Screening China-Origin Biotech IP: A New U.S.-EU Divide

In the twelve months bracketing the turn of 2026, the United States Congress and the European Council finalized opposite regulatory frameworks for the same problem — and life sciences dealmakers have not caught up.

Chinese biopharmaceutical out-licensing reached roughly $110 billion across 81 deals in the first half of 2026 alone, already 80% of all of 2025’s record total[1], with licensees from the United States, Britain, France, and Italy. Antibody-drug conjugates (ADCs) alone account for nearly 90% of that volume.[2] Every major global pharmaceutical company now has, or is negotiating, a China-origin asset in its pipeline. The question this article addresses is narrower than the deal boom itself: what happens when a government decides that acquiring the underlying intellectual property, not just the finished molecule, is itself a risk to be managed and what happens when the two governing bodies most likely to regulate that acquisition choose fundamentally different ways to do it?

The U.S. Is Building a Licensing-Specific Tool

The Comprehensive Outbound Investment National Security (COINS) Act, enacted as part of the fiscal year 2026 National Defense Authorization Act, created the Treasury Department’s first outbound investment screening regime with statutory force.[3] It operates through a two-tier prohibit-or-notify structure, administered by Treasury alone, with no interagency committee comparable to the Committee on Foreign Investment in the United States. Its covered sectors are semiconductors, artificial intelligence, quantum computing, high-performance computing, and hypersonics. Biotechnology is conspicuously absent, and implementing regulations are not due until March 2027.

Biotech’s omission is the gap the Biotech Investment National Security Act (BINSA) is designed to close. Introduced as H.R. 9102 on June 2, 2026, it amends Section 809 of Title VIII of the Defense Production Act, the same provision the outbound investment act relies on, to insert biotechnology into both the notifiable and prohibited technology lists. The definition is drafted broadly to be applicable to everyone: research, development, manufacturing, or commercialization of therapeutic compounds, “including drug discovery platforms, clinical research and development capabilities, biologics manufacturing, and intellectual property and know-how relating to therapeutic compounds.” The bill’s most consequential line adds a new covered-transaction category – namely, licensing a prohibited technology from a covered foreign person – meaning the statute would reach the licensing agreement itself, not merely an equity stake or acquisition.[4]

H.R. 9102 has had no committee action beyond referral, no hearing scheduled and no Congressional Budget Office estimate as of this writing.[5] Treasury could, in principle, add biotechnology as a covered sector by rulemaking under the outbound investment act’s existing authority without new legislation. The bill is, by every available signal, a longer-term legislative project rather than an imminent rule.

A third instrument reaches the same terrain from a different angle. The Biosecure Act, also enacted December 18, 2025, bars federal agencies from contracting with, or extending federal grants and loans to, any company that uses equipment or services from a designated “biotechnology company of concern” in performing federally funded work, a restriction that follows the money into the supply chain of any contractor, foreign or domestic, several steps removed from the original transaction.[6]

The EU Chose a Narrower Framework

The European Union’s revised foreign direct investment screening regulation, finalized in June 2026 and formally applicable on January 17, 2028, took the opposite structural approach in the identical window.[7] The European Commission’s original January 2024 proposal had included “critical medicines” among the sectors subject to mandatory Member State authorization. The Council removed it by restructuring the entire mandatory list to track the European Union’s existing, legally precise export-control frameworks for dual-use goods and defense items, and relegating everything less precise, critical medicines included, to a discretionary risk-assessment tier.[8]

The result is that the final regulation’s mandatory authorization list covers dual-use and defense goods, semiconductor and quantum technologies, artificial intelligence research and development, critical infrastructure, strategic raw materials, financial market infrastructure and electoral systems. There is no life-sciences, pharmaceutical, or biotechnology category. Public health survives only as one of several factors Member States and the Commission “shall” consider under Article 19 when a transaction is already inside a national screening mechanism for some other reason, such as a risk factor, not a filing trigger. The European Parliament expanded the mandatory list during negotiation to add media services, transport infrastructure, and critical raw materials, but at no point did it propose restoring medicines or health.[9]

The practical consequence for a European life sciences patent owner or acquirer is that nothing in the regulation itself obliges a Member State to review a transaction because it involves biotechnology, drug discovery IP or a Chinese licensor, no matter the deal’s size or significance. The regulation also sets only a minimum harmonization floor. Member States remain free to go further under national law[10] which is precisely where the transatlantic comparison gets interesting.

