US BioSecure Act: Impact on India and biotech opportunities in supply chain shifts

India can become a leading biomanufacturing hub if it can elevate its services to international standards with increased efficiency.

In 2024, the United States introduced the BioSecure Act, aiming to enhance the security of its biotechnology supply chains. While the bill successfully passed the House of Representatives, it failed to advance in the Senate during the last-minute business of the year. Regardless of its fate, the bill adds to the line of policies on export controls and the recent move to revoke China's Permanent Normal Trade Relations Status (PNTR). The latest interim final rule, released on 15 January by the US Department of Commerce’s Bureau of Industry and Security (BIS), introduces new controls aimed at mitigating the dual-use risks of biotechnology, adding another layer to this effort. The BioSecure bill seeks to reduce China’s influence from America's biotech supply chains and safeguard against biotech espionage. However, China's strong position in global supply chains—evidenced by 79% of US biotech firms having at least one contract with Chinese firms—means China may remain and continue to play a larger role in the US biotech industry. Regardless of the bill’s fate, there appears to be a mandate for US biotech companies to shift their businesses away from China to other locations. India could be one of the destinations if it strengthens its biotech capabilities, reduces its dependence on China, and diversifies its import markets.

The House version of the bill states that it prohibits US federal agencies from conducting business with companies that are "subject to the jurisdiction, direction, control or operates on behalf of the government of a foreign adversary", which is defined under the bill as China, Cuba, Iran, North Korea, and Russia. The bill prohibits US federal agencies from involving biotechnology "companies of concern" in manufacturing, distributing, providing, or procuring biotechnology equipment or services. The identified risks in conducting joint research with foreign adversaries include multi-omic data breaches, dual-use of technology, and biotech espionage. The bill provides a winding-down period for US firms to cut business ties with the companies of concern, with a January 1, 2032 deadline for those who have existing contracts with the companies of concern, especially with five named Chinese biotechs, including WuXi Biologics and WuXi AppTec, which are partners for many US pharma companies.

On the one hand, the bill's passing is still contentious due to the impact it could have on America's pharmaceutical sector and the costly endeavour of decoupling the biotech supply chains from China. With the broader outlook of hiking tariffs against Chinese goods and the America First Policy, this policy adds another layer of division to global supply chains and possible tensions in US-China trade relations. Like the US CHIPS and Science Act of 2023, this adds a political tenor to the supply chains, making them fragile and geopolitically vulnerable. Regardless of whether the bill is passed, the chances of US biotech companies shifting their businesses away from China are high, although gradually, and CROs and CDMOs based outside of China may face unprecedented demand.

For a country like India, this is a window of opportunity to present itself as a viable market and efficient service provider and absorb those businesses looking to exit from China. However, the question remains whether India's Production Linked Incentive (PLI) schemes and BioE3 (Biotechnology for Economy, Environment and Employment) policy, favouring localised domestic production, can create an efficient biotech sector of global standards in India. While India plays a critical role in providing generic medicines and biosimilars, at its current capacities, India might not be able to attract much of the business flowing out of China.

Moreover, if the bill is passed, it would have some ripple effects along the global supply chains, as it would impact not only those companies that might have direct business ties with Chinese Contract Research Organisations (CROs) and Contract Development and Manufacturing Organisations (CDMOs) but may also eventually be expanded to impact those working with companies that use their equipment or services. This means that companies will have to undertake extra due diligence to ensure subcontractors comply with the provisions of the bill. This might be difficult for India, as India's pharmaceutical sector is dependent on China, with 43 percent of total pharma imports coming from China. This means that India will also have to move away from Chinese imports and diversify its import markets. As the BioSecure policy opens the window to replace Chinese CDMOs, India's expertise in generic medicine is insufficient, and it must develop better talent, technology, and R&D in innovative biotech, especially in the genomics market.

However, as friend-shoring is a plausible trend in biotechnology, India can become a leading biomanufacturing hub if it can elevate its services to international standards with increased efficiency, innovation, and cutting-edge technology. India can only meet the competition from Japan, South Korea, and the EU markets if it can provide cost-efficient and innovative services to global biomanufacturing. India can only become an alternate vendor ecosystem if it addresses regulatory and quality challenges in its biotech services and has smooth approval processes to attract businesses to India.