massive deal-making. According to data from the National Medical Products Administration of China, the country’s innovative drug out-licensing transactions exceeded $60 billion in the first three months of 2026, already approaching half of the $135.7 billion recorded for the entire year of 2025. At the end of 2025, over $128 billion in deals involving Chinese partners had been announced. This surge reflects a fundamental shift in the narrative, with multinational corporations moving from treating China as a “budget” option for isolated assets to seeking access to entire development platforms and capabilities.

Deal structures have evolved accordingly. Established players with deep pipelines are entering into multibillion-dollar “portfoliowide” agreements that span multiple assets and provide access to proprietary technology platforms. Mid-cap biotechs are increasingly using “NewCo” models, spinning off ex-China rights into newly formed offshore entities to share development risks while retaining 20% to 30% of the equity upside. Early-stage startups in highly sought-after areas like AI drug discovery, GLP-1s, and antibody-drug conjugates can still command premiums through competitive bidding processes.

China’s rise as a biotech hub has been rapid. In 2024, the country officially eclipsed Europe in the number of new clinical trial initiations. Its strengths lie in early-stage R&D and clinical development, with superior speed of translational research and cost-effectiveness. However, limited success in late-stage development and commercialization remains a significant risk. This transformation began with the Chinese government declaring biotech a national priority in its twelfth Five-Year Plan, supported by government subsidies and a wave of returning talent after the 2008 financial crisis, which planted the seeds of a world-class R&D workforce.