Biden Announces Biotechnology and Biomanufacturing Initiative, Souring Sentiment for Chinese CXOs

On Sept. 12, President Biden signed an executive order to create the National Biotechnology and Biomanufacturing Initiative. One of its goals is to improve U.S. manufacturing capacity for various biologics products. This includes medicinal biologics, which are a major source of revenue for some Chinese contract service organizations, or CXOs. On one hand, the tone of the press release sounded quite protectionist. An exclusionary policy toward medicinal biologics would hurt Chinese CXOs that derive significant revenue from U.S. biotech clients. On the other hand, the order’s text suggests that the policy will be stimulatory in nature rather than exclusionary, perhaps focusing on subsidies and investments, which we think is fairly benign for Chinese CXOs.