After the BIOSECURE Act: Moving Drug Manufacturing From a Chinese CDMO to Switzerland or the EU

A US sponsor moving drug substance or drug product from a Chinese CDMO may expect a manufacturing handoff. The BIOSECURE Act, enacted on 18 December 2025 within the fiscal year 2026 NDAA, makes the supplier's status relevant to covered federal business.1National Defense Authorization Act for Fiscal Year 2026, Pub. L. No. 119-60, § 851, 139 Stat. 981–988 (18 December 2025) (BIOSECURE Act), § 851(a)–(c), (f), (h) and (k): covered transactions, designation and implementation; the five-year protection applies only to the contracting-with-a-user prohibitions. A receiving site in Switzerland or the EU creates a different problem: procurement restrictions do not determine when a transferred product can be released, or what the departing manufacturer must surrender.

1. What the BIOSECURE Act prohibits, and from when

The enacted text names no company. One designation route combines inclusion on the Chinese military company list published by the Department of Defense (DoD) under section 1260H of the National Defense Authorization Act for Fiscal Year 2021 with involvement in biotechnology equipment or services.2William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. No. 116-283, § 1260H (1 January 2021); Department of Defense, 'Notice of Availability of Designation of Chinese Military Companies', 91 Fed. Reg. 35189 (10 June 2026), filed 8 June 2026: the June list includes WuXi AppTec and Novogene. The other permits the Office of Management and Budget (OMB) to designate entities subject to a foreign adversary's governance, direction or control, or acting on its behalf, involved in biotechnology equipment or services and posing the specified national-security risk. Qualifying parents, subsidiaries and successors are also covered.1BIOSECURE Act (n 1), § 851: designation, transaction scope, implementation and qualified transitional protection. Production of biological materials, including contract manufacture, falls within a definition that also reaches related software, firmware, storage, transmission and advisory services.

Federal agencies face restrictions on direct procurement from a company of concern and on entering, extending or renewing contracts with entities that use covered equipment or services acquired after the applicable effective date in performance. The latter also reaches knowing contracts requiring that use. The Act separately restricts direct use of loan or grant funds and contracts financed by them. Its contract definition includes Federal Acquisition Regulation (FAR) contracts and research other transactions under 10 U.S.C. § 4021; it does not cover every federal payment. The Veterans Affairs deeming rule preserves the master-agreement condition relevant to Medicaid and Medicare Part B where Veterans Affairs determines that the manufacturer has offered to comply and only these restrictions prevent agreement. A private manufacturing agreement itself is not prohibited.1BIOSECURE Act (n 1), § 851: designation, transaction scope, implementation and qualified transitional protection.

Implementation and the narrower five-year protection

The BIOSECURE Act requires OMB's initial list by 18 December 2026, implementing guidance within 180 days of publication, and a FAR revision within a year of that guidance. The prohibitions take effect 60 days after the revision for the 1260H route and 90 days for the others. If every period is used in full, application falls in the second half of 2028; earlier implementation remains possible.1BIOSECURE Act (n 1), § 851: designation, transaction scope, implementation and qualified transitional protection. List publication does not start the five-year clock: that runs from the FAR revision identifying the company.

Until five years after that revision, the contracting-with-a-user prohibitions do not apply to equipment or services provided under agreements entered into before the applicable effective date, including previously negotiated options. That protection covers both designation routes but neither direct agency procurement nor direct loan- or grant-funded procurement, obtaining or use. It concerns the underlying equipment or service agreement, not merely the age of a federal award. Services a company of concern no longer provides fall outside the statutory definition. Case-specific waivers require OMB approval and notification; a waiver lasting up to 365 days may receive one extension of up to 180 days only under the additional approval and national-security conditions. Exceptions include specified intelligence and overseas healthcare activities, lawfully compiled human multiomic data commercially or publicly available, and specified procurement directly responding to a declared public health emergency.1BIOSECURE Act (n 1), § 851: designation, transaction scope, implementation and qualified transitional protection.

