Biotech stocks plunged on Wednesday. Ascletis Pharma down 14%; Clover Bio, Transcenta down over 10%; Beigene, HBM Holdings down over 8%; Jacobio down over 7%.

The Trump administration is drafting an executive order threatening to cut off the pipeline for experimental drugs developed in China, the New York Times reported. The government officials reportedly circulated the draft executive order last week and sought feedback from US biotechnology investors.

The draft aims to bring pharmaceutical manufacturing back to the US by targeting drugs heavily produced in China, prioritizing US-made drugs in government procurement, and proposing tax incentives for companies relocating factories back to the US.

Another policy in the draft mandates that US pharmaceutical companies' transactions to license experimental drugs from China be subject to review by the Committee on Foreign Investment in the United States (CFIUS), and prevents pharmaceutical companies from relying on Chinese clinical data, which must undergo strict scrutiny by the US Food and Drug Administration (FDA) and incur higher regulatory fees.