National Law Fills Part of the Gap – But Only Inbound

Germany, France, Italy, and Spain already treat life sciences, pharmaceuticals or biotechnology as sensitive sectors under their own foreign investment statutes, largely as a legacy of amendments made during the 2020 pandemic. Germany’s Foreign Trade and Payments Act and Ordinance require non-EU investors to notify before acquiring a 10% to 20% stake in a company developing or manufacturing medical devices or pharmaceuticals.[11] France added biotechnology to its list of critical technologies under the Monetary and Financial Code in April 2020.[12] Spain lists biotechnologies among its critical technologies under Law 19/2003, with public health as an independent ground for review.[13] The Netherlands will become the first Member State to place biotechnology, including gene editing and genomics, inside a mandatory filing regime, effective January 1, 2027, a full year ahead of the EU regulation’s own application date.[14]

Italy’s Golden Power regime goes furthest and is the one European mechanism patent counsel should read closely. It expressly extends to the “licensing or transfer of strategically relevant intellectual property rights,” including patents and know-how, in its healthcare and pharmaceutical sector.[15] That is the closest European analogue to the licensing issue Congress is debating in H.R. 9102.

But every one of these mechanisms, without exception, is inbound. Each protects a domestic target from a foreign acquirer or licensee. None of them constrains a German, French, Italian or Spanish company’s own decision to in-license a Chinese asset. The legal architecture that the United States is actively building, a control on outbound acquisition of foreign biotech IP, has no European counterpart at either the EU or Member State level.

The Uncovered Transaction

The sharpest point for cross-border counsel is what falls outside every instrument on both sides of the Atlantic simultaneously. The outbound investment act and its proposed biotechnology amendment reach a European party only through a US nexus: a controlled foreign entity of a U.S. parent, a U.S. person “knowingly directing” a non-U.S. entity’s transaction, or a U.S. limited partner in a fund investing in a country of concern. The Biosecure Act’s reach depends on federal contracting, grants or supply-chain exposure.[16] Neither statute purports to reach a wholly European company, with no U.S. person involved and no federal funding anywhere in the structure, that licenses a Chinese ADC or bispecific platform on its own account.

That same transaction sits outside the EU regulation and outside every Member State regime described above, because all of them govern inbound acquisitions of domestic targets, not a domestic company’s own outward-facing licensing decisions. Therefore, on the current text of every relevant statute and regulation, a European pharmaceutical company licensing China-origin biotech IP through a structure with no U.S. or EU-regulated nexus faces no ownership-based regulatory review anywhere.[17]

Coordination Risk and Practical Implications

Three practical steps follow for counsel advising European life sciences companies with U.S. operations, investors or commercial ambitions.

First, deal teams should map every U.S. nexus in a proposed China-origin licensing transaction before signing, be it federal contracts or federally funded research collaborations, because any one of them could bring a European deal within the outbound investment act’s reach even before Treasury finalizes implementing rules.

Second, counsel should track H.R. 9102 and any Treasury rulemaking under the existing outbound investment act in parallel, since Treasury could add biotechnology as a covered sector administratively, on a faster timeline than the bill’s own legislative path suggests.

Third, portfolio-level diligence on China-origin assets should now include a jurisdiction-by-jurisdiction national screening check, including Germany, France, Italy, Spain and, from 2027, the Netherlands, even though no single one of those checks currently reaches the licensing transaction itself, because the discretionary risk factors under the EU regulation’s Article 19 mean a deal that clears the mandatory list can still be revisited for up to five years after closing if it happens to fall within a Member State’s broader national net for some other reason.[18]

The United States is treating China-origin biotech licensing as a national security question and building statutory tools aimed specifically at the license itself. The European Union, over the same period, deliberately narrowed its own mandatory screening to exclude life sciences entirely, leaving the field to national law that was never designed to reach outbound transactions in the first place. European life sciences companies that assume Brussels or their home Member State will eventually mirror Washington’s approach may be reading the wrong side of the Atlantic. Companies that treat the absence of European ownership controls as a permanent feature, rather than a live legislative question tied to a Commission review due later this year, will find that assumption tested first.

