US and China Propose Restrictions on Cross-Border Biotech Deals
Newly proposed U.S. Treasury and Chinese MOFCOM measures would restrict a wide range of biotech transactions and collaborations between U.S. and Chinese entities while leaving many licensing deals permitted.
Arnold & Porter reports that the U.S. Treasury Department and China's Ministry of Commerce have each proposed new steps intended to address U.S.-China competition in biotechnology. Taken together, the proposals could prohibit or restrict a broad range of transactions and collaborations between U.S. and Chinese entities, even as many licensing arrangements would continue to proceed.
Why sophisticated counsel should care: this is a dual-track national security and economic policy intervention sitting directly on top of deal pipelines. Life sciences clients with Chinese counterparties — in licensing, joint development, equity investment, supply or distribution arrangements — face a moving target, and counterparties, diligence postures and deal-structure choices can shift quickly before any measure is final. Because both governments are acting at once, structuring around a single regime will not suffice, and licensing carve-outs make the equity/commercial boundary in any agreement newly consequential.
Concrete action: map existing U.S.-China biotech exposures, including equity and non-equity collaboration structures, against the scope of both proposals as they evolve, and track the comment processes and final implementation timing for each. The source advisory does not set out thresholds, covered technology definitions, or effective dates, so the operative detail remains to be confirmed as the rules are finalized.