The June 2026 DoD update added WuXi AppTec and Novogene and listed Complete Genomics as a BGI subsidiary.2National Defense Authorization Act for Fiscal Year 2021 and Department of Defense notice (n 2), § 1260H and 91 Fed. Reg. 35189: June 2026 list. On 7 August 2026 the District Court for the District of Columbia granted WuXi preliminary relief: the three stated rationales misread the evidence, while customers had terminated or redirected programs within weeks.3WuXi AppTec Co., Ltd. v. United States Department of Defense, No. 1:26-cv-02069, memorandum opinion, ECF No. 25, 1–2, 15–30 and 35 (D.D.C. 7 August 2026) (Boasberg CJ): preliminary relief against the 1260H designation. National Defense Authorization Act for Fiscal Year 2024, Pub. L. No. 118-31, § 805 (22 December 2023), supplies the separate DoD prohibitions. The opinion leaves room for a lawfully justified redesignation. Its relief against DoD does not resolve the separate OMB route. For WuXi it also suspends the designation's consequences under the separate prohibitions in section 805 of the National Defense Authorization Act for Fiscal Year 2024, dated 30 June 2026 and 30 June 2027. A supplier's status can change during a transfer whose validation, comparability and approval work takes much longer; neither the list nor the injunction fixes that relationship.

2. The regulatory transfer: licenses, variations and batch certification

A transfer connects the receiving site's permitted operations with the product dossier. It does not necessarily require a new site license: an existing license may already cover the work. Swiss manufacture requires a Swissmedic license under Art. 5(1)(a) HMG, with conditions and inspection under Art. 6 HMG.4Bundesgesetz über Arzneimittel und Medizinprodukte (Heilmittelgesetz, HMG) vom 15. Dezember 2000 (SR 812.21), Art. 5–6, 9–10 and 17–20 HMG: licensing, authorization and release; Art. 20(1) HMG permits import of authorized medicines and medicines not subject to authorization. The license holder remains responsible for its operations and the applicable GMP standards under Art. 4 AMBV. Technical release and the batch certificate under Art. 7 AMBV are distinct from market release by the authorization holder's responsible person under Art. 13 AMBV.5Verordnung über die Bewilligungen im Arzneimittelbereich (Arzneimittel-Bewilligungsverordnung, AMBV) vom 14. November 2018 (SR 812.212.1), Stand am 15. März 2025, Art. 4–5, 7 and 11–14 AMBV: manufacturing responsibilities, technical and market release and qualified import controls. The latter checks conformity with the authorization and the supply chain. Art. 10(1)(b) and (c) HMG also requires the authorization holder's Swiss domicile, seat or branch and manufacturing, import or wholesale license; moving the site does not remove that holder requirement.

For finished medicinal products in the EU, Art. 40 Directive 2001/83/EC requires manufacturing authorization, including for partial manufacture, packaging and third-country imports. The holder notifies relevant changes, complies with GMP, audits active-substance manufacturers and retains a QP under Art. 46 and Art. 48 Directive 2001/83/EC. Batch certification follows Art. 51 Directive 2001/83/EC.6Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use [2001] OJ L311/67, Art. 40, 46, 46b, 48, 51 and 52a Directive 2001/83/EC: medicinal-product manufacturing and batch controls differ from active-substance registration and import conditions. Active substances follow a different route: Union manufacturers, importers and distributors register under Art. 52a Directive 2001/83/EC, with risk-based inspection and the GMP and import conditions of Art. 46b Directive 2001/83/EC. A drug-substance site can still be named in the product dossier; the distinction does not eliminate the product-change question.

