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New US trade policy may limit foreign investment into biotechs

pharmafile | October 11, 2018 | News story | Research and Development CIFUS, Trump, america, biotech, capital, foreign investment 

The US Trump Administration have issued new rules, which will put foreign investment into companies involved in the development and testing of critical technologies, including biotechs, under additional scrutiny.

The legislation, which is aimed at protecting American trade secrets from being leaked to hostile foreign powers, will require companies to report deals involving critical technologies to the Committee on Foreign Investment (CFIUS). The laws will also allow the government body to review those agreements.

Established in 1975, Cfius was created with the aim of vetting foreign investment for potential security threats. However the new law significantly expands the committee’s responsibilities.

The ruling comes within the context of the US-China trade war. The legislation will however effect foreign investment into US biotechs, at a time when Asian and particularly Chinese investors are channelling significant capitals into US pharma firms. Notably in the first nine months of 2018 43% of private biotech deals involved at least one Asian investor.  

The rules will come into effect on the 10th of November 2018. Other industries that will be affected include those surrounding semiconductors and aircraft manufacturing.

Louis Goss

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