Dowdy Jackson, Ph.D.
The Biosecure Act, H.R.7085, is a bipartisan legislation that focuses on limiting US biotechnology and pharmaceutical companies from working with specific biotech companies in China. The act focuses on BGI Tech Solutions and subsidiaries (BGI Genomics Co, LTD, Complete Genomics (owned by MGI), MGI). WuXi Apptec and WuXi Biologics. This legislation was passed by the house of representatives, with a 306–81 vote to approve, and is headed to the senate.
According to the Biosecure Act, the intent of the bill is to protect the genetic information of American citizens and to protect the US biotechnology and pharmaceutical companies drug supply chain from reliance on China manufacturing. The act also points to protecting the intellectual property of US companies. US companies with current relationships with the China based companies in the legislation have until January 1st 2032 to sever their ties with these companies.
A recent survey from the biotechnology advocacy group, Biotechnology Innovation Organization (BIO), states that approximately 79% of the 124 companies that responded to the survey said they had at least one contract or product agreement with a China based Contract Development and Manufacturing Organization (CDMO).
L.E.K. consulting reports states that 68% of companies are taking pre-cautionary measures and are diversifying their partnerships, increasing legal and compliance requirements and adding background check for existing partnerships with China based companies.
According to a press release from the select committee on the CCP, WuXi Apptec generates 60% of their revenue from US based companies. This legislation will have a substantial impact on WuXi Apptec.
China based CDMOs and Contract Research Organizations (CROs) have been the partner of choice for nearly 20 years for several pharmaceutical and biotechnology companies. The question is why do so many US based biotechnology and pharmaceutical companies use China based CDMOs and CROs?
I have worked with WuXi, who is named in the Biosecure Act, and other China based CDMOs and CROs, and there three major reasons why the companies I worked for chose China based companies.
1. The first reason is cost. China based CDMOs and CROs charge substantially less for their services than many non-China based companies. This is important, especially for startups, to reduce their costs.
2. The second reason is speed. Many China based CDMOs and CROs have a shorter turn-around times than many non-China based companies.
3. The third reason is quality. The quality of the materials produced by China based CDMOs and CROs is comparable to non-China based companies. Can you find exceptions to this? Yes, but from my experience reputable China based companies develop a robust client base by providing fast, lower cost and high-quality APIs, antibodies, ADCs, etc.
So what is WuXi being accused of and where is the evidence that supports these accusations?
The Biosecure Act states:
(24) WuXi Apptec presents a national security threat to the United States.
(25) According to the People’s Republic of China (PRC) press, WuXi Apptec has sponsored Military-Civil Fusion events in the PRC.
(26) WuXi Apptec has received investments from a Military-Civil Integration Select Hybrid Securities Investment Fund.
(27) According to the PRC press, WuXi Apptec has granted awards to People’s Liberation Army (PLA) researchers and invited PLA institutes to participate in the selection process of company awards.
(28) Chris Chen, CEO of WuXi Biologics, was previously an adjunct professor at the PLA’s Academy of Military Medical Sciences.
According to a report from Reuters, a classified briefing was given to about a dozen senators. An anonyms source stated a report from the FBI, the state department and the office of the director of national intelligence claims WuXi Apptec transferred a US client’s intellectual property to Chinese authorities without consent. Although I have not seen any evidence of this when I was working with WuXi, it will be important that this report and perhaps others be provided to support these allegations.
WuXi has denied these allegations and stated that it earned a 100% pass rate during the 748 quality audits and inspections by customers, regulatory authorities and independent third parties in 2023. https://www.fiercepharma.com/pharma/would-never-approve-does-not-condone-WuXi-apptec-refutes-claim-secret-ip-transfer-letter-dod
The Biosecure Act, in its current form, only targets specific China based companies but it isn’t unreasonable to assume that other China based CDMOs or CROs could be placed on future legislation banning US companies from working with these companies.
