BIOSECURE Act
The BIOSECURE Act is bipartisan legislation introduced in January 2024 by Reps. Mike Gallagher (R-Wis.) and Raja Krishnamoorthi (D-Ill.). It aims to prevent “foreign adversary biotech companies” from accessing U.S. taxpayer dollars and health information. The act is scheduled for a vote in the coming months.
The bill explicitly targets several China-based biotechs including WuXi Biologics, AppTec, Complete Genomics, Beijing Genomics Institute, MGI, and Vazyme Biotech among others. All have been labeled “companies of concern.” To contextualize the impact, WuXi Biologics alone does an estimated $100B annually with US Pharmaceutical Companies.
The act would force pharmaceutical companies to choose between US government contracts or maintaining relationships with these China-based companies. The proposed legislation also bans entities from entering into new agreements or extending existing contracts with these companies by 2032.
Even though the legislation has not yet passed – and may be delayed due to 2024 elections – it’s part of a larger push to get US Pharma Companies to onshore, or re-shore, their drug product contract manufacturing capability. The impacts are already being felt. Many US Pharma Companies have paused their manufacturing investments in China and are investigating in different locations and impacts on Supply Chains. Given that it takes between five and ten years to set up, test, and launch a new drug product manufacturing facility, the deadline of January 1, 2032, is not that far away.
With the new BIOSECURE Act, disruption awaits the pharmaceutical supply chain and now is the time to plan for the future bureaucracy.
Pharma Should Capitalize on its Preparation Activities to Holistically Assess its Total Supply Chain Risk and Degree of Digitization
Pharmaceutical companies thinking of “just finding and building a new manufacturing capability in a more friendly location” may be missing out on an opportunity to positively impact their Enterprise. The risks associated with complying with the BIOSECURE Act must be addressed. However, addressing that risk presents other opportunities to create leaner, potentially more robust supply chain capabilities.
Conduct a Rigorous Supplier Risk Assessment
- Review current Supplier Risk Management (SRM) programs and processes currently implemented for efficacy and define tactical opportunities for improvement. Read more about Supplier Risk Management here.
- Create or expand SRM programs to assess the potential for disruptions with People’s Republic of China (PRC) suppliers, including development and research components, as well as long-term supplier viability.
- Conduct a detailed inventory of the intellectual property involved in the supply chain and determine where the company is over-reliant on PRC technology (i.e., the Chinese company owns the needed technology, and any successful transition might require a license of that technology from the Chinese company)
Conduct a Procurement Spend Analysis
- Employ data and analytics experts with extensive Enterprise Resource Planning (ERP) backgrounds to enable the extraction of data from source systems and identify procurement opportunities.
- Key analyses should include strategic spending analysis, pricing analysis, credits/rebates monitoring, payment term alignment, payables discount validation, and prioritization.
- Identify overlaps, gaps, and potential areas for cost reduction and over-reliance.
- Start the process of identifying alternative vendors.
Conduct a Strategic Process Optimization Assessment
- Leverage functional process experts across the Supply Chain landscape (Procurement, Demand and Supply Planning, Production Planning, Warehousing, and Logistics) to identify quick hit, foundational, and transformational initiatives across the Supply Chain.
- After conducting a Supply Chain Network analysis, look for process optimization opportunities that align with PRC bottlenecks and channel reliance.
- Development of strategic centralized process roadmap / portfolio of activities.
- Read more about Procurement Optimization Strategies here.
Embark (or Reboot) Supply Chain Digital Transformation
- Few companies succeed in creating a true “omnichannel supply chain” through digital transformation; factoring new manufacturing capabilities into a digital supply chain strategy presents a unique and rare opportunity to truly connect multiple business units and geographies.
- A digital supply chain strategy can also help focus, expose, and highlight different technology-focused initiatives that are succeeding or failing.
- A digital supply chain strategy can also help build consensus with corporate stakeholders when considering where and when to break ground on new manufacturing capabilities.
- Read more about building a resilient supply chain here.
Addressing and planning for political uncertainties and changing compliance landscapes does not have to be a “sunk cost.” Duplicate your assessment results so that you are prepared to either pivot or finalize your decision.
About Liberty Advisor Group
Liberty Advisor Group is a goal-oriented, client-focused, and results-driven consulting firm. We are a lean, handpicked team of strategists, technologists, and entrepreneurs – battle-tested experts with a steadfast, start-up attitude. We collaborate, integrate, and ideate in real-time with our clients to deliver situation-specific solutions that work. Liberty Advisor Group has the experience to realize our clients’ highest ambitions. Learn more on LinkedIn and Twitter.
