The Bioeconomy at War: Why America’s Next Semiconductor Moment is Biological

A strategic assessment of the National Security Commission on Emerging Biotechnology’s final report and its implications for venture capital in the Fifth Industrial Revolution

The Three-Year Window

The National Security Commission on Emerging Biotechnology (NSCEB) has delivered a sobering verdict: The United States has three years to act decisively in biotechnology or risk permanent subordination to China in what may be the defining technology of the 21st century. This isn’t hyperbole from academic theorists—it’s the consensus view of a bipartisan commission that includes former Google CEO Eric Schmidt, former Under Secretary of Defense Dov Zakheim, and leading biotechnology experts who spent two years assessing America’s position in the global bioeconomy race.

Their April 2025 report, “Charting the Future of Biotechnology,” arrives at a moment when the convergence of artificial intelligence and biology is creating capabilities that seemed like science fiction just five years ago. Using tools like AlphaFold, scientists can now predict protein structures in a weekend that once took years to determine. Chinese companies, such as BioMap, have developed AI foundation models with over 100 billion parameters, specifically designed for the life sciences—the largest of their kind. Meanwhile, WuXi AppTec, which the commission identifies as the “Huawei of biotechnology,” has grown to 38,000 employees and nearly $6 billion in revenue, manufacturing essential ingredients for medications that treat leukemia, lymphoma, and HIV.

The strategic implications extend far beyond healthcare. As Senator Todd Young, the commission’s chair, warns: “Countries that win the innovation race tend to win actual wars, too.”

The New Physics of Strategic Competition

To understand why biotechnology has become a national security imperative, consider how fundamentally the field is being transformed. Biology is transitioning from a science of discovery to one of design—a leap comparable to chemistry’s transformation in the 1880s or physics in the 1940s. But unlike those revolutions, which unfolded over decades, the AI-biotechnology convergence is compressing innovation cycles to mere years.

The Special Competitive Studies Project (SCSP), led by Eric Schmidt and building on the work of the National Security Commission on Artificial Intelligence, has identified biotechnology as one of six “transformative technologies” that will determine global power dynamics through 2030. Their analysis reveals a stark reality: China has been strategically investing in biotechnology for over 20 years, with a 400-fold increase in biopharma R&D spending over the past decade alone.

This isn’t just about research papers and patents. China is executing what the NSCEB calls a “steal, scale, strangle” playbook—the same strategy it employed with semiconductors and rare earth minerals. First, acquire intellectual property through both legal and illegal means. Then, scale production through state-backed champions. Finally, leverage market dominance to exert geopolitical pressure.

The commission’s research reveals that 79% of U.S. biopharmaceutical companies now depend on China-based companies for at least some component of their manufacturing. This dependency creates vulnerabilities that make our semiconductor supply chain concerns look manageable by comparison.

The Convergence Economy: Where Biology Meets Capital

For venture investors, the biotechnology transformation represents both an existential threat and a generational opportunity. The global biotechnology market is projected to reach $1.7 trillion by 2033, but the distribution of value creation will depend entirely on who controls the foundational platforms and infrastructure.

The NSCEB report calls for a minimum of $15 billion in federal investment over five years—a figure that, while substantial, pales in comparison to the CHIPS Act’s $280 billion commitment. This gap between need and allocation creates a critical role for private capital. But as the commission notes, the current venture ecosystem is failing to bridge the notorious “valley of death” between laboratory discovery and commercial scale.

Consider the sobering statistics: Biotechnology company bankruptcies hit a 10-year peak in 2023. Venture investment in the sector has retracted as investors have learned that “hard tech” like biotechnology requires patient capital and deep technical expertise—qualities increasingly rare in a market optimized for software returns.

Yet this market dislocation creates opportunity for specialized funds that understand the intersection of technology domains. The winning platforms won’t be pure-play biotechnology companies but those that leverage the convergence of AI, advanced materials, and biological engineering. As SCSP’s April 2025 AI+ Biotechnology Summit emphasized, “The bottleneck isn’t discovery. It’s deployment.”

China’s Biological Leviathan

The commission’s assessment of China’s biotechnology capabilities should alarm every American investor and policymaker. WuXi AppTec and WuXi Biologics aren’t just service providers—they’re strategic assets of the Chinese Communist Party, having transferred American intellectual property to the Chinese government while maintaining their position as essential suppliers to Western pharmaceutical companies.