For finished-product imports, Art. 51(1)(b) Directive 2001/83/EC ordinarily requires full batch testing in a Member State, subject to the arrangement-based relief in Art. 51(2) Directive 2001/83/EC. China has no such EU arrangement. Under Chapter 15 of Annex 1 MRA, the EU and Switzerland recognize covered batch certification without import re-control, alongside inspections, authorizations and official batch releases.7Agreement between the European Community and the Swiss Confederation on mutual recognition in relation to conformity assessment [2002] OJ L114/369 (SR 0.946.526.81) (MRA), Annex 1, Chapter 15 MRA: recognition of inspections and batch certification within scope, with conditions for third-country re-exports. Recognition for third-country products re-exported through a party requires each batch to be re-controlled in either party's territory and an inspection by either party's competent authority finding that the third-country manufacturer complies with GMP for the relevant product or product category. A Swiss address does not transform Chinese manufacture into Swiss manufacture. Under Art. 11(1)(i) AMBV, an import-license applicant must show either that the foreign manufacturer holds a manufacturing license from a country whose GMP control system Swissmedic considers equivalent or that the medicines were manufactured under Swiss GMP rules. Art. 14 AMBV separately permits Swissmedic to require each batch of ready-to-use medicines manufactured in a state without a GMP recognition agreement to be re-analyzed in Switzerland if justified doubts concern its safety or quality.5AMBV (n 5), Art. 4–5, 7 and 11–14 AMBV: responsibility, release and qualified import controls.

A site change does not have one reporting category

EU variations under Regulation (EC) No 1234/2008 carry different notification and implementation rules. Type IA generally permits notification within twelve months after implementation, with immediate-notification categories; Type IB's 30-day period depends on a valid notification. Type II generally carries a 60-day assessment, with specified extensions and clock stops, while Art. 24 Regulation (EC) No 1234/2008 adds implementation conditions beyond acceptance.8Commission Regulation (EC) No 1234/2008 of 24 November 2008 concerning the examination of variations to the terms of marketing authorisations for medicinal products for human use and veterinary medicinal products [2008] OJ L334/7, Art. 2, 8–10, 16 and 24 Regulation (EC) No 1234/2008: categories, assessment and qualified implementation. European Commission, Guidelines on the details of the various categories of variation, on the operation of the procedures laid down in Chapters II, IIa, III and IV of Commission Regulation (EC) No 1234/2008 concerning the examination of variations to the terms of marketing authorisations for medicinal products for human use, and on the documentation to be submitted pursuant to those procedures (C/2025/5045, OJ C, 22 September 2025), Q.I.a.1(d) and Q.II.b.1: conditional site-change routes. The Commission's guidelines applicable from 15 January 2026 place a biological active-substance manufacturing-site change in Type II. Finished-product changes include Type II for specified novel or complex processes or inspection circumstances and Type IB for other manufacturing operations. Secondary and immediate packaging can qualify for Type IA with immediate notification only under their conditions; the immediate-packaging route excludes sterile products.

Swiss categories under Art. 21–24 VAM distinguish later notification, advance notification, approval before implementation and extensions requiring a new procedure.9Verordnung über die Arzneimittel (Arzneimittelverordnung, VAM) vom 21. September 2018 (SR 812.212.21), Art. 21–24 VAM: notification, advance approval and extensions follow different procedures. Advance minor changes depend on complete documentation and the absence of objection within the applicable 60-day period. Those labels do not guarantee that a transfer receives the same category or implementation date in the EU and Switzerland.

In the United States, site changes fall under 21 CFR 314.70 or, for approved biologics, 21 CFR 601.12. The Food and Drug Administration's (FDA) 2004 NDA/ANDA guidance gives five prior-approval examples. They address inadequate inspection history or restarted operations, specified aseptic and terminally sterilized moves, and dose-controlling or modified-release products. A satisfactory site inspection therefore does not put every move on the 30-day route. Qualifying changes not otherwise assigned a different category can use that route; annual-report examples also exist, and related process or equipment changes affect classification. The 1997 guidance requires prior approval for manufacturing-site changes other than testing for its specified biotechnology and synthetic biological products.1021 CFR 314.70, 601.12 and 211.22: application changes and quality control. FDA, Guidance for Industry: Changes to an Approved NDA or ANDA (April 2004), VI.A–D, pp 8–11: site history does not alone determine reporting. FDA, Guidance for Industry: Changes to an Approved Application for Specified Biotechnology and Specified Synthetic Biological Products (July 1997), scope and II.7: prior approval for specified manufacturing-site changes.