With this possibility looming, many US biotechnology and pharmaceutical companies are looking to non-China based CDMOs and CROs to support their drug development and drug discovery efforts. This provides opportunities for companies in other countries, such as India, to establish relationships with US based biotechnology and pharmaceutical companies. According to a report in BioPharma Reporter, three India based CDMOs, Syngene, Enzene and Aragen are ready to step forward to take advantage of this opportunity. Although CDMOs in India might be a viable alternative to the China based CDMOs for some companies, the FDA has recently inspected and cited other India based CDMOs for significant manufacturing deviations. The FDA cited Brassica for falsification of records and poor hygiene. The FDA also recently cited Granules, for poor quality control procedures, poor hygiene, and cross contamination risks to name a few of the issues reported.
The challenge for US companies is to find a non-China based CDMO or CRO that has the experience, knowledge, equipment and facility to produce their therapeutics at low cost, high-speed and high quality to meet the regulatory and safety standards in the US and in various countries. This also places a substantial burden on the FDA to inspect these facilities and it isn’t clear how this will be paid for by the US government.
Not all drug manufacturing requirements are the same. For example, developing antibody drug conjugates (ADCs) requires specific expertise, training, equipment and facilities to deal with the complexities of producing the antibody, conjugating the linker-payload to the antibody, purifying the ADC, characterizing the lots, etc to avoid costly failures during manufacturing. Only a few CDMOs have this expertise and obtaining a manufacturing slot can be difficult with some requiring 6 months to 1 year lead time.
According to Pharmaoffer, the top 10 CDMOs, based on revenue are:
CDMO | Headquarter | Revenue (2022) |
Lonza Group | Basel, Switzerland | $6.970 billion USD |
Thermo Fischer Scientific | Waltham, MA | $6.967 billion USD |
Catalent | Somerset, NJ | $4.276 billion USD |
WuXi Biologics | WuXi, China | $2.108 billion USD |
Samsung Biologics | Incheon, South Korea | $1.773 billion USD |
Siegfried | Zofingen, Switzerland | $1.377 billion USD |
Fujifilm Diosynth Biotechnologies | Tokyo, Japan and College station, TX | $1.314 billion USD |
Recipharma | Stockholm, Sweden | $1.314 billion USD |
Boehringer Ingelheim | Ingelheim, Germany | $1.097 billion USD |
MilliporeSigma | Darmstadt, Germany and Burlington, MA | $1.024 billion USD |
Only a few of these companies have the experience developing ADCs.
The 2032 deadline for US based companies to terminate their current contracts with WuXi, for example, doesn’t give them a lot of time to find appropriate CROs and CDMOs that can take on the manufacturing of their approved and/or clinical candidates such that there won’t be a significant interruption in their supply chains. The potential increases in cost and delays due to the reduced number of manufacturing slots at qualified and FDA approved CDMOs and CROs will need to be addressed. This will most likely result in higher drug prices that will be passed on to patients and their families.
While the Biosecure Act can provide opportunities to invest in and establish US based CDMOs and CROs, this will take a substantial amount of time. Eight years isn’t enough time to establish enough US based CDMOs and CROs to meet the current biotechnology and pharmaceutical manufacturing demands unless the US government is willing to make substantial investments now to support this.
What does this mean for other China based companies that are not mentioned in the Biosecure Act? CDMOs such as Altruist Biologics and TOT Biopharma, which have experience in manufacturing ADCs could be alternatives to WuXi.
Despite the growing concern around the potential passage of this legislation, according to L.E.K’s report, many US based companies still maintain a keen interest in partnering with China based companies.
I think our senators and other politicians need to actively engage with US leaders in the biotechnology and pharmaceutical industry so they can understand the potential ramifications this act will have on American companies and more importantly on American patients and their families. They need to clearly outline actionable plans to help bolster and fund manufacturing in the US, within a reasonably short time frame, to minimize the impact this legislation will have on our biotechnology and pharmaceutical industry.
Our US biotechnology and pharmaceutical companies and their teams of talented and dedicated scientists are at the forefront of developing novel innovative therapeutics. We need effective legislation that will support, strengthen and protect the innovative work from our US based companies while also not harming American patients and their families.
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