This post was originally published on this site
https://content.fortune.com/wp-content/uploads/2022/09/GettyImages-1240138617.jpg
And after his administration’s big success passing last month’s CHIPS Act, which will funnel more than $70 billion into the U.S. semiconductor industry to counter China’s dominance in the space, Biden has a new goal in his sights.
The order will direct a still unspecified amount of money toward U.S. research into biologically derived technologies, which can have applications for everything from developing alternative fuels to mRNA vaccines.
With the new bill, White House officials hope to reduce U.S. dependence on China in the biotech space, especially in the context of pharmaceuticals. And it’s yet another move by the U.S. to stay competitive with the country that the Biden administration is increasingly and explicitly portraying as an economic threat.
“Other countries, including and especially China, are aggressively investing in this sector,” a White House official told Reuters on Sunday. “Which poses risks to U.S. leadership and competitiveness.”
Biden’s new battleground
The U.S. remains the world’s biggest player in the global biotech industry, but it has hit a slump.
After financing and new IPO deals for biotech startups broke records in 2021, venture capital investment into U.S. biotech firms fell by 46% during the first quarter of this year compared with the beginning of 2021, according to analysis by GlobalData, which attributed the drop to “current economic and geopolitical uncertainties.”
The biotech funding that has gone through this year has also primarily been directed at more established firms closer to bringing drugs to market, Reuters reported in June, leaving sparser funding for research and development for new drugs.
The decline in biotech investments this year comes as the U.S. tech sector in general has entered a slide after a decade of explosive growth. With fears mounting that a recession is set to hit sometime next year, tech financing in 2022 has largely come to a standstill.
Biden hopes to change that with his new order, which calls for more targeted investments in biotech research with applications to pharmaceuticals, agriculture, and energy. It also includes provisions to increase funding for education and special training for skilled workers in the space, expand domestic manufacturing, and streamline regulations.
China’s booming biotech industry
Meanwhile, China’s biotech industry is booming.
Last year, the U.S. held over 40% of biotech’s global market share. But the Asia Pacific region is expected to have the fastest growth over the next decade, according to a recent report by consulting firm Nova One Advisor, which points to both India and China as driving forces.
Last July, China’s big investments into biotech R&D led Beijing-based Daxue Consulting to predict China’s pharmaceutical industry will surpass that of the U.S. to become the largest in the world in less than 10 years.
China is setting itself big targets for its biotech sector, seeking to overtake U.S. market share within the next decade, according to the government’s latest five-year plan.
In recent years, China’s pharmaceutical sector has been shifting from manufacturing low-cost and high-volume generic drugs toward placing a larger focus on innovation and research into developing new medicines, according to a report last year by McKinsey. That shift has led to a windfall of investment into the country’s biotech industry.
Earlier this year, the Chinese government’s new five-year plan for biotechnology pledged to raise the sector’s value to 22 trillion yuan (around $3.2 trillion) over the next several years. The market is currently worth around $380 billion, according to McKinsey’s report. Last year, Chinese biotech firms raised $16.6 billion according to the Wall Street Journal, a huge leap from the $11.2 billion invested in the space in 2020.
“The United States really has the best biotechnology innovators in the world, but we risk falling behind,” a White House official said Sunday.
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.
