The Law That Could Slam the Brakes on Pharma's Favorite Shopping Spree
Congress wants to expand a national security law to cover biotech, potentially disrupting a $137 billion China-to-U.S. licensing boom. The COINS Act could force every cross-border deal through a government screening process, and Big Pharma's favorite pipeline is in the crosshairs.
U.S. pharma companies spent the last two years on a shopping spree in China. Now Congress wants to cut up the credit card.
A push to expand the COINS Act (Comprehensive Outbound Investment National Security Act) into biotechnology could throw a wrench into the fastest-growing deal pipeline in the industry. The law already restricts U.S. capital flowing to China in AI, semiconductors, and quantum tech. Adding biotech to that list would put a massive, booming licensing market directly in the crosshairs.
And we're not talking about a small market.
The Boom Nobody Wants to Talk About
Cross-border licensing of Chinese biotech assets has gone from niche to nuclear. In 2025, companies in greater China signed 186 out-licensing deals worth a combined $137.7 billion in total value. That's roughly 10 times the level from 2021.
The average deal size tells an even wilder story. By early 2026, it had climbed to about $1.3 billion per deal, up 76% from 2025. Average upfront payments nearly doubled year-over-year, hitting around $78 million. Chinese biotechs aren't offering bargain-bin assets anymore; they're setting prices.
The buyers? Exactly who you'd expect. AbbVie licensed a next-gen antibody from RemeGen for up to $5.6 billion. AstraZeneca grabbed obesity drug rights from CSPC Pharmaceutical in a deal worth up to $18.5 billion. Novartis paid up to $5.2 billion for a cardiovascular asset from Argo Biopharmaceutical. By one count, Chinese companies captured 6 of 26 major pharma deals, with those six worth a combined $53 billion, between January 2025 and April 2026.
This isn't a trend. It's a structural shift. China went from being pharma's low-cost manufacturer to its innovation engine, and roughly one-third of global licensing spending now goes to Chinese-origin assets.
So naturally, Washington wants to get involved.
What the COINS Act Actually Does (and Doesn't Do Yet)
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President Trump signed the COINS Act into law as part of the FY2026 National Defense Authorization Act on December 18, 2025. It created a Treasury-run screening system for U.S. investments flowing into "countries of concern" (China, Russia, Iran, North Korea, Cuba, and Maduro-era Venezuela) in sensitive technology sectors.
The catch: biotechnology isn't on the list yet. The law currently covers AI, semiconductors, and quantum information technologies. But it contains something lawyers are calling a "sweeping discretionary expansion clause" (Section 809) that lets the executive branch pull new industries into the program through regulation, without needing Congress to pass another bill.
Treasury has until March 2027 to finalize updated rules. And the political pressure to include biotech is building fast.
The Campaign to Add Biotech
In May 2026, House Select Committee on the CCP Chairman John Moolenaar sent a letter to Treasury Secretary Scott Bessent explicitly calling for biotech to be swept into the COINS framework. He's not alone. Rep. Brian Mast and other Republican lawmakers have made similar demands, arguing that Chinese biotech innovation and manufacturing platforms pose national security risks.
Their argument goes beyond equity investments. Current COINS coverage focuses on traditional deal structures: equity stakes, debt financing, joint ventures. A pure licensing deal without an equity component? Lawyer Laurie Burlingame of Morse, Barnes-Brown & Pendleton noted that such a transaction "would not be covered under the current Act text."
But lawmakers are pushing Treasury to expand the definition of "covered transactions" to include pharmaceutical IP licensing, drug discovery platforms, and biologics manufacturing know-how. They want the net cast much wider.
Why "NewCo" Deals Are Sweating
One deal structure is particularly vulnerable: the "NewCo" model. In these arrangements, U.S. venture investors create a new American company built around assets licensed from a Chinese biotech. The Chinese firm typically takes a small equity stake (often under 20%) in the new entity.
Joint ventures are already explicitly listed as covered transactions under COINS. If Treasury adds biotech as a covered sector and clarifies that NewCo-style structures count, a significant chunk of U.S.-China biotech dealmaking could suddenly require government notification, or face outright prohibition.
Don't Expect an Outright Ban (Yet)
Most experts think the initial approach will be surgical, not scorched-earth. Brian Curran of Hogan Lovells told FierceBiotech that "the likelihood of the initial regulations imposing an outright ban on all licensing activities in this sector seems low," given how intertwined U.S. and Chinese biotech have become.
The more probable scenario: a notification regime where U.S. companies must alert Treasury before completing covered biotech transactions involving China. Think of it like a speed bump, not a roadblock. Deals wouldn't necessarily be blocked, but they'd face longer timelines, higher legal costs, and a thick fog of regulatory uncertainty.
That fog alone could chill dealmaking. And several analysts view the notification pathway as a stepping stone to future prohibitions if Treasury spots patterns it doesn't like.
The Protectionism Paradox
Policy commentators have flagged an ironic risk: restricting U.S. access to Chinese biotech could simply push those assets to European, Japanese, Korean, and Middle Eastern buyers instead. Chinese innovators are already structuring deals with ex-U.S. territorial licenses first, adding American partners later once the regulatory picture clears.
Meanwhile, PitchBook's 2026 outlook argues that China has "gained the lead" in generating early-stage drug candidates and that this edge is "likely to persist" for years. Western biotech remains capital-constrained, and roughly 75% of cross-border China licensing deals involve preclinical or Phase 1 assets. The pipeline isn't drying up; the question is who gets to drink from it.
What Comes Next
The COINS Act sits at the intersection of two powerful forces: a pharma industry desperate for external innovation, and a political establishment increasingly hostile to Chinese technology ties. The BIOSECURE Act already restricts government dealings with certain Chinese biotech firms. Adding biotech to COINS would be the next domino.
Treasury's March 2027 deadline for final rules is the date circled on every dealmaker's calendar. Until then, every China-to-U.S. licensing negotiation comes with an asterisk: subject to whatever Washington decides next.
For an industry that just discovered its most productive new source of innovation, the timing couldn't be worse.
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