A Memo for the President on Preserving U.S. Leadership in Biotechnology
Hello, I’m Ylli Bajraktari, CEO of the Special Competitive Studies Project. In this edition of 2-2-2, SCSP’s Future Technology Platforms team makes the tech competition case for why we need a National Action Plan for U.S. Leadership in Biotechnology in the style of a Memo to the President of the United States.
SCSP Releases National Action Plan for U.S. Leadership in Biotechnology
Today, April 12, the SCSP’s Platforms Panel released its National Action Plan for U.S. Leadership in Biotechnology, which outlines a series of policy recommendations the United States should take to ensure American leadership in biotechnology through 2030 and beyond. This will be the first of a series of action plans that will be published throughout the year focused on the battleground technologies SCSP identified in last year’s Mid-Decade Challenges to National Competitiveness report.
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Global leadership in biotechnology continues to trend toward the United States but China is organizing to compete.
Both countries are making policy moves to structurally organize, even though the United States continues to lead in biotechnology investments and remains home to the large majority of the world’s leading biotechnology companies and innovators.
Organization: Over the past few years, the United States has made structural moves to direct government resources toward biotechnology, arguably matching the People’s Republic of China (PRC) in terms of organizational ambition. Beijing’s “14th Five Year Plan for Bioeconomic Development,” issued in May 2022, outlines the country’s ambitious strategy to lead in biotechnology by 2035, suggesting that PRC industrial planners are pivoting the domestic biotechnology industry beyond past competencies in contract research and contract manufacturing toward building more capacity for drug development innovations. Over the past few years, the White House has issued a landmark Executive Order on Advancing Biotechnology and Biomanufacturing Innovation, published the follow-on Bold Goals for U.S. Biotechnology and Biomanufacturing, and launched the Advanced Research Projects for Health (ARPA-H). ARPA-H and the congressionally created National Security Commission on Emerging Biotechnology are two new biotechnology-focused government entities that have come online to develop and strategize U.S. biotechnology leadership.
Summary of China’s 14th Five-Year Plan for Bioeconomy Development: areas of focus, implementation vehicles, and desired outcomes. Source: The Roadmap of Bioeconomy in China (2022)
Investments: The United States remains the world’s leading originator and destination of global biotechnology investments, with U.S.-based biotechnology firms raising $466 billion worth of capital, exceeding PRC-origin capital tenfold. Roughly 87 percent of that U.S. capital is invested domestically, suggesting that the United States continues to serve as both a global innovation hub and a marketplace for leading edge biotechnology R&D and commercialization. Meanwhile, nearly 20 percent of the biotechnology capital raised in the PRC is invested in the United States, one indicator of the degree to which China relies on its investment, research, and commercial ties with the United States and foreign entities for its own domestic development.
The United States (dark blue) has consistently led the world in biotechnology investments, with the United Kingdom (light blue) in 2022 coming in second and China (grey) ranking third. Source: Pitchbook Data, Inc.
Publications & Patents: An examination of biotechnology publications, patents, and citations paints a mixed picture in terms of U.S. versus PRC advantage. According to some measurements, PRC institutions hold leading positions in the most highly-cited synthetic biology and biomanufacturing publications. However, in terms of patents (which carry more legal weight than publications), the United States is more widely cited over the same two biotech subsectors.
Firmographics: As of last year, the U.S. has the largest number of biotechnology enterprises in the world, almost three times as many as China. As of 2021, U.S. companies still account for 46 percent of biopharmaceutical-based drugs in the R&D pipeline. The U.S. has higher-valued biotechnology unicorns, and U.S. venture capital firms led investments in biotechnology in 2021, sometimes doubling the total investment rounds as PRC firms. That said, there are some PRC firms with global reach in the biomanufacturing segment of the industry: Wuxi AppTec is one of the world’s largest Contract Manufacturing Organizations (CMOs) and BGI has one of the world’s largest DNA sequencing capacities. Notably, both firms have been under growing scrutiny by U.S. regulators.
Chokepoints: Manufacturing capacity is perhaps one of the key areas of strength for China in biotechnology and by extension a potential geopolitical chokepoint. Lower production costs, a growing domestic market, and supportive government policies have propelled China to becoming a global hub for Contract Manufacturing Organizations — an essential ingredient for biotechnology companies to produce at scale. While these activities represent the lower end of the biotechnology value chain, they are nonetheless high-tech, and high-skill, and build a solid foundation of technology for future innovation. Drug production capacity in the United States, meanwhile, is on the decline, potentially creating a critical strategic supply chain vulnerability.
China’s biotech industry is dominated by contract research and contract manufacturing organizations, however the growing valuations of PRC biotech companies suggests that domestic firms’ capacity for developing true biotech innovations is increasing. Source: The Dawn of China Biopharma Innovation, McKinsey & Company (2021).
It is against this backdrop that we present to you the National Action Plan for U.S. Leadership in Biotechnology, which outlines a series of actions that would help preserve U.S. leadership in this essential and strategic sector.
This action plan provides a biotechnology policy roadmap for a coordinated effort among academia, the private sector, and government to establish U.S. leadership in this critical technology through 2030, alongside our allies and partners, from a national security perspective. Recommendations in the action plan include:
Launching biotechnology moonshots to advance fundamental science and technology;
Aligning biotechnology commercialization, diffusion, and scale through targeted government incentivization measures;
Developing new public-private partnerships across the innovation ecosystem that better connect our universities, national labs, and biomanufacturing institutes;
Building the supporting infrastructure that will allow the United States to tap into biotechnology’s full potential;
Cultivating, attracting, and retaining global biotechnology talent in the United States;
Securing the inputs for a thriving bioeconomy, such as fermenter capacity and DNA sequencers;
Unite democratic allies and partners competitive advantages through partnerships like biomanufacturing alliances and data-sharing agreements; and
Running faster with guardrails to ensure that U.S. investments do not inadvertently aid the biotech advancements of our strategic adversaries counter to our national security interests.
There is no consensus definition for biotechnology. The U.S. National Science Foundation (NSF) and the Organisation for Economic Co-operation and Development (OECD) use the definition of “the broad application of science and technology to living organisms, as well as parts, products and models thereof, to alter living or nonliving materials for the production of knowledge, goods and services.” As such, this definition encompasses sectors including biopharmaceuticals and synthetic biology.
The statistics in this section are derived from PitchBook Data, Inc.