[1] China’s innovative drug out-licensing deal value reaches new high in first half of 2026 (July 13, 2026). https://www.reuters.com/legal/litigation/china-innovative-drug-out-licensing-deal-value-reaches-new-high-first-half-2026-2026-07-13/

[2] China biotech licensing boom set to hit record in 2026 as pipeline swells (Feb. 13, 2026) (Vision Lifesciences data on ADC share of global licensing). https://www.reuters.com/sustainability/climate-energy/china-biotech-licensing-boom-hit-record-2026-pipeline-swells-2026-02-13/

[3] Comprehensive Outbound Investment National Security Act of 2025 (COINS Act), enacted as Title LXXXV, Subtitle C, National Defense Authorization Act for Fiscal Year 2026, Pub. L. No. 119-60 (Dec. 18, 2025)

[4] H.R. 9102, 119th Cong. § 2 (2026) (text), Congress.gov (amending 50 U.S.C. § 4589 to add biotechnology, including “intellectual property and know-how relating to therapeutic compounds,” as a covered/prohibited technology, and adding licensing from a covered foreign person as a covered transaction). https://www.congress.gov/bill/119th-congress/house-bill/9102/text

[5] H.R. 9102, All Actions, Congress.gov (no committee hearing, markup, or CBO score as of this writing); https://www.congress.gov/bill/119th-congress/house-bill/9102/all-actions

[6] The BIOSECURE Act Becomes Law: Implications for Collaborations With Biotechnology Companies of Concern (2026); BIOSECURE Act, § 851, National Defense Authorization Act for Fiscal Year 2026, Pub. L. No. 119-60 (Dec. 18, 2025). https://sanctionsnews.bakermckenzie.com/the-biosecure-act-becomes-law-implications-for-collaborations-with-biotechnology-companies-of-concern/

[7] Regulation of the European Parliament and of the Council on the screening of foreign investments in the Union, final text PE-CONS 10/1/26 REV 1, art. 4(15) (mandatory scope) (June 2026). https://data.consilium.europa.eu/doc/document/PE-10-2026-REV-1/en/pdf

[8] PE-CONS 10/1/26 REV 1, art. 19(1)(h) & Annex IV (public health / critical medicines as a discretionary risk-assessment factor, not a mandatory filing trigger); European Commission, Proposal for a Regulation on Screening of Foreign Investments, COM(2024) 23 (Jan. 2024) (original inclusion of “critical medicines” in mandatory Annex II). https://data.consilium.europa.eu/doc/document/PE-10-2026-REV-1/en/pdf

[9] European Parliament, Press Release, Protecting EU Strategic Sectors From Risky Foreign Investments (May 13, 2026) https://www.europarl.europa.eu/news/en/press-room/20260513IPR43304/protecting-eu-strategic-sectors-from-risky-foreign-investments

[10] CELIS Institute, Tug-of-War? Determining the Mandatory Scope for the New FDI Screening Regulation (2026) https://www.celis.institute/celis-blog/tug-of-war-determining-the-mandatory-scope-for-the-new-fdi-screening-regulation/

[11] Expert Guide to Foreign Investment Screening Laws — Germany (Außenwirtschaftsgesetz (AWG) and Außenwirtschaftsverordnung (AWV)).

https://cms.law/en/int/expert-guides/cms-expert-guide-to-foreign-investment-screening-laws/germany

[12] Direction générale du Trésor, COVID-19: Update of the Foreign Direct Investment Screening Procedure in France (Apr. 30, 2020). https://www.tresor.economie.gouv.fr/Articles/2020/04/30/covid-19-update-of-the-foreign-direct-investment-screening-procedure-in-france

[13] Expert Guide to Foreign Investment Screening Laws — Spain (Law 19/2003 of July 4, 2003, art. 7 bis; Royal Decree 571/2023). https://cms.law/en/int/expert-guides/cms-expert-guide-to-foreign-investment-screening-laws/spain

[14] What the Vifo Act Expansion and First-Ever FDI Prohibition Mean for Dutch M&A (2026). https://www.nautadutilh.com/en/insights/what-the-vifo-act-expansion-and-first-ever-fdi-prohibition-mean-for-dutch-ma/

[15] An Introduction to the Italian Golden Power Law 2026. https://www.jdsupra.com/post/fileServer.aspx?fName=593f8dec-e0ea-4fa9-8e72-df6250b9fffb.pdf

[16] BIOSECURE Act for UK and EU Life Sciences Companies: Navigating China/US Contract Risk (2026) (no express extraterritoriality provision; nexus triggers for non-US companies through federal procurement, grants, and US counterparties’ risk appetite). https://inquisitiveminds.bristows.com/post/102ne3t/biosecure-act-for-uk-and-eu-life-sciences-companies-navigating-chinaus-contract

[17]Council on Foreign Relations, The Pharma Choke Point (June 2026). https://www.cfr.org/reports/the-pharma-choke-point

[18]PE-CONS 10/1/26 REV 1, art. 3(1). https://policy.trade.ec.europa.eu/news/eu-strengthens-its-foreign-investment-screening-framework-2026-06-26_en