Comparability adds a product-specific evidentiary burden. The International Council for Harmonisation (ICH) Q5E guideline applies where three conditions coincide: specified cell-culture-derived proteins or polypeptides capable of high purification and characterization; a single manufacturer, including a contract manufacturer, able to compare pre- and post-change product directly; and changes during development or after authorization.11ICH, Comparability of Biotechnological/Biological Products Subject to Changes in Their Manufacturing Process (ICH Q5E, 18 November 2004), §§ 1.3–1.4 and 2: the scope conditions are conjunctive; comparability may require evidence beyond analytical studies. It tests high similarity of quality attributes without adverse impact on safety or efficacy. Analytical studies may suffice, but nonclinical or clinical evidence can be needed; applicability to other product types may require consultation with the authority.

Inspection reliance leaves authority discretion intact

The Swiss-US GMP agreement, signed 12 January 2023 and in force 27 July 2023, and the EU-US pharmaceutical annex, operational across all Member States for human medicines by 11 July 2019, permit reliance within their scope.12Abkommen zwischen der Schweizerischen Eidgenossenschaft und den Vereinigten Staaten von Amerika über die gegenseitige Anerkennung der Guten Herstellungspraxis für Arzneimittel vom 12. Januar 2023 (SR 0.812.101.933.6) (Swiss-US GMP Agreement), Art. 3, 5, 7 and 8, Annex 2 Swiss-US GMP Agreement: scope limits and retained inspection rights. Agreement on mutual recognition between the European Community and the United States of America [1999] OJ L31/3, pharmaceutical annex as amended by Decision No 1/2017 of the Joint Committee established under Article 14 of the Agreement on Mutual Recognition between the European Community and the United States of America of 1 March 2017 amending the Sectoral Annex for Pharmaceutical Good Manufacturing Practices (GMPs) [2017] OJ L58/36 (2017/382), Art. 8, 11 and 14 of the amended Agreement: conditional inspection reliance. Each authority retains its own inspection right, and a requested inspection depends on the partner's response. The Swiss agreement excludes human blood, plasma, tissues, cells, organs and veterinary immunological products; human vaccines require expanded coverage. Treaty potential scope does not itself establish operational reliance for every product or application-based inspection. Recognition can avoid duplication, but neither assures a shorter queue nor replaces the site-change supplement, validation, stability data or comparability evidence. The analysis of ATMP manufacturing in the EU and Switzerland addresses related GMP differences.

3. Leaving the Chinese CDMO: termination, transfer assistance and Chinese law

A designation need not make performance of a private manufacturing agreement unlawful or impossible. The CDMO may remain able to manufacture and the sponsor able to pay, even where covered federal business is affected. Force majeure, illegality and change-in-law clauses can therefore point to different events. A status representation or designation-triggered exit right may address termination while leaving the price, transition supply and transfer assistance contested.

Where Swiss law governs, characterization affects the economics. Production and delivery of batches carry features of a contract for work under Art. 363 OR; development and services carry mandate features under Art. 394 OR.13Bundesgesetz betreffend die Ergänzung des Schweizerischen Zivilgesetzbuches (Fünfter Teil: Obligationenrecht, OR) vom 30. März 1911 (SR 220), Art. 363, 377, 394 and 404 OR; BGE 115 II 464, E. 2a; BGE 128 III 428, E. 3c and 4; Schweizerisches Zivilgesetzbuch (ZGB) vom 10. Dezember 1907 (SR 210), Art. 4 ZGB: characterization and mandatory rules complicate termination. Art. 377 OR permits withdrawal while work is unfinished against payment for work done and full indemnification, including lost profit. Art. 404 OR permits either party to terminate a mandate at any time, with damages for termination at an inopportune time. The Federal Supreme Court treats that mandate right as mandatory, including where it governs an appropriate mixed agreement. A contractual label cannot settle which rules apply.

