Key Takeaways:
The U.S. biotech industry is tearing itself apart over China.
American drug companies spent $60 billion on Chinese-developed molecules in the first three months of 2026 alone, according to state figures cited by industry executives — a pace that would double last year's total, which was already 10 times larger than in 2021. The spending spree has created an existential rift inside biotech, pitting executives who see Chinese partnerships as smart business against those who warn the dependency threatens national security and the long-term survival of the domestic industry.
"Until I'm not allowed to do it, of course I'm going to do it," one biotech investor said, describing the dynamic as a prisoner's dilemma. "There are too many for-profit actors in this setting who are willing to launder their ethics to make $100 million on each deal."
Chinese-invented molecules accounted for 8% of the global drug pipeline a decade ago. By 2025 that figure had surpassed 40%, according to an analysis published in JAMA by Georgetown University professor So-Yeon Kang and colleagues. Over the same period, the U.S. share of the world's medicine chest fell from nearly half to less than 35%. The biggest initial public offering in biotech history was built on Chinese-invented medicines, as were a string of billion-dollar buyouts and buzzy startup launches.
The math driving the shift is brutal. One venture capitalist estimated that licensing a best-in-class drug from China costs about $10 million, versus roughly $40 million over three years to develop the same candidate in the U.S. — a 50% cost savings that lets the same capital fund twice as many programs.
"We're going to make half as many medicines if we need twice as much money to make all of them," the investor said. "So is the goal to subsidize the Kendall Square labor ecosystem, or is it to maximize drug productivity?"
The COINS Act battle
Jason Kelly, chief executive officer of Ginkgo Bioworks, has emerged as the industry's most vocal critic of the China dependency. He argues the U.S. should add biotech to the list of sensitive industries covered by the COINS Act, enacted last year, which already restricts American investment in Chinese technologies such as advanced semiconductors and drones.
"This isn't just about ceding ground on manufacturing," Kelly said. "It's about the frontier. It's about who owns the future."
Seven Republican lawmakers, including Senator Tom Cotton of Arkansas, sent a letter to Treasury Secretary Scott Bessent in early 2026 urging him to add biotech to the COINS list, warning that inaction "risks hollowing out a critical American industry while strengthening that of a foreign adversary." The Treasury Department has not responded publicly.
The Pharmaceutical Research and Manufacturers of America, which spent a record sum on lobbying last year, opposes the idea. "We're not going to regulate ourselves to success here," said Robert Zirkelbach, PhRMA's chief public affairs officer. "The way we win is by making America the most attractive place in the world to invest."
Kelly has a personal stake in the outcome. Ginkgo has built an automated laboratory in Boston called Nebula, where interconnected robots perform the scientific grunt work of drug discovery. The company argues its machines can replicate the cost advantages of Chinese outsourcing without the geopolitical risk. Ginkgo's stock has fallen roughly 95% from its 2021 peak, and the automated lab is central to its turnaround plan.
The science gap widens
China's rise was not accidental. The country spent years working up the pharmaceutical value chain, first manufacturing chemical raw materials, then producing finished medicines, and now inventing drugs designed explicitly for Western acquirers, Kang said. "China is competing in the supply chain of ideas," she said.
The truly cutting-edge science — first-in-class mechanisms, novel targets — remains largely in American labs, Kang said. Where Chinese firms have dominated is on best-in-class drugs: taking existing concepts and making them longer-acting, more potent, or more convenient. They are building better mousetraps rather than reinventing pest control.
The domestic industry is already showing signs of strain. Greater Boston's laboratory vacancy rate has climbed to nearly 30%, according to real estate firm CBRE, from effectively zero as recently as 2023. Biotech jobs in Massachusetts declined year over year for the first time in two decades, according to the trade group MassBio.
"Biocom, the California-based trade group representing biotech firms, led a delegation of executives to China last month to broker introductions with the country's burgeoning research scene. "It's not a Cold War game of chess; it's a game of Twister," said Tim Scott, Biocom's CEO. "We're all over each other, and we have to just accept that and make the best of it."
What happens next
The schism shows no signs of healing. One faction wants the government to block Chinese drug deals entirely, arguing that the alternative is a future in which access to cancer medicines depends on geopolitical compliance with Beijing. The other sees Chinese partnerships as an evolution of global drug development — and accuses the doomsayers of crying Cold War because they cannot compete on the merits.
John Crowley, CEO of the trade group BIO, said capital is stateless and rational. If Chinese researchers are doing good science, someone will fund it. "It would be a fool's errand to try to stop what's happening in China," he said. "Let's look in the mirror. How do we win in biotech? How do we outcompete China?"
For investors, the question is which side the Trump administration takes. Adding biotech to the COINS list would immediately disrupt the deal flow that has become the industry's primary source of new pipeline assets, potentially triggering a wave of writedowns at companies that built their valuations on Chinese-licensed programs. A decision to leave the market open would accelerate the current trajectory, with Chinese-invented drugs projected to claim an even larger share of the global pipeline by 2030.
This article is for informational purposes only and does not constitute investment advice.
