China drafts ban on foreign takeovers of its cell and gene therapy and siRNA platforms

China's Ministry of Commerce published a draft revision of its export control list on Friday 16 October that would stop foreign buyers acquiring proprietary cell and gene therapy, siRNA and pathogen gain-of-function platforms developed in China ¹. The ministry says the restrictions would not reach licensing, partnerships or contract research involving these technologies ².

What the draft covers

Under the proposal, a platform means a reusable set of technologies capable of supporting more than one drug ¹. Outright foreign acquisition of such platforms in the three fields would be banned ¹. A second tier would restrict, rather than ban, the complete transfer overseas of proprietary target identification and verification technologies in cell and gene therapy and siRNA; deals in that tier would need regulatory approval ¹. Bloomberg Law, as summarised by STAT, counts five biomedical technologies being added to the list ². The biopharma items sit within a wider update covering 40 key technologies, including AI and photovoltaic energy ¹.

A Ministry of Commerce spokesperson said in a published Q&A that out-licensing and the use of know-how to deliver outsourced research and manufacturing services fall outside the ban, and that out-licensing of target identification and verification technologies would generally be approved ¹. The spokesperson described the aim as supporting "orderly international collaboration around China's biopharma technologies" and cited national security for the pathogen element ¹.

Comments on the draft are open until 15 November ¹.

What it means for the market

China's drug regulators put foreign transactions in Chinese biotech assets at $120 billion as of August, up 36% on a year earlier ¹. Most of that flow is unaffected on the draft's own terms. Western drugmakers and venture investors have mostly bought individual drugs or paid to use a Chinese platform to find new molecules, not bought the platform itself ¹. PharmCube data cited by Fierce Biotech show that only 5 of 121 cross-border out-licensing deals by Chinese biopharma companies this year, as of 1 July, involved a transfer of ownership ¹.

The deals most exposed are whole-company acquisitions built around a platform. Fierce Biotech names AstraZeneca's $1 billion purchase of Gracell Biotechnologies, owner of the FasTCAR CAR-T manufacturing platform and announced at the end of 2023, as a transaction that would probably not have been possible under the new rule ¹. For business development teams, the practical effect is that licence, royalty and milestone structures stay open while buying the engine that produces Chinese assets becomes far harder in these modalities.

Aaron Gu, a healthcare partner at Chinese law firm Han Kun, summed up the approach as "regulating transfers while leaving licensing unconstrained" and called the draft "significantly better than market expectations" ¹. A list that circulated online in May had also named multispecific antibodies, antibody-drug conjugates and protein degraders; none of those appears in the published draft ¹.

The move lands as Washington weighs its own curbs. The Biotech Investment National Security Act, introduced by Representatives John Moolenaar and Debbie Dingell to add scrutiny to China biopharma deals, has not advanced in Congress ¹.

Caveats

This is a draft, and its final scope may change after consultation ¹. Fierce Biotech notes that the real effect on Chinese biopharma deal flow may be limited, given how few deals transfer ownership ¹. Gu advised foreign buyers to carry out due diligence and said that until the revised catalogue is enacted, any export of technology within its scope must be registered with the Ministry of Commerce ¹.