The U.S. Department of the Treasury has proposed adding biotechnology to the sectors subject to restrictions on certain outbound investments, opening a new regulatory front for U.S. companies, investors and research businesses with ties to China and other foreign adversary countries.
The proposal, issued on October 22, 2026, would implement the Comprehensive Outbound Investment National Security Act, or COINS Act. Congress passed the law on December 18, 2025, creating a statutory framework to build on the existing Outbound Investment Security Program, known as OISP.
Treasury said the proposed rule would cover certain transactions involving U.S. persons and biotechnology companies or platforms in China, including Hong Kong and Macau, as well as in other countries designated as foreign adversaries. The restrictions would not apply in the same way to every biotechnology transaction. Instead, the proposal uses transaction-based limits and distinguishes between activities that would be prohibited and those that would require advance notification.
What the proposal would cover
Among the transactions that could be prohibited are certain equity investments, equity-like debt investments and qualifying joint ventures involving specified biotechnology categories. The proposal also indicates that a joint venture may qualify as a covered national security transaction even when the arrangement does not create a new legal entity or issue equity.
The framework would not categorically prohibit all licensing of drug candidates developed in China or the purchase of contract manufacturing services, according to Foley Hoag’s summary of the proposal. However, the structure and details of a licensing or manufacturing arrangement could determine whether additional analysis is required under the rule.
- Biotechnology would be added as a restricted technology sector.
- Certain U.S. investments and joint ventures involving China, Hong Kong and Macau could be prohibited.
- Some transactions could instead trigger an advance-notification requirement.
Industry has until December 7 to comment
Treasury is accepting public comments on the proposed rule through December 7, 2026. The agency is expected to issue final regulations after the comment period, meaning the final scope of the biotechnology restrictions has not yet been set.
The biotechnology addition would sit alongside two other sectors included under the COINS Act: high-performance computing and supercomputing, and hypersonic systems. The existing OISP already prohibits or requires advance notification for certain transactions involving U.S. persons and specified technology sectors.
For biotechnology businesses, the proposal could make the regulatory classification of cross-border capital, collaboration and licensing arrangements a central part of transaction planning. Foley Hoag said conventional biotechnology licensing and joint-venture structures may require additional review to determine whether they would be prohibited. The proposed rule therefore reaches beyond straightforward share purchases and could affect how some international partnerships are structured before the final regulations are issued.
