America's biotech supplier ban gives British contract labs a reason to prove supply chains

America has written a biotech supplier test into federal contracting law

On 18 December 2025 the United States enacted the National Defense Authorization Act for Fiscal Year 2026, and its Section 851 is a revised version of the BIOSECURE proposal that had failed in the previous Congress. It says the head of an executive agency may not procure biotechnology equipment or services from a "biotechnology company of concern", nor contract with any entity that uses such equipment or services in performing a federal contract.

The rule also follows federal money. Agencies may not spend loan or grant funds on such equipment or services, and recipients may not use those funds to buy them. That reaches universities, hospitals and companies that hold US federal research grants, not only defence and health agency suppliers.

The definition of what is covered is wide. Biotechnology equipment includes genetic sequencers and any instrument designed for research, development, production or analysis of biological materials, together with the software and firmware needed to run it. Services include research, analysis and the storage and transmission of data related to biological materials.

The law names no companies. The Office of Management and Budget must publish a list of biotechnology companies of concern no later than one year after enactment, so by 18 December 2026. Entities on the Pentagon's annual list of Chinese military companies can be designated if they are involved in biotechnology equipment or services, and OMB can add others that are controlled by or act for a foreign adversary government and pose a national security risk.

An Arnold & Porter advisory of December 2025 notes that, unlike earlier drafts, the enacted text does not name specific entities, and that the prohibitions do not apply immediately, even to companies already on the Pentagon list. It still advises companies to consider them now, particularly when entering new contracts.

British contract labs sell into exactly the supply chains the law will screen

Britain has a sizeable business that does other companies' research and manufacturing. The Office for Life Sciences statistics for 2021 to 2022 show the contract manufacturing and research organisation segment employing 26,800 people in 2021/22, nearly double the 13,500 of 2008/09, and generating £6.3 billion of turnover in 2021/22.

That made it the second largest employment segment in UK life sciences after small molecules. The wider sector is now under some pressure. The Office for Life Sciences statistics for 2024 to 2025, published on 17 September 2026, estimate 306,700 people employed in UK life sciences in 2024/25, down 2 per cent, and £125.8 billion of turnover, down 1 per cent.

The contract segment is not the only one exposed. The same 2021 to 2022 statistics show the reagent, equipment and consumables supplier segment generating £11.9 billion of turnover in 2021/22, 11 per cent of the sector total. British firms that make or distribute laboratory instruments and consumables sell the very category of goods the US law defines as biotechnology equipment.

The United States is the market that matters most. The Office for National Statistics' April 2025 analysis of UK trade with the United States records £6.6 billion of medicinal and pharmaceutical product exports to the US in 2024, 26.7 per cent of the UK's exports of that commodity.

Research links are deepening too. The UK and US Technology Prosperity Deal memorandum of September 2025 commits both governments to joint flagship research programmes, involving agencies including the US National Institutes of Health and UK Research and Innovation, in areas such as AI for biotechnology and precision medicine, with joint funding opportunities. Put together, British labs increasingly sit inside US-funded research and US-bound supply. Where US federal grant money or contracts are involved, Section 851 makes their equipment and service choices their customers' compliance problem.

The strongest objection is that the law moves too slowly to shift work to Britain for years

The objection is serious. The statute builds in a long cascade. After the list comes OMB guidance within 180 days, then revision of the Federal Acquisition Regulation within one year of that guidance, and the prohibitions take effect 60 or 90 days after the revision. If every step uses its full allowance, the bans would not bite until the second half of 2028.

Existing contracts then get more time. Section 851 says that for five years after the regulation is revised, the contracting prohibitions do not apply to equipment or services provided under contracts entered into before the effective date. On the statute's outer limits that protection runs into 2033. A sponsor could rationally do nothing for years.

Tariffs pull the other way. Proclamation 11020 under Section 232, published on 9 April 2026, sets a 100 per cent duty on imported patented medicines, with 20 per cent for companies with approved onshoring plans, rising to 100 per cent on 2 April 2030. It cites FDA data that as of 2025 approximately 53 per cent of patented medicines sold in the US were made abroad. Much new manufacturing will be built on American soil, not in Britain.

I accept both points. But sponsors choose development and manufacturing partners for programmes that will run well past 2028. Bristows warns that firms should not assume today's position will hold over the life of a multi-year clinical, manufacturing or collaboration arrangement, and that the later a technology transfer happens in a drug's life cycle, the more burdensome and disruptive it is likely to be. A supplier change is cheapest at the start of a programme, which is now.