These rules create opposing pressures. A sponsor seeking an inexpensive exit may also need the supplier bound through a lengthy transition. Swiss law additionally recognizes early termination of a continuing contract for an important reason making continuation unreasonable; BGE 128 III 428, E. 3c and 4, places that assessment within judicial discretion under Art. 4 ZGB. A designation that leaves manufacture possible does not itself answer that test. Even an express change-in-law trigger leaves questions about mandatory rights, the event's scope and the damages or supply obligations that survive.13OR and Federal Supreme Court decisions (n 13), Art. 377 and 404 OR: different exit economics and mandatory mandate termination.

Access to knowledge and permission to export are separate

The transfer package can be as disputed as termination. Dossier ownership does not necessarily provide rights to the CDMO's process improvements, confidential know-how or continued cooperation. Batch records, validated analytical methods, deviation histories, reference standards and cell banks can sit under different ownership and access terms. The sponsor's demand for a workable process at the next site confronts the departing manufacturer's interest in protecting its own technology and recovering transfer costs. Inventory may bridge an approval delay, but continued supply, reserved capacity and the price of assistance can remain contested while the supplier is still needed. The analysis of pharma supply chain liability addresses the limits of contractual protection when a supplier fails.

Chinese controls add a different constraint. The human genetic resources regime distinguishes genetic materials from regulated information and separates cooperation approvals, filings and export requirements. Its information definition excludes specified clinical, protein and metabolic data. The Export Control Law of 2020 reaches controlled technologies and technical data; the Biosecurity Law, adopted in 2020 and effective in 2021, separately regulates biological materials and research. Under the technology regulations revised through 2020, restricted technology requires a license from the competent commerce authority; prohibited technology cannot be exported. The December 2023 catalog, adjusted in July 2025, titles entry 237301J 'human cell cloning and gene editing technology', but its control point concerns ethically controversial, potentially seriously harmful editing of human reproductive cells containing genetic material.14Regulations of the People's Republic of China on the Administration of Human Genetic Resources (State Council Decree No. 717, promulgated 28 May 2019, in force 1 July 2019, amended 2024), Art. 2–3 and 21–28 Human Genetic Resources Regulations; Implementation Rules for the Regulations on the Administration of Human Genetic Resources (MOST Order No. 21, 2023), Art. 2 Implementation Rules; Export Control Law of the People's Republic of China (adopted 17 October 2020, in force 1 December 2020), Art. 2, 4 and 12 of the Export Control Law (the statute); Biosecurity Law of the People's Republic of China (adopted 17 October 2020, in force 15 April 2021); Regulations of the People's Republic of China on the Administration of the Import and Export of Technologies (State Council Decree No. 331, in force 1 January 2002, revised through 2020), Art. 31–40 Technology Import and Export Regulations; Catalogue of Technologies Prohibited or Restricted from Export (MOFCOM/MOST, 21 December 2023), adjusted 15 July 2025, entry 237301J: distinct controls on material, information and technology. That narrow entry does not establish a ban on every gene-editing transfer.

A contractual access right and permission to send material or information abroad can therefore diverge. Cell lines, samples and process documents need not share one legal category or one authority decision. Whether the package can leave while supply continues, and who bears a delay beyond either party's control, remains separate from the US procurement clock.

4. Contracting the new site in Switzerland or the EU

The receiving-site relationship combines transfer work, steady-state supply and quality responsibilities. These activities can be divided among agreements without dividing the authority's statutory expectations in the same way. Under Art. 4 AMBV the Swiss license holder remains responsible for its operations; technical release under Art. 5(6) and Art. 7 AMBV differs from market release under Art. 13 AMBV.5AMBV (n 5), Art. 4–5, 7 and 11–14 AMBV: responsibility, release and qualified import controls. In the EU finished-product system, the manufacturing authorization holder's active-substance audits and the QP's batch certification remain governed by Art. 46(f) and Art. 51 Directive 2001/83/EC.6Directive 2001/83/EC (n 6), Art. 40, 46, 46b, 48, 51 and 52a Directive 2001/83/EC: manufacturing and active-substance rules. A quality agreement cannot make those roles interchangeable or bind an inspector's judgment. For categories subject to official batch release under Art. 17 HMG, that public decision is another dependency, even where the EU-Swiss MRA recognizes the exporting authority's release within scope.4HMG (n 4), Art. 5–6, 9–10 and 17–20 HMG: distinct licensing, authorization and release requirements.

