The BIOSECURE Act: Safeguarding U.S. Biotechnology

By Mile Iliev

What Is the BIOSECURE Act?

The BIOSECURE Act is a pivotal U.S. legislative measure designed to safeguard national security by restricting federal contracts and funding involving biotechnology companies tied to foreign adversaries. Specifically, it prohibits executive agencies and grant recipients from engaging with companies allegedly connected to foreign governments, like BGI and WuXi AppTec. It also mandates a stringent review of biotechnology providers to ensure the security of sensitive biological data.

Primarily targeting federal agencies, its ripple effect has already impacted private sector supply chains, partnerships, and R&D collaborations. It also has the potential to put some emerging biotech firms out of business due to their dependency on government funding and/or sourcing from companies named in the act. We are seeing a trend in emerging companies taking steps to remove their supply chains from China in order to eliminate any uncertainty associated with the Chinese business ecosystem. This could be the beginning of global supply chain shifts.

Regardless of whether the act secures support in the new Senate, the overall uncertainty hanging over our industry will continue to be top of mind for managers and investors. This puts particular pressure on the “fragile” emerging biotechs, those who are still primarily in clinical development and dependent on investor capital.

Therefore, we advise our clients to proactively adapt to this overall uncertainty by examining their existing compliance frameworks to avoid disruptions, enhance data security, and foster trust with regulators and stakeholders. Companies can also leverage this situation as an opportunity to strengthen domestic partnerships and innovate within secure business ecosystems.

What Are the Implications of the BIOSECURE Act?

If the BIOSECURE Act or any similar future bill gets passed by U.S. Congress and becomes law, there are several implications for the biotech industry, such as:

Regulatory Compliance Risk: Emerging biotech companies heavily reliant on foreign suppliers could face operational challenges if their partners fall under the legal restrictions.

Evolving Security Standards: With heightened scrutiny on data privacy and national security, aligning with these standards will be essential to maintain credibility and secure future funding.

Consequences of Not Acting:

• Companies risk project delays, regulatory penalties, and reputational damage if they were to fail to comply with the legal mandates.
• Dependency on restricted biotechnology providers could jeopardize access to federal funding and partnerships.

Furthermore, even if the BIOSECURE Act doesn’t pass in the near term, it reflects a broader trend of deglobalization in critical industries, pushing companies to reassess international dependencies and prioritize domestic sourcing.

We have seen and supported this reassessment first-hand in our own U.S.-based clients. One client recently began to take precautionary steps in anticipation of future regulatory shifts. They identified three CMOs (contract manufacturing organizations) for their key starting materials, each based in different global regions to ensure a resilient, compliant supply chain that will maintain quality and data security while reducing regulatory risk.

Key Takeaways

Regardless of whether the BIOSECURE Act gains congressional support, global trade protectionist trends will likely continue. Therefore, we encourage U.S. companies to:

• Conduct supplier risk assessment. Identify and evaluate current suppliers to ensure regulatory compliance and avoid potential disruptions.
• Prioritize domestic partnerships. Collaborate with U.S.-based providers to reduce security risks and build resilience against future regulatory changes.
• Enhance data security protocols. Strengthen internal data governance frameworks to align with evolving security standards and regulatory expectations.
• Stay ahead of trends. Monitor legislative developments and global shifts in biotechnology to anticipate future challenges and opportunities.

By taking these steps, companies can turn compliance with the BIOSECURE Act or any future legislation into a strategic advantage, ensuring long-term operational stability and fostering trust with regulators and partners.

For support in navigating supply risk management, developing best practice supply planning, or execution support, contact our team of experts today at info@convergeconsulting.com.