Nomura: Framework for restrictions on Chinese biopharma is becoming clearer; expert expects manageable near-term impact

Why is the near-term impact expected to be manageable?

A lawyer specializing in cross-border export regulation and compliance, interviewed by Nomura on 3 November, said the policy framework is becoming clearer and transitional arrangements can help contain the near-term impact; over the longer term, however, restrictions could weigh on cross-border cooperation.
The lawyer expects companies designated as biotechnology companies of concern to face restrictions primarily on new contracts involving US federal funding. Existing contracts would generally be exempt and subject to a five-year transition period.
The cushion does not mean clients will necessarily wait until the transition period ends: the expert noted that some may terminate contracts early. The effective date and scope of the final list will therefore affect each company's actual exposure.

The expert expects the US Office of Management and Budget to publish a list of biotechnology companies of concern before 18 December 2026. It may include companies already on the 1260H list, as well as others designated separately by the office.
According to the expert, companies should receive 90 days' advance notice and have an opportunity to object to a proposed designation; which companies are ultimately included will be key to assessing the impact on each one.
Designated companies may also apply for removal from the list or seek relief through litigation. WuXi AppTec has filed a lawsuit over its inclusion on the 1260H list, but the expert noted that uncertainty during litigation may affect client behavior, and some clients have reportedly paused orders during this period.

The expert explained that a recent proposal under the COINS Act framework would bring Chinese biotechnology within the scope of restrictions, potentially taking effect in January 2027 or February.
Transactions in listed securities and IPO cornerstone investments, among others, may qualify for exclusions, while pre-IPO investments such as Series A and Series B rounds may face greater constraints; exactly which transactions qualify remains subject to implementing rules.
The expert believes that most major geopolitical tools targeting biotechnology supply chains, cooperation and investment are already in place, and subsequent attention will shift more toward specific company designations and enforcement.