Beijing’s ambitions extend beyond commercial dominance. The report documents how China already deploys genomic surveillance for population control, has produced genetically modified babies (with the responsible scientist already back in the lab after a brief imprisonment), and explicitly aims to use biotechnology for “intelligent warfare” through human-machine teaming. The commission warns starkly: “Drone warfare will seem quaint if we are faced with genetically enhanced PLA super-soldiers with fused human and artificial intelligence.”

The proposed BIOSECURE Act, which would prohibit federal agencies from contracting with Chinese biotechnology companies, has already impacted markets—WuXi AppTec’s and WuXi Biologics’ share values declined nearly 40% and 50% respectively in early 2024. But defensive measures alone won’t secure American leadership. As the commission argues, “The United States should not try to out-China China; that is a losing strategy. Instead, we must lean into our inherent strengths.”

The Infrastructure Imperative

The commission’s recommendations center on a fundamental insight: biotechnology leadership requires not just innovation but infrastructure—the ability to scale from laboratory to market at competitive speed and cost. This is where the investment opportunity becomes most acute.

The report identifies several critical infrastructure gaps:

Biomanufacturing Capacity: The U.S. lacks sufficient facilities to produce biological products at scale, creating dependencies on foreign manufacturers even for domestically developed innovations.

Regulatory Modernization: Current regulatory frameworks, designed for traditional pharmaceuticals, create 10-15 year development cycles incompatible with the pace of technological change.

Workforce Development: The biotechnology sector needs workers at every skill level, from PhD researchers to manufacturing technicians, yet our education system hasn’t adapted to meet this demand.

Data Infrastructure: Biological data is becoming a strategic resource comparable to oil, yet the U.S. lacks comprehensive standards and systems for collecting, storing, and utilizing this asset.

For infrastructure-focused investors, these gaps represent compelling opportunities. The platforms that can accelerate development timelines, reduce manufacturing costs, or streamline regulatory compliance will capture enormous value as the sector scales.

The Precision Medicine Pivot

One area where American innovation continues to lead is precision medicine—treatments tailored to individual genetic profiles. This represents not just a medical revolution but a complete restructuring of healthcare economics. As treatments become more personalized, the traditional pharmaceutical model of blockbuster drugs for mass markets gives way to a platform model where the ability to rapidly design and manufacture customized therapeutics becomes the source of competitive advantage.

5IR Funds’ investment thesis in bioscience and healthtech aligns precisely with this transformation. The convergence of AI-driven drug discovery, advanced materials for drug delivery, and blockchain for secure health data management creates opportunities for platform investments that can serve multiple therapeutic areas and applications. These aren’t traditional biotech investments requiring decades to reach profitability, but infrastructure plays that can generate returns while advancing American biotechnology sovereignty.

The Allied Advantage

The commission emphasizes that America’s greatest strategic asset isn’t technology but alliances. Unlike China, the United States can mobilize a coalition of democratic nations committed to ethical biotechnology development. The report recommends specific initiatives for allied cooperation:

Biotechnology Development Fund: A multilateral fund supporting research and infrastructure in allied nations, preventing them from becoming dependent on Chinese biotechnology.

Ethical Standards Alliance: Common frameworks for biotechnology governance that create market advantages for companies adhering to democratic values.

Supply Chain Resilience: Coordinated efforts to map and secure critical biotechnology supply chains across allied nations.

For investors, this allied ecosystem creates opportunities for cross-border platforms that can scale beyond the U.S. market while maintaining alignment with Western values and security requirements.

The Investment Thesis for Biological Sovereignty

The NSCEB report makes clear that biotechnology leadership isn’t optional—it’s existential. The commission projects that by 2030, most people on the planet will have consumed, used, worn, or been treated by a product of emerging biotechnology. By 2035, biomanufacturing will produce critical chemicals domestically. By the 2040s, biosensors will enable truly personalized medicine. By the 2050s, we’ll be biomining rare minerals in space.

But these projections assume American leadership. If China achieves biotechnology dominance, these capabilities become leverage points for geopolitical coercion. Imagine cancer treatments withheld during Taiwan tensions, or agricultural biotechnology used to create food dependencies, or biological data weaponized for population control.

For venture investors, the message is clear: biotechnology isn’t just another sector—it’s the sector that will determine whether American innovation continues to drive global progress or whether we become subordinate to authoritarian biotechnology regimes.

