Source: Finance Association

The big stick that has been hanging for many days has finally ushered in phased results. At 10 a.m. on May 15, US time, the US House Oversight and Accountability Committee held a hearing to review various bills. Among them, the new version of the “Biosafety Bill” in the House of Representatives was finally passed with a 40-1 vote after on-site discussions and a long adjournment.

The industry is not surprised by the results, believing that this means that the bill has taken another important step towards formal entry into force, and has entered the stage of simultaneous progress with the Senate version of the bill. Furthermore, since the bill fully takes into account the opinions of US pharmaceutical organizations and companies, the pace of the legislative process will accelerate, and special attention should be paid to the “run-in” between the two houses after each version of the bill has been voted on.

40-1! The bill was overwhelmingly passed during the hearing

The hearing was held in Washington, D.C., and was delayed by more than ten minutes compared to the scheduled start time of 10 o'clock.

At the hearing, all members reviewed, discussed, and voted on the nine bills. Among them, the new “Biosafety Act”, which received the most attention from the domestic pharmaceutical industry, was originally ranked in section 2, but the bill was discussed as soon as the hearing began. James Comer, chairman of the US House Oversight and Accountability Committee, Jamie Raskin, and senior member of the US-China Special Competition Commission, Raja Krishnamoorthi, took turns speaking in support of the bill. The bill was then supposed to enter the oral voting stage, but James Comer announced that voting was postponed due to a member present calling for a recorded vote on the measure. Voting on several bills that followed that night was also postponed.

At around 12:00 local time in the US, James Comer announced the temporary adjournment of the hearing, and the hearing resumed at around 14:30

In the end, at around 14:40 local time on the 15th, the new “Biosafety Act” was voted on site. After statistics from on-site staff, the final voting results were fixed at 40-1, and the new “Biosafety Act” was overwhelmingly passed.

According to financial news agencies, the next step is to revise the bill and submit it to the House of Representatives for full review, discussion, and voting.

According to reports, the new version of the “Biosafety Act” was initiated by Republican Congressman Brad R. Wenstrup, and continues the legislative process of the “Biosafety Act” initiated by Republican Congressman Mike Gallagher, who has already retired in April. The other co-sponsors of the two versions of the bill are almost identical.

Compared with the previous version, the new version of the “Biosafety Act”, in terms of the enterprises involved, the previous Huada Department,$WUXI APPTEC (02359.HK)$On the basis of subsidiaries, it was clearly added$WUXI BIO (02269.HK)$. At the same time, an 8-year exemption period and other related content have also been added.

This means: First, from the time the bill comes into effect until the end of the first phase of the exemption period. At this stage, companies covered by the bill can continue to receive new orders from US pharmaceutical companies. The law takes effect 60 days after implementation, after which there is a 365 day exemption period, and they can continue to apply and extend for 180 days after expiration. The second phase will continue from the end of the first phase exemption period until 2032. At this stage, companies covered by the Act will no longer be allowed to accept new orders, but they can continue to execute the signed orders.

Zhan Kai, partner attorney at Shanghai Yuanda Winston, who is familiar with the operation of US congressional legislation, told the Financial Federation that this means that the bill will be another important step towards officially entering into force. Since the previous Senate version of a similar bill is already preparing to enter the Senate plenary discussion and voting stage, the House of Representatives will also bargain on the details of the bill's provisions in the next step.

Zhan Kai believes that although the bill is still a long way from being officially passed and signed into effect, since members of both houses of the US Congress currently maintain the same tone on China issues, I'm afraid the bill is still very likely to be officially implemented in the future, and it will have a certain impact on Chinese biomedical companies at that time.

According to the industry, rapid decoupling is not in the interests of the US industry and we need to focus on the run-in between the two houses of law

Regarding the passage of the “Biosafety Bill” at the hearing, many industry insiders told reporters, “Not surprisingly, the progress of this bill in the House of Representatives will not be greatly hindered until negotiations and collusion with the two versions of the bill in the Senate. ”

In this regard, Zhao Heng, founder of medical strategy consulting firm Latitude Health, told CFA reporters that it is necessary to focus on the Senate's reaction to the 8-year exemption clause because the “Biosafety Act” (S.3558), which was previously passed through a hearing vote by a committee under the Senate, did not leave a mitigation period for the US pharmaceutical industry involved in China to reduce its dependency in this regard.

Zhan Kai told reporters that because both houses must pass the exact same version of the bill, if there are differences, they can be resolved by sending back and forth amendments or convening a consultation committee with members of the two houses.

“Therefore, this negotiation and run-in process, as well as the content involved, will be the next focus of attention in the legislative process of this bill.” Zhao Heng told reporters.

It is worth mentioning that the day before the US House Oversight and Accountability Committee held a hearing on the 15th, the US White House announced through a press release that it will drastically raise tariffs on a range of products imported from China, such as electric vehicles, chips, and medical products. In addition, the US election is gradually approaching, the development of this bill in the US Congress has also made the industry feel a sense of urgency.

However, Zhao Heng is not worried that the bill will advance in the direction of a “malicious spiral.” He said, “A bill that cannot be implemented has no value, and it is not in the interests of the business community to maliciously decouple or rapidly decouple from China's CRO industry chain.”

Also, in response to the recent concerns of the domestic pharmaceutical industry about the binding power and binding targets of the new “Biosafety Act”, Zhan Kai told the Financial Federation reporter that according to the original text of the new “Biosafety Act” and the practice of previous US congressional legislation, although it is only specified that the binding targets are relevant US government departments and companies receiving federal funding, US companies will also focus on considering relevant government laws and tendencies when carrying out business activities and choosing partners. Moreover, the US government and related departments are major buyers of US pharmaceutical companies, so if the bill is passed, it involves US pharmaceutical companies The dealings of Chinese companies have a profound impact.

“Moreover, some non-US pharmaceutical companies that are listed on US stocks or have a large market size in the US will also pay attention to trends and be more cautious.” Zhan Kai added.

CFA reporters will continue to monitor legislative developments in the US Congress following the Biosafety Act.

(CFA reporter He Fan also contributed to this article)

editor/tolk