U.S. Proposes Strict Controls: Hundreds of Companies Involved in Military Medical Trials in China

On January 9, the China Special Committee established by the U.S. House of Representatives sent an open letter to Commerce Secretary Gina Raimondo, suggesting stricter export controls on companies planning to conduct cooperation or trials at Chinese military-related facilities. The committee believes this move will help prevent U.S. biotechnology from falling into the hands of the Chinese military.

This is not the committee's first focus on the Chinese biopharmaceutical industry; in fact, it represents a continuing concern and escalation. Last July, the committee warned industry associations and listed clinical trials as a key area for review, sending a letter to the FDA requesting an investigation into candidate drug clinical trials conducted at relevant medical institutions over the past decade. The committee pointed out that such trials could generate sensitive data valuable to the Chinese side.

It is estimated that in the past decade, hundreds of clinical trials conducted in China involved military-related medical institutions, with relevant companies including Pfizer and Eli Lilly among multinational corporations (MNCs). If the proposal is approved, these companies will need to obtain permission from the U.S. government before conducting clinical trials at military-related medical institutions in China.

Currently, with the U.S. government transitioning, the specific response from the new Trump administration remains unclear, and the future and implementation of this proposal still hold uncertainty. According to Medical Trends, relevant U.S. parties have gradually tightened scrutiny on clinical trials conducted in military-related medical institutions in China for several years, initially focusing on Chinese companies seeking to list in U.S. capital markets; however, the scope of review has expanded to include more multinational pharmaceutical companies in recent years.

Reflecting on 2024, the Biosecurity Bill has been a constant source of controversy, and the committee's focus may trigger another "pressure campaign," marking a further escalation in the U.S. scrutiny of the Chinese biopharmaceutical industry. On January 11, 2023, with bipartisan consensus, the U.S. House of Representatives passed a resolution by an overwhelming majority to formally establish the China Special Committee to develop a comprehensive strategy to respond to the so-called "growing economic and strategic power" from China. Biopharmaceuticals are one of the industries of interest to this committee.

Last July, the committee began reviewing clinical trials conducted by multinational companies at military-affiliated medical institutions in China and contacted two major associations, BIO (Biotechnology Innovation Organization) and PhRMA (Pharmaceutical Research and Manufacturers of America), recommending a focus on this area. As a key country for global clinical trials, China not only corresponds to the world's second-largest market size but also has abundant clinical resources. According to a report released by IQVIA, from 2019 to 2023, China ranked third globally in clinical trial share, following North America and Western Europe; the number of clinical trials in China doubled over the past five years, reaching 57%, with emerging biotech forces and MNCs being important components.

Industry practitioners have stated that while military hospitals hold significant positions in the domestic medical system, their clinical trial processes and regulations fall under a unified domestic system. When choosing hospitals for clinical trials, companies primarily depend on the specialized resources of different hospitals. For example, the Air Force Medical University’s Xijing Hospital specializes in cardiology and orthopedics, while the Navy Medical University’s First Affiliated Hospital (Changhai Hospital) excels in urology and neurosurgery.

According to the Clinical Trials.gov database, many multinational pharmaceutical companies have previously collaborated with relevant hospitals, with some projects currently recruiting patients and others having completed clinical research, including Pfizer, Eli Lilly, and Johnson & Johnson. The open letter mentions, "We believe that if regulatory restrictions are added before multinational companies collaborate with Chinese military medical institutions, they will be more proactive in seeking clinical trials with non-military-affiliated medical institutions."

Throughout 2024, the Biosecurity Bill became a focal issue in the U.S. Congress, continuously impacting the biopharmaceutical industry across the ocean. Nevertheless, the bill ultimately failed to pass — by the end of the year, the military committees of both chambers of Congress published the final agreement text of the 2025 National Defense Authorization Act (NDAA), excluding the Biosecurity Bill. This means that the supporters of the Biosecurity Bill, who initially hoped to hitch a ride on this bill, saw their plans thwarted.

However, U.S. lawmakers have not given up. According to Endpoints, legislators are considering a compromise on legislation targeting Chinese life sciences companies, which would still name companies like Wuxi Apptec, WuXi Biologics, BGI Genomics, and Complete Genomics, but the proposal would add an administrative review process rather than automatically prohibiting biopharmaceutical companies from collaborating with these Chinese firms. This idea aligns with the thoughts mentioned in the open letter — believing that as long as "limits" are set for relevant cooperation, the connections between both sides can be reduced.

It is noteworthy that the chain reactions triggered during the push for the "Biosecurity Bill" cannot be ignored. At the beginning of 2024, BIO's position shifted unexpectedly to support the bill, catching the industry off guard. Furthermore, to mitigate risks, the companies under scrutiny have had to take action. In December last year, WuXi Apptec announced the sale of its advanced therapy business unit to the U.S. private equity firm Altaris LLC. According to unaudited data, from January to November 2024, the planned divestiture's revenue was approximately 980 million RMB, accounting for 2.4% of WuXi Apptec's recently audited annual revenue, as a measure to alleviate potential regulatory risks, they "cut losses."

On January 6, WuXi Biologics announced it would sell its vaccine-related assets through its wholly-owned subsidiary WuXi Hyde Ireland for a total price of $500 million, with Merck as the buyer. Although this transaction appears not to incur losses, underlying regulatory concerns are subtly present.

As the iron curtain falls, no industry can remain unscathed. Although the incoming Trump administration has not yet specifically focused on the biopharmaceutical field, its advocated policies of manufacturing return and "America First" will not only impose more administrative constraints on Chinese companies but will also have far-reaching impacts on global supply chains and capital flows. It is expected that in 2025, more companies will adopt measures such as selling overseas assets to reduce associations with sensitive areas.

Despite potential obstacles, there is confidence that U.S.-China biopharmaceuticals will not decouple and cannot decouple. From another perspective, given China's vast market, foreign companies cannot afford to give up. In 2024, the NMPA approved a total of 93 new drugs, of which 50 were imported drugs, accounting for more than half, including highly anticipated weight loss drugs like semaglutide and tirzepatide. Moreover, the speed at which imported drugs enter the Chinese market is accelerating, such as repotrectinib, lurbinectedin, and donanemab, which have less than a year's time gap in approval between global regions and China. Notably, zotiraciclib was approved in China just over two months after FDA approval, achieving near-simultaneous international market entry.

Behind this success lies the investment of multinational pharmaceutical companies in clinical trials in China. In 2024, multinational companies have been ramping up their R&D centers, for example, Sanofi established a China Medical Innovation Center in Beijing to advance clinical research and drug development; Eli Lilly also set up a China Medical Innovation Center in Beijing to promote clinical research and accelerate drug development. Meanwhile, China's biopharmaceutical industry has been designated as a "strategic emerging industry related to national livelihood and national security," emphasizing that "its development must be firmly controlled in our own hands."

In March 2024, the term "innovative drugs" was included in the Chinese government work report for the first time; in September 2024, the Ministry of Industry and Information Technology reported that the added value growth rate of the national pharmaceutical industry reached 10.5%, accounting for 3.7% of the total industrial proportion, with the domestic innovative drug market scale exceeding 100 billion RMB. Regardless, focusing on creating original new drugs and exploring uncharted territories will be the way forward for China's biopharmaceutical breakthroughs.