The National Security Commission on Emerging Biotechnology recommends at least a $15 billion investment into biotech over the next five years.
A congressional commission is sounding the alarm on the US biotech industry, raising concerns that China could soon become the world’s leader in terms of innovation.
In a report released Tuesday, the National Security Commission on Emerging Biotechnology (NSCEB) found that over the last two decade, “the U.S. government’s approach [in biotech] has been piecemeal and uncoordinated.” Currently, the country still lacks the “high-level departmental and agency leadership we need to execute a national biotechnology strategy,” according to the report.
Meanwhile, China has made biotech a clear strategic priority, building out its core capabilities such as drug discovery—powered by AI—and biomanufacturing, which puts the nation in a strong position to “eclipse” the U.S.
In a Tuesday evening note to investors, Jefferies analysts wrote that “Investors are struggling to decide whether [Tuesday’s] report is good or bad for US biotech,” and acknowledged that “there could be tough times ahead for biotech companies with dependencies on China-based CDMOs/CMOs.”
To help maintain U.S. biotech leadership, the NSCEB made several strategic recommendations, chief of which is a $15 billion infusion, at the minimum, into the industry over the next five years. “Any smaller amount risks hamstringing U.S. innovation and product development,” according to the report. Other recommendations include creating simpler pathways to the market and greater executive action to support R&D and innovation.
The Jefferies analysts said the National Security Commission is “supportive of regulatory optimization” and backs the reshoring of manufacturing capabilities, which they said is overall a positive for biotech.
Additionally, “there seems to be bipartisan support for the Commission,” according to Jefferies, though there are slight differences in focus along party lines. Democrats, for instance, are more focused on “limiting damage” from President Donald Trump’s tariffs, while Republicans have their sights set on “maintaining US competitiveness vs China.”
According to a May 2024 survey from trade group Biotechnology Innovation Organization, 79% of biotech companies have at least one contract with a Chinese CDMO/CMO. Respondents said they would need up to eight years to completely switch their manufacturing pipelines. Without enough time to adjust their supply chains, “millions of patients could be affected” as per the survey.
Additionally, Jefferies flagged the “little clarity” regarding licensing deals with Chinese companies—a practice that has become increasingly common. Just this year, for instance, Merck, AstraZeneca, ArriVent and Roche have collectively dropped some $15 billion in Chinese contracts.
The NSCEB’s recommendations also appear to run counter to Trump’s sweeping and aggressive cuts across its health authorities. Since the start of the year, the Department of Health and Human Services has lost around 25% of its original headcount—approximately 20,000 employees—and has seen several structural consolidations as well as budgetary reductions.
