The US Biosecure Act is back. How will Indian contract manufacturers benefit?

The Biosecure Act, a bill that was blocked from becoming law in 2024, was reintroduced as an amendment in a key defence spending bill that the US Senate approved on Friday, 10 October. Shares of companies such as Divi’s Laboratories, Syngene, Laurus Labs, Piramal Pharma, and Blue Jet Healthcare surged up to 5% on Friday on the news, anticipating that supply chains would shift away from China.

If the bill becomes law, these contract development and manufacturing organisations (CDMOs), as well as contract research organisations (CROs) that work with US drugmakers, are expected to benefit as US drugmakers look beyond China for new partners.

However, concerns over the act’s dilution, as well as uncertainties over the Trump administration drug policies, cloud the picture.

Mint explains how.

What is the Biosecure Act?

The Biosecure Act seeks to prevent companies that rely on government contracts and funding from working with certain Chinese biotechs. An earlier version was passed in the House of Representatives in September 2024, after several amendments. However, it was later stalled in the Senate and not included in the 2025 National Defense Authorization Act (NDAA), which authorises the country’s annual defence spending.

This year a new iteration, with a softer stance, was added as an amendment to the NDAA, which the US Senate approved late last week. The bill still needs to be approved in the House of Representatives and be sent to the President before it becomes law.

How is the new version different?

The amendment defines ‘companies of concern’ as those that are an extension of the Chinese military and those that answer to a “foreign adversary” or otherwise pose a national security risk to the United States. However, it refrains from mentioning certain companies that were included in the earlier version of the bill.

“The 2025 version of the Biosecure Act has been diluted compared with the 2024 version as it avoids specific mention of WuXi AppTec, WuXi Biologics, BGI, MGI, and Complete Genomics as biotechnology companies of concern,” Nuvama analysts said in a September 12 note reviewing the draft bill.

Instead of singling out the five Chinese players, the amended version refers to a list of “Chinese military companies” from the US Office of Management and Budget. This list includes companies such as BGI, Forensic Genomics International, MGI and Origincell Technology, but not the WuXi companies.

If the bill is passed, the list is also expected to be updated every year.

How do Indian CDMOs stand to gain?

Indian CDMOs and CRDMOs have been positioning themselves as competitors to Chinese companies for the past few years as many countries have looked to diversify supply chains beyond China. Several are investing aggressively to increase capacity and strengthen their technical capabilities.

Divi’s Laboratories, the country’s largest CDMO player (and second largest pharma company by market cap), is expected to spend ₹2,000 crore in capex to expand capacity and on strategic projects such as the Unit III greenfield project in Kakinada to increase backward integration. Mumbai’s Piramal Pharma plans to spend $100-125 million in 2025 to expand capacity, chairperson Nandini Piramal told Mint in July.

Many of the country’s CDMOs and CRDMOs have caught the fancy of investors and are trading at high valuations, but these valuations could rise further, analysts said. “The past, unapproved version of the Biosecure Act led to increased inquiries and project wins by Indian CDMOs. The renewed push on the act could again bring the focus back on the supply-chain security for innovators, potentially benefitting Indian companies once more,” Nuvama analysts noted.

Expectations from the country’s growing contract manufacturing sector had been growing even before the bill was revived. According to a report by BCG, India’s CRDMO industry is worth $3-3.5 billion today and could grow to $25 billion by 2035. It currently accounts for only 2-3% of the global market, which is worth $145 billion.

How soon will this happen?

Should the bill become law, however, its effects probably won’t be immediate. While Indian CDMOs have reported an uptick in interest from drug innovators to hire their services, actual contracts take time, experts said. Also, Indian companies need to benchmark themselves against Chinese peers to be able to compete with them on cost and agility.

Suresh Subramanian, national lifesciences leader at EY Parthenon India, told Mint in an earlier conversation that Indian companies can compete with Chinese firms, but need to answer questions about digitisation, process improvement, and how they can match costs.

“What Indian companies are asking is how can we benchmark ourselves with Chinese companies, how can we compete with them in terms of cost and agility?” he said.

Concerns around US policies around pharmaceutical imports persist, too. While generics exported from India to the US have been exempted from Trump’s 100% tariff, uncertainty persists over which companies will be affected in the end.

The administration is pursuing two separate economic goals: imposing tariffs to curb offshore manufacturing of goods, and using Most-Favoured Nation (MFN) pricing models to negotiate lower drug costs with large pharmaceutical innovators.

Meanwhile, the Trump administration continues to press US pharma giants such as Pfizer to accept most-favoured nation (MFN) pricing, the second part of Trump’s two-pronged strategy to reduce drug prices for American consumers. In this scenario, uncertainty remains over how India’s top CDMOs, which largely work on contract for these innovators, will be affected.