The Treasury Department’s draft regulations under the COINS outbound investment framework could sharply narrow China biotech dealmaking, experts told Endpoints News on October 27, because complex collaborations risk being swept up as banned joint ventures even where simple licensing deals may escape the prohibition.
The distinction is the whole issue for pharma. The initial proposal, noted in yesterday’s edition, would add biotechnology to outbound investment screening, requiring notification of some China transactions and barring others. Western companies have spent the past three years licensing Chinese drug candidates at scale, and the structures range from clean asset licences to co development arrangements with shared governance and equity. If the draft text treats the second category as a prohibited joint venture, deals already being negotiated would need restructuring, and some would not survive it.
Nothing is final. The rules are in draft and subject to comment, and yesterday’s reporting indicated straightforward licensing may not be meaningfully affected. What changed on October 27 is the expert reading of the draft text: the risk sits in collaboration architecture, not in the existence of a China deal. Companies with China co development programs now have a drafting problem to solve before they have a compliance problem.