Commercial milestones can diverge from regulatory ones. A site may have performed agreed transfer work while the sponsor still lacks an acceptable comparability result or approval to distribute. Rejected validation batches, additional clinical evidence, reserved capacity and exclusivity expose different parties to costs without corresponding revenue. An approval-linked payment may protect the sponsor while placing an open-ended authority delay on the manufacturer; a fixed calendar can leave the sponsor paying before the product is usable. Allocation of dossier preparation and inspection support does not give either party control over the authority's assessment.

Relocation also leaves the Act's look-through problem intact. Use of a designated company's sequencers, software or analytical services by a Swiss or EU site in covered performance can bring the same procurement restrictions, subject to the acquisition date, transitional protection and exceptions. Supplier representations, notification duties and substitution rights concern who knows and bears that risk; they do not determine a later designation or establish that substitution is technically and regulatorily available. A sponsor may have a contractual exit while lacking an approved replacement process.

EU tender policy adds a separate commercial distinction. The Critical Medicines Act compromise, agreed but not adopted as of 6 October 2026, would impose specified Union-manufacturing preferences for critical medicines whose vulnerability evaluation shows high dependence on one or a limited number of third countries. Its manufacturing definition, international commitments and exceptions qualify that preference.15Final compromise text for a Regulation of the European Parliament and of the Council establishing a framework to strengthen the security of supply and the availability of critical medicinal products, as well as the availability and accessibility of medicinal products of common interest, and amending Regulation (EU) 2024/795 (Critical Medicines Act, CMA), Council document ST-11059/26 (30 June 2026), Art. 18 ST-11059/26: conditional procurement requirements; not adopted as of 6 October 2026. Swiss and EU location alone therefore does not decide every tender. The analysis of Swiss and US manufacturing in EU public tenders develops that question.

Governing law and forum affect both transfer and supply disputes. Under Swiss law the receiving agreement can raise the same work-contract and mandate tensions as the agreement being left. A negotiated description of termination and transition duties may still confront mandatory rights and disputed characterization. The agreement can divide delay costs and damages between the parties, while manufacturing, certification and sales remain dependent on decisions outside it.

5. Strategic Considerations for US Sponsors Leaving a Chinese CDMO

Which US restrictions apply depends on the transaction. A FAR supply contract, a covered research other transaction and direct grant-funded use do not receive identical transitional protection. The underlying equipment or service agreement's date matters differently from an award's renewal date. A supplier's 1260H status also leaves the independent OMB route unresolved. A five-year headline does not establish which covered federal business a sponsor could lose during a particular product's transfer, or whether the regulatory work can be completed within the available period.

Switzerland and the EU offer different combinations of market access and recognition. Covered Swiss batches can enter the EU without re-control under the MRA, while US inspection reliance remains limited by product, inspection type and retained authority powers. EU manufacture may matter under the proposed critical-medicines tender rules, but the vulnerability, manufacturing and international-commitment conditions prevent a universal location preference. The Swiss authorization-holder requirement remains relevant for sales in Switzerland whichever site is chosen.

The unresolved contract questions follow the product through both relationships. What rights survive the departing CDMO's termination, and which process knowledge remains beyond the sponsor's access? Can Chinese controls delay a package the contract promises? At the receiving site, who bears approval delay, unsuccessful comparability work or a designated upstream supplier's replacement? A lawful exit, an approved transfer and continued access to covered federal business may each depend on a different event.