U.S. Crackdown On Foreign Investments Could Cool Asia’s Desire For U.S. Biotech

Damian Garde, Stat

October 10, 2018

The Trump administration on Wednesday issued new rules that will put some foreign investment in U.S. biotech under heightened scrutiny, a sweeping measure that comes as Asian investors pour billions into stateside drug developers.


Biotech is among 27 industries subject to Treasury Department rules, which mandate that foreign investments in “critical technologies” undergo review by the Committee on Foreign Investment in the U.S., or CFIUS. That committee has the power to block deals if it deems them a threat to national security or U.S. “technological superiority.” Those who don’t submit to the review could face fines as high as their proposed investments.


The rules, which take effect Nov. 10, come amid a groundswell of Asian interest in U.S. biotech. In the first nine months of 2018, 43 percent of private biotech deals included at least one Asian investor, up from just 11 percent in 2016, according to data from Pitchbook.

The Treasury’s move would introduce a process that could significantly slow that pace. According to the rules, foreign investments that result in a U.S. company sharing nonpublic information are subject to federal review, a provision that all but guarantees every overseas biotech deal will undergo scrutiny.


CFIUS previously had authority only over deals that gave foreign investors a controlling stake.


The new provisions are part of a pilot program authorized by a bipartisan bill, signed in August, designed to strengthen CFIUS’s ability to block deals that might threaten national security. The administration’s move comes amid an escalating trade war with China and follows President Trump’s oft-stated concerns about Chinese companies stealing U.S. technology.


Other industries covered by the rules include semiconductors, missiles, and aircraft.

Posted in: R&D, Regulatory

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