In a May 21, 2026, letter to Treasury Secretary Scott Bessent, House Select Committee on the Chinese Communist Party Chairman John Moolenaar urged Treasury to designate biotechnology as a prohibited sector under the Comprehensive Outbound Investment National Security (COINS) Act of 2025. The Select Committee’s rationale centers on the accelerating flow of U.S. capital, intellectual property, and expertise into China’s biotechnology industry – a sector Beijing has strategically prioritized and that the letter ties directly to military, intelligence, and surveillance capabilities.
The letter points to a striking surge in cross-border activity. Cross-border out-licensing transactions between multinational pharmaceutical firms and Chinese biotech firms reached approximately $136 billion in 2025, and 48% of large global pharmaceutical licensing deals were inked with Chinese counterparties. Recent transactions - including Bristol Myers Squibb’s $15.2 billion partnership with Hengrui Pharma and Eli Lilly’s $8.8 billion collaboration with Innovent - have moved beyond conventional licensing into co-development structures that involve the transfer of intellectual property and proprietary know-how from U.S. firms to Chinese partners. The Chairman flags concerns that such collaboration accelerates China’s ascent up the global pharmaceutical value chain while also creating risks of intellectual property diversion, particularly when clinical trials and research occur in sensitive environments such as military-linked hospitals or regions linked to reported human rights abuses.
This push to include biotechnology under COINS aligns with a broader U.S. policy trajectory that treats critical technologies as national security assets. The BIOSECURE Act, enacted as part of the National Defense Authorization Act for Fiscal Year 2026, already recognizes biotechnology as both a strategic industry and strategic national security vulnerability. Expanded export controls on advanced semiconductors reflect the same underlying logic. In each case, U.S. policy is reaching beyond trade flows to focus on the transfer of capital, know-how, and broader tech ecosystem advantages, and the Chairman’s letter explicitly invokes rare earths and semiconductor supply chains as cautionary precedents for what unchecked dependency can produce.
For pharmaceutical companies, biotech investors, and their counsel, the implication is that outbound activity involving China - whether structured as a licensing agreement, joint venture, co-development arrangement, or equity investment – is becoming materially more complex to underwrite. Even before Treasury acts on the Chairman’s recommendation, the direction of travel is clear: counterparties, trial sites, data flows, and downstream end-users will all face heightened scrutiny, and deal teams will be expected to have asked harder questions earlier.
"The United States is engaged in a fierce biotechnology competition with the PRC, with crucial implications for our national and economic security as well as for the future of healthcare and the security of American medical data."
