Geopolitical tensions and threats of decoupling have led to a steep decline in American companies’ confidence in working with Chinese partners, although few have taken steps to end relationships, according to a new survey.
The survey — conducted by LEK Consulting and featuring responses from 73 professionals across biopharma, CDMO, CRO and investor sectors — also found that 68% of global life sciences companies have adjusted their operations in response to looming US legislation targeting Chinese service providers.
Some have increased legal and compliance requirements for Chinese partners, while others are diversifying partnerships to companies in other countries or adding background checks for existing partners.
The results offer a new window to understanding how different stakeholders in the biopharma world are reacting to the Biosecure Act, though the legislation’s future remains unclear after it was left out of a wider defense spending bill.
Securities filings and a previous survey by BIO have revealed extensive ties between US biopharma companies and Chinese service providers. They’ve also flagged risks of clinical trial delays and drug shortages, even though most companies have been reluctant to publicly discuss their contingency plans.
“The act, regardless of passage, is likely to reshape how the global biopharma industry operates,” LEK Consulting said in the report.
For US-based life sciences companies, confidence in working with Chinese companies dropped by up to 50%, the firm found. With WuXi AppTec and WuXi Biologics, two major CDMOs named in Biosecure as companies of concern, CDMOs were the worst hit, with confidence falling 49% after the bill was introduced. For comparison, respondents from other parts of Asia reported a 31% confidence decrease in working with Chinese CDMOs, rounding the decline out to 38% across all geographies.
When it comes to the impact on current operations, respondents were spread on a wide spectrum. Overall, 26% said they are looking to shift away from their current Chinese suppliers (although the percentage is slightly higher for US respondents), and the same percentage are adopting a wait-and-see approach or staying in the discussion stage.
While 13% said they will only consider non-Chinese partners for new projects or potential partnerships, only 2% of all respondents — and 4% of US respondents — said they have started to unwind relationships with companies named in Biosecure.
“Somewhat surprisingly, 11% of life sciences companies report no impact on their decisions,” LEK said. “This likely reflects the yet still uncertain nature of the act.”
Beyond the binary decision of whether to work with a vendor, the survey suggested that companies could make other strategic adjustments and are already implementing them. Those include compliance, security and other measures. Notably, 11% said they are restructuring collaboration agreements in response to the bill.
Despite the precautions, LEK noted one bright spot for potential Chinese partnerships: product commercialization in China.
“China’s market continues to be attractive, and the majority of biopharmas wish to consider commercialization,” the report said. “Collaboration with Chinese service providers in clinical research, development and manufacturing is also not completely off the table, with approximately 30% of respondents considering these partnerships as likely in the next three years."