CCP Investment in US Biopharm and Genomics Companies Raises Security Concerns

February 7, 2022 Updated: February 8, 2022

News Analysis

A growing number of biotech, genomics, and medtech firms with ties to the Chinese Communist Party (CCP) are operating in the United States, raising concerns about medical and genetic data security.

With more than $1 trillion at its disposal, China’s sovereign wealth fund has over 33 percent of the world’s total sovereign wealth fund assets. Since 2017, much of this money has been flooding into U.S. biotech companies, as part of the CCP’s Made in China 2025. The industrial policy specifically identifies biotech as a strategic industry, entitled to government financial support. Consequently, Beijing has allocated $100 billion for investment in the sector.

In 2018, China invested $5.1 billion in U.S. biotech companies, a 25 percent increase from the previous year. In keeping with the CCP’s “military-civil fusion strategy,” the People’s Liberation Army (PLA) is involved in biotech research to develop bioweapons that target specific ethnic groups. In 2019, half of China’s investment in the United States was in the health, pharmaceuticals, and biotechnology sectors, followed by financial and business services, and information and communications technology. In 2021, the number of filings for FDA approval by Chinese drugmakers was the highest it has ever been.

The number of Chinese biotech firms and joint ventures in the United States is steadily increasing. Innocube Bioscience Inc., located in Texas, is the U.S. headquarters for China’s Lepu Biopharma Co., which is heavily invested by Beijing’s sovereign wealth fund, the State Development and Investment Corporation (SDIC). BeiGene, a Chinese pharmaceutical and research firm located in San Mateo, California, conducts research on molecularly targeted agents related to gene sequencing. The company’s research center in China, which received significant local government funding, works on genetic engineering.

Much of the CCP’s infiltration of the U.S. bio and medical industries is aided by U.S. citizens and even the government. Last month, Chinese firm Andon Health Co. has received a $1.28 billion contract from the U.S. Army Contracting Command to supply COVID-19 self-test kits. A subsidiary of Andon, iHealth Labs, signed a contract with the New York State Department of Health in December for $120 million worth of self-test kits.

These purchases evoked a harsh response from Republican lawmakers. The Republicans floated a bill, which was defeated by the Democrats, prohibiting the purchase of Chinese-made COVID test kits. Chinese tabloid Global Times touted the purchases as the United States relying on China to fill the gaps in its supply chains.

Epoch Times Photo
The logo of Chinese gene firm BGI Group is seen at its building in Beijing, China, on March 25, 2021. (Carlos Garcia Rawlins/Reuters)

The PLA-linked BGI Group, formerly known as the Beijing Genomics Institute, purchased Complete Genomics, a California-based company that holds the genetic information of U.S. citizens. Last year, a China government sovereign wealth fund purchased 1.4 million shares in BGI Genomics. Another wealth fund, State Development and Investment Corporation (SDIC), owns more than 33 percent of BGI. Two other Chinese state-owned securities firms also bought shares, with Huatai Securities becoming BGI’s fifth-largest shareholder.

Chinese firm WuXi Pharma Tech acquired U.S. firm NextCODE Health in 2015, forming WuXi NextCODE Genomics. By 2019, there were 15 Chinese genetic testing or genomic sequencing companies with operations in the United States.

WuXi Biologics, bought a Pfizer manufacturing plant in China, which will grant the company access to some of Pfizer’s data. In 2015, the firm also bought a stake in an American DNA testing company, 23andMe. WuXi Biologics now has locations in Massachusetts and New Jersey. Its drug plant in Delaware was built with a China government grant. In November 2021, WuXi Advanced Therapies (WuXi ATU) announced the opening of a cell and gene therapy testing facility, which is located in the Philadelphia Navy Yard.

The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) expanded the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to block investments that the government deems to pose a threat to national security. Increasingly, CFIUS has used its authority to halt Chinese biotech investments.

The United States is expected to blacklist a number of Chinese biotech firms in the near future. Meanwhile, numerous Chinese biotech firms are operating in the United States while gathering the genetic data of American citizens.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Antonio Graceffo, Ph.D., has spent more than 20 years in Asia. He is a graduate of the Shanghai University of Sport and holds a China-MBA from Shanghai Jiaotong University. Graceffo works as an economics professor and China economic analyst, writing for various international media. Some of his books on China include "Beyond the Belt and Road: China’s Global Economic Expansion" and "A Short Course on the Chinese Economy."