The tariffs also fall on imported medicines and ingredients, while much of what British contract labs sell is research, analysis and data, which is exactly what Section 851 covers. The proclamation exempts generic medicines for now, and for the UK it sets a rate of 10 per cent on patented medicines, reducing to zero to the extent a pricing agreement requires.

Counterparties will ask British firms to prove a negative

The practical effect reaches companies that never contract with a US agency. A Bristows analysis of 27 July 2026 for UK and EU life sciences firms says counterparties with US connections are likely to scrutinise a company's supply chain more closely, because using a listed supplier somewhere in the chain, even several steps removed, may create a problem for federal work.

Bristows expects those counterparties to seek representations and disclosures about suppliers with audit rights, approval or veto rights over suppliers, notification if a supplier is designated, and remedies such as step-in, substitution, segregation of US-funded work or termination.

It also points out that the law is not a general sanctions regime and does not stop a company commercialising a product in the US commercial market or through Medicare Part B and Medicaid. The exposure is to federal contracts, federal grants and partners who need to protect them, including acquirers and licensees who may insist on a technology transfer or adjust valuation.

For a British contract lab, every one of those clauses is a question about its own instruments, reagents, sequencing and software. A firm that can answer them quickly, with records, removes a risk from its customer's deal. A firm that cannot becomes the risk.

Provenance evidence is a data system, not a compliance letter

The statutory definition explains why this is a data task. It covers components and accessories of instruments, the software and firmware needed to run them, advisory and support services for their use, and data storage and transmission related to biological materials. A sequencer bought years ago, its service contract, the cloud tool that analyses its output and the courier of the samples could each be in scope.

That means a laboratory needs an asset register that records the manufacturer and service provider for each instrument, a supplier master that links reagents and consumables to their producers, and a map of where research data is stored and processed. It needs those records versioned, so that it can show what was used on a given project on a given date.

Genomic data deserves particular care. Section 851 directs the Director of National Intelligence to assess, within 270 days of enactment, the national security risks from human multiomic data on US citizens collected or stored by a foreign adversary, and to report annually on intelligence about misuse of such data by biotechnology companies. A British sequencing or bioinformatics provider handling American samples should expect to be asked where that data travels and who can reach it.

The list will change. Section 851 requires OMB to review it at least annually, and designated entities can seek removal, with OMB replying within 90 days. Bristows advises firms not to assume today's position will hold across a multi-year collaboration. A static attestation goes stale, and a maintained register can be rechecked against each new list.

There is a safe harbour for equipment or services formerly, but no longer, produced by a listed company, and Bristows notes a five-year grandfathering period for existing contracts. Neither helps a laboratory that cannot show which supplier provided what, and when. Laboratory software and service contracts deserve as much scrutiny as the instruments themselves.

Britain cannot measure the opportunity it is trying to seize

The case for British contract labs would be easier to make if the government still counted them. The 2024 to 2025 statistics explain that data for 2021/22 and earlier are not comparable after a methodology change, and that some breakdowns of the sector were temporarily removed. Segment-level figures such as the 26,800 contract research and manufacturing jobs are therefore not available for the latest years.

The Office for Life Sciences says it will explore ways to reintroduce some breakdowns. I would make the contract segment the first priority, because it is the part of the sector most directly exposed to US procurement rules and the part ministers will want to promote to American sponsors.

Without that series, neither government nor investors can tell whether BIOSECURE is bringing work to Britain or sending it to the United States, the EU or elsewhere in Asia. The rules are being written now, and the evidence on their effect should be collected from the start.

What I would do now as a UK contract research chief executive

First, I would commission a provenance map of every instrument, reagent line, sequencing service and data platform used on work that touches US customers, recorded against the Section 851 definitions, and I would refresh it the day OMB publishes its list, due by 18 December 2026.

Second, I would offer that map to US sponsors as part of every proposal, with contract terms that commit to notify them if a supplier is designated and to qualify a second source. Bristows' list of the protections counterparties will seek is, in effect, a specification for what a supplier should volunteer.

Third, I would ask my laboratory software and cloud providers where they process and store biological data and who supports their systems, because the statute treats software, firmware and data services as biotechnology equipment or services.

Fourth, I would press the Office for Life Sciences and the Department for Business and Trade to restore segment statistics for contract research and manufacturing, and to present British provenance standards to US partners under the Technology Prosperity Deal's joint research programmes.

My prediction is that by the time the federal regulation is revised in 2028, US sponsors will treat a documented supplier map as a standard bid requirement for contract research. The British firms that can produce one in 2027 will win programmes that are moving now, and those that wait for the rule to bite will find the work already placed.