A new proposal from the U.S. government seeking to address investment in Chinese biotech as a matter of national security drew cautious statements from across the industry, with leaders vowing to ensure innovation isn’t stifled.
The U.S. Department of the Treasury has taken steps to restrict outbound biotechnology investments to protect national security, acting on direction from President Donald Trump.
The proposal seeks to restrict U.S. persons from investing in certain bio-derived compounds, biomanufacturing equipment and facilities, biotechnology or equipment involved in biological design and scientific discovery or experimentation.
But licensing deals would not be off limits, according to a fact sheet that accompanied the proposal, leaving pharmaceutical companies open to continue transacting in China as they have increasingly been for the past few years.
The Treasury Department’s proposal comes a week after China similarly rolled out a new policy to restrict the transfer of ownership for certain biotechnologies, including cell and gene therapy—while also exempting licensing deals.
The new U.S. proposal drew cautious statements from across the industry, with leaders vowing to carefully review the fine print and ensure that innovation isn’t stifled.
“We need policies and initiatives that maintain and advance our global leadership in biotech, particularly as we compete with China,” John Crowley, CEO of the Biotechnology Innovation Organization (BIO), said in a Thursday statement. “The details of the proposed Treasury Department rules matter. We cannot restrict our way to success.”
Crowley has been an outspoken voice on the rising dominance of China’s biotech sector, warning of national security risks and the need to boost U.S. companies. In response to the official proposal, Crowley urged the U.S. government to ensure that the new rules do not unintentionally weaken U.S. biotechs.
The proposal comes from the Comprehensive Outbound Investment Security (COINS) Act, which was passed by Congress in the Fiscal Year 2026 National Defense Authorization Act. Trump signed the COINS Act into law in December 2025.
The proposal focused heavily on brain-computer interface technology but more broadly suggested naming the following as prohibited technologies from countries of concern: small molecules, polymers, vaccines, blood and blood components, allergenics, cell and gene therapies, and monoclonal antibodies or other recombinant therapeutic proteins.
“It is necessary to place restrictions in this sector in the interest of protecting U.S. national security,” the rule states; “at the same time, the Treasury Department recognizes that restrictions may potentially have countervailing effects on national security to the extent restrictions lead to significant public health risks or harm U.S. businesses in this sector.”
The department is therefore seeking comment on the possible risks of restrictions and the impact on national security.
“The proposed regulations are designed to address risks that can arise when foreign adversaries try to benefit from U.S. investment in key technology sectors,” Christopher Pilkerton, assistant secretary of the Treasury for Investment Security, said in a statement.
While industry leaders have been calling for a more committed strategy from the U.S. to support homegrown biotechs, they have stopped short of calling for a ban on licensing deals.
“We are in a new space race,” said Patroski Lawson, founder of the KPM Group and the American Biotech Innovation Alliance, during a BioSpace webinar on the rise of China biotech earlier this month. “Patients don’t care. Patients just want innovation, right? So it’s incumbent upon us to be thinking more strategically rather than in sort of this fragmented ad hoc approach that we’ve taken to this.
“China is gaining on us,” he continued. “We’re not sure exactly how much they’re catching up, and what are we going to do about it? Are we going to continue complaining, or are we going to get our act together?”
Meanwhile, with China and the U.S. trading potentially restricting policy proposals, Sidley Partner Lila Hope said the back-and-forth is injecting uncertainty into the dealmaking process. This could push Chinese biotechs to instead look to Europe, Japan or other areas for deals.
“We’re not helping ourselves by turning away from this,” Hope said on the BioSpace webinar. “What we ought to do is try to see what are the opportunities to collaborate. You have good asset. I have talent. Let’s bring it here and develop it together.”
