US Risks Losing Biotech Leadership to China

In a time of increasing competition and global instability, it is crucial for the U.S. to maintain its leadership in biotechnology. Having been the frontrunner in this field for many years, the U.S. now risks falling behind, similar to what happened with a ago.

The U.S. was the birthplace of the semiconductor revolution and was a leading supplier for decades. In 1990, U.S. manufacturers produced nearly of the world’s semiconductors. However, today that number is just over . Meanwhile, China has invested heavily in its chip industry and is projected to control almost of the global chip manufacturing market by 2030. 

According to a new by Commissioners on the (NSCEB), history is in danger of repeating itself in the biotech sector. Despite many significant discoveries being made by American scientists in American labs, China has been heavily investing in biotech for , and the U.S. is rapidly losing ground in areas such as production and development.

The NSCEB has proposed measures to accelerate the American biotech sector and slow down Chinese progress. However, these measures can only succeed with close cooperation between industry and government. 

Here are two key areas that require immediate attention: 

1. Curbing the impact of rival investment in U.S. biotech

Many American biotech firms, struggling with funding and navigating the “”—the stage where research funding is scarce but commercialization is not yet possible—have accepted funds from foreign investors, including Chinese entities. 

Once these entities acquire a stake in an American company, they can influence product development or undermine the company’s relationship with the U.S. government. For example, certain Chinese investments can disqualify companies from government contracts. At the very least, they gain insights into U.S. biotech and access valuable intellectual property. China’s recent on investments in American companies further highlights the Chinese Communist Party’s use of investment regulations as a competitive strategy. 

Biotech companies must recognize the risks of adversarial investment. Unlike the pharmaceutical industry, biotech lacks coordination, with fewer central bodies for regulation and information sharing. This limits the ability to respond to these threats in a unified manner. Industry leaders must address this issue, both for national security and economic reasons, as protecting the biotech ecosystem’s intellectual property is crucial for its financial success.

Government action is also vital. The NSCEB has that Congress establish an Independence Investment Fund. Managed by an expert, non-government partner, the fund would support start-ups that enhance U.S. national security but struggle to attract traditional investors. It would aid businesses in the situations that most often lead to foreign investment, helping emerging American biotech firms survive challenging periods and succeed in the global market. This strategic deployment of federal capital would have a significant impact on the industry, paving the way for private investment.

2. Improving information exchange between the biotech sector and the U.S. government, particularly the intelligence community

If economic security is considered national security, as the NSCEB Commissioners believe, then communication between intelligence agencies and industry must be improved. Informing business leaders about potential risks will enable them to take appropriate action. Over-classification of intelligence, which often prevents the sharing of important findings with civilian business leaders, should be addressed, especially when complex geopolitical factors are involved. 

Greater collaboration will also help the government better understand the industries it aims to protect. Access to biotech leadership’s perspectives will allow the intelligence community to identify the most critical issues for government monitoring. Furthermore, more individuals with knowledge of biology and science should be involved across government, beyond the traditional focus on chemical, biological, radiological, and nuclear threats. Without experts who understand the biotech sector and its needs, the U.S. will struggle to effectively navigate this increasingly important area of U.S.-China competition. 

The risks posed by adversarial capital and information silos are just two examples of areas where public-private collaboration could safeguard the biotech industry. Importantly, like other issues identified in the NSCEB report, these are problems that can be resolved before it is too late. 

Decades ago, the U.S. failed to maintain its dominance in semiconductor manufacturing. Correcting that mistake has required extremely expensive, difficult, and uncertain measures. Now, facing a similar risk with biotech, the U.S. must not repeat the same error.