The Three-Track Strategy

The commission’s recommendations translate into three investment themes:

1. Acceleration Platforms: Technologies that compress the time from discovery to deployment. This includes AI-driven design tools, automated laboratories, and modular manufacturing systems.

2. Sovereignty Infrastructure: Capabilities that ensure American control of critical biotechnology assets. This encompasses secure data platforms, domestic manufacturing capacity, and supply chain mapping tools.

3. Convergence Applications: Products that leverage the intersection of biotechnology with other transformative technologies. Examples include biological computing, living materials, and hybrid biological-digital systems.

These themes align with the commission’s two-track national strategy: “make America innovate faster, and slow China down.” But for investors, there’s a third track: build the bridges between innovation and implementation that neither government nor traditional venture capital currently provides.

A Call to Strategic Action

The NSCEB report concludes with an urgent call: “There is time to act, but no time to wait.” For the investment community, this translates into specific imperatives:

For Limited Partners: Biotechnology can no longer be viewed as a specialized, high-risk allocation. It must be recognized as critical infrastructure for the 21st century economy. LPs should seek funds with the technical expertise, patient capital, and strategic vision to navigate this complex landscape.

For Venture Capitalists: The traditional VC model—optimized for software returns and short time horizons—is poorly suited to biotechnology’s challenges. Success requires new models that can bridge the valley of death between discovery and deployment, potentially through closer collaboration with government programs and allied investors.

For Entrepreneurs: The opportunity to build foundational biotechnology platforms has never been greater. The convergence of federal support, technological capability, and market need creates conditions for building companies that are both commercially successful and strategically vital.

For Policymakers: The commission’s $15 billion funding recommendation should be viewed as a floor, not a ceiling. But beyond funding, regulatory modernization and strategic coordination are essential. The proposed National Biotechnology Coordination Office could serve as a critical interface between public and private sectors.

The View from 2030

The NSCEB commissioners paint two possible futures. In one, America leads a global biotechnology renaissance, bringing breakthrough treatments, sustainable manufacturing, and enhanced human capabilities while maintaining ethical guardrails and democratic values. In the other, China’s biotechnology dominance creates new dependencies and vulnerabilities that make today’s semiconductor concerns seem quaint.

The difference between these futures will be determined in the next three years. As the commission states: “There will be a ChatGPT moment for biotechnology, and if China gets there first, no matter how fast we run, we will never catch up.”

For 5IR Funds and other forward-looking investors, the path is clear. Biotechnology represents the ultimate expression of our Fifth Industrial Revolution thesis—the convergence of AI, advanced materials, and biological engineering to create transformative platforms. The federal government has provided the strategic assessment and initial capital commitment. Now it falls to private capital to build the bridges between American innovation and global leadership.

The commission began its work by visiting farms, laboratories, hospitals, and military bases across America. They concluded that biotechnology is everywhere—in our food, our medicine, our materials, and increasingly, our strategic calculations. The question isn’t whether to invest in biotechnology, but whether America will maintain the innovation leadership that has defined our prosperity and security for generations.

The three-year window is open. The race is accelerating. The time for strategic investment is now.

For institutional investors seeking to understand the strategic implications of the biotechnology revolution and explore investment opportunities aligned with American technological sovereignty, contact 5IR Funds’ investment team. Our expertise at the intersection of AI, advanced materials, and biological systems positions us to identify and support the platforms that will define the bioeconomy while advancing U.S. strategic interests.

About This Analysis

This assessment synthesizes findings from the National Security Commission on Emerging Biotechnology’s April 2025 final report, the Special Competitive Studies Project’s biotechnology initiatives, and current market dynamics in the biotechnology investment landscape. 5IR Funds acknowledges the critical importance of the NSCEB’s work in framing biotechnology as both an economic opportunity and national security imperative. The views expressed represent 5IR Funds’ interpretation of these strategic assessments and their implications for venture capital investment.

Recommended Resources

• National Security Commission on Emerging Biotechnology: “Charting the Future of Biotechnology” (April 2025)
• Special Competitive Studies Project: “National Action Plan for U.S. Leadership in Biotechnology”
• SCSP & NSCEB: “AI+ Biotechnology Summit Proceedings” (April 2025)
• Congressional Research Service: “The BIOSECURE Act and U.S.-China Biotechnology Competition”
• RAND Corporation: “Maintaining the Competitive Edge in Artificial Intelligence and Machine Learning” (2020)