Theresa Campobasso, Ex-Marine Intel Officer, on the Regulatory Wave Reshaping China Biotech Deals

In her first appearance on Open Door Salon, Theresa Campobasso explained why the BIOSECURE Act, on its own, would not protect American pharma from China. In this follow-up conversation with host Lori Ellis, she returns to a landscape that has moved fast, and makes the case that BIOSECURE was never the finish line. It was the opening signal.

Campobasso is a Senior Vice President at Aardwolf Global and a former United States Marine Corps intelligence officer who supported the Defense Intelligence Agency’s Office of Counterintelligence before moving into supply-chain security work for the life sciences. Her read on the current regulatory wave is built on that background: this is threat-based regulation, and it is accelerating.

What the BIOSECURE Act actually covers

In its current form, the BIOSECURE Act names five Chinese companies: Beijing Genomics Institute, MGI Tech, WuXi AppTec, WuXi Biologics, and Complete Genomics. Companies holding federal contracts may not use those five for genomic sequencing, drug-development services, or anything that touches American patient data. That, Campobasso notes, is the entire reach of the law as written. The five names and the federal-contract limit are not the ceiling. They are the floor.

Where the rules go next

Campobasso expects the regulated perimeter to widen in two directions: more named entities, and more use cases. The use case she watches most closely is active pharmaceutical ingredients, the APIs, raw materials, and chemical precursors most drugs are built from. Those sit largely outside the law today, and they are also where the United States carries real concentration risk, because a great deal of API supply traces back to one or two locations in China or India. That kind of exposure is difficult to unwind quickly, which is exactly what makes it the obvious next target.

From procurement to investment: the COINS Act

Two developments sharpened the picture. The United States International Trade Commission opened a formal investigation into Chinese state subsidies, market overcapacity, and pricing practices in biotechnology, with a report due to Congress within a year. And a bipartisan House bill would add biotechnology to the COINS Act, the Comprehensive Outbound Investment National Security Act, requiring government screening of US investment in Chinese biotech. Under that proposal, licensing deals, joint ventures, and equity investments could be subject to Treasury and Department of War review. BIOSECURE was about who a company can buy from. This, Campobasso explains, is about who it can invest in, and it would extend the same logic from five companies to whole categories.

Don’t count on grandfathering

Asked the question many dealmakers are quietly asking, what happens to arrangements already signed, Campobasso is direct. She would be very surprised to see grandfathering, because this is not regulation written for trade or compliance reasons. It is threat-based, built on a documented pattern of Chinese biotech firms leveraging American patient data and taking intellectual property. The companies that come through well, she argues, are the ones using the current window, while these are still signals rather than statutes, to map their exposure before the line is drawn. The red flags are knowable in advance: Chinese state funding, a government-designated innovation zone, or a Chinese Communist Party committee embedded in a company’s governance, structures that are common and frequently undisclosed.

The many ways IP leaves

Campobasso describes three paths for intellectual property to walk out the door, and only one looks like a hack. The first is direct access through a partnership, where a company shares IP expecting it to be protected and it is not. The second is insider threat, phishing, solicitation, sometimes a person. The third is the one people underestimate: patent theft. China’s patent process moves faster than the US system, so a company can take unpatented IP, register it there first, and leave the original inventor unable to secure it. Her comparison is to lifting an artist’s design and selling it with no credit and no royalty, at the scale of a drug molecule.

Twenty-eight percent, and the question BD teams skip

Roughly 28 percent of the top twenty pharma deals have been tied to Chinese biotech. Campobasso’s concern is not that the deals happened, but that most were stress-tested for the wrong risks. Business-development teams run their standard diligence, IP ownership, clinical data, regulatory pathway, financial terms, and stop there. What they tend not to ask is who else has a claim on the molecule, and what happens to the deal if the partner becomes a restricted entity tomorrow. That second question is the one that matters now, and it is answerable before signing.

Medtech, hardware, and reading the signals

The risk does not stop at molecules. For medtech the exposure shifts to hardware, where counterfeit and compromised components are well documented. Campobasso points to Operation Warp Speed, where nearly half a billion dollars in fraudulent acquisitions were flagged, much of it tied to China, and caught only because the effort ran a threat-based screen over its purchasing. Reading where the regulation goes next, she says, is less mysterious than it looks: watch the hearing texts, the pace of new bills, and the topics that keep recurring. When the conversation turns to APIs or medtech, that is the tell. Most of it is public weeks ahead. It only feels sudden if no one is reading it.

Watch the full conversation with Theresa Campobasso above, and subscribe to Open Door Salon for more candid conversations with the people who build, fund, and fight for the life sciences.