The National Security and Investment Act and its impact on life sciences dealmaking

The National Security and Investment Act 2021 (the NSI Act) came into force in January 2022. It affects a wide range of potential transactions, from M&A to IP licensing. The legislation gives wide scope to Government in taking steps to stop transactions on national security grounds. Although extensive guidance is available indicating how the legislation will be applied, until a bank of prior decisions has been built up it is difficult for businesses to understand how their proposed deals might be affected. We are now beginning to see some transactions going through the process, shedding some light on the likely approach that will be taken.

Progress to date

The essentials of the NSI Act can be seen here. More information on how it will be applied is available in the form of guidance. See for example, guidance for the higher education and research-intensive sectors, and additional guidance on each of the 17 sensitive areas where mandatory notifications are required if the relevant thresholds of control and conditions are met. Also useful is the Government’s “section 3 statement” on how it expects to exercise the “call in” power under the Act in relation to qualifying acquisitions completed from 12 November 2020.

An annual report is published on the application of the regime. The first of these, published in March, is very early in its operation. However, already over 200 notifications had been submitted.

Among the transactions that have so far been formally assessed are the following:

  • acquisition by Altice of 5.9% shares in telecoms provider BT. The transaction was called in for a full national security assessment on 26 May, and has now been cleared.
  • a licence of know-how related to SCAMP-5 and SCAMP-7 vision sensing technology granted by the University of Manchester to Beijing Infinite Vision Technology Company Ltd. This licensing transaction has been blocked on the basis that the technology concerned could be used to build defence or technological capabilities which may present national security risk to the UK (dual use).
  • acquisition of Pulsic Ltd by Super Orange HK Holding Ltd. This proposed acquisition has been blocked on the basis that the intellectual property, knowledge, processes and techniques for the software developed and owned by Pulsic for electronic design automation to facilitate the building of cutting-edge integrated circuits could be used in a civilian or military supply chain (dual use) and so present a risk to national security.

We can see from these early decisions that Government ministers are willing to use their new powers to block transactions where they see issues of national security arising, both in the M&A and technology licensing fields.

Impact on life sciences

‘Synthetic biology’ is among the 17 key sectors earmarked as particularly relevant to national security. This category is broadly defined to include the process of applying engineering principles to biology to design, redesign or make biological components or systems that do not exist in the natural world. While some categories of activity are specifically excluded from scope, the boundaries are finely drawn and may not be easy to apply. For example, the sector guidance gives the following example:

“a company developing antibody-drug-conjugates would not be exempt from mandatory notification [if all other conditions for a mandatory notification are satisfied] since these products contain highly potent toxins and use a linker technology that enable antibodies to deliver toxins to specific tissues. However, a company developing standard monoclonal antibody therapies would be exempt from submitting a mandatory notification [if all other conditions for a mandatory notification are satisfied].”

The National Security and Investment Act Annual Report 2022 shows that, at the point of publication, synthetic biology represented the smallest category by number of mandatory notifications, although account for a more substantial proportion of voluntary notifications.

We are aware of life sciences transactions that are currently being notified and called in for review. However, it remains to be seen how these will be treated and where the boundaries will be set.


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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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