From The Editor | April 12, 2024

You Want To Rein In China? Then Actually Do It


By Louis Garguilo, Chief Editor, Outsourced Pharma

US China trade war GettyImages-1215715673

What’s in the proposed legislation circling our biopharma outsourcing world?

Here’s the stated objective leading off H.R. 7085 (S.3558 in the Senate), known as the BIOSECURE Act:

“To prohibit contracting with certain biotechnology providers, and for other purposes.”

The first part is bone chilling; the second, ominous.

Those “certain biotechnology providers” are, for now, in China. Will you be prohibited from contracting with them?

Will the U.S. government’s “purposes” be served? Let’s give it some concentrated thought.

Taboo For You?

Lets start with the prohibitions, laid out in SEC. 3. of the proposed legislation.

(a) In General.—The head of an executive agency may not—

(1) procure or obtain any biotechnology equipment or service produced or provided by a biotechnology company of concern; or

(2) enter into a contract or extend or renew a contract with any entity that—

   (A) uses biotechnology equipment or services produced or provided by a biotechnology company of concern and acquired after the applicable effective date in subsection (c) in performance of the contract; or

   (B) enters into any contract the performance of which will require the direct use of biotechnology equipment or services produced or provided by a biotechnology company of concern…

Statutorily, then, this doesn't apply to you if you are not in charge of a U.S. government executive agency.

But of course the government designating an entity a national security risk, which is the actual accusation as we’ll see in a moment, will force all drug sponsors to think twice before engaging that entity.

Why A Risk?

Here are some of the clauses leading to the conclusion of national security risk, purportedly what this is all about.

(5) PRC [People’s Republic of China] law requires companies that are controlled by a PRC entity, like BGI , to comply with PRC national security laws, which provide the Chinese Communist Party (CCP) with the power to compel Chinese companies to turn over their data…

11) The executive branch has determined that BGI, formerly known as Beijing Genomics Institute, is a national security threat.

[The U..S Department of Defense  added BGI to its list of PRC Military Companies; the Department of Commerce added BGI Tech Solutions (Hong Kong) a subsidiary of BGI, to its Entity List for concerns the unit poses a significant risk to contributing to PRC Government surveillance; the National Counterintelligence and Security Center published a public advisory that the Government of the PRC seeks to leverage access to genetic data to conduct repression and surveillance with mention of BGI’s role in this campaign.]

15) BGI is engaged in global campaign to collect foreign person’s genetic data.

You may not have heard of BGI until now. The company claims to be the world's largest genome research organization. This is where legislation might have stopped: it's about genetic data transfer

And H.R. 7085 focuses right there, until suddenly, this:

(24) WuXi Apptec presents a national security threat to the United States.

(25) According to PRC press, WuXi Apptec has sponsored Military-Civil Fusion events in the PRC.

(26) WuXi AppTec has received investments from a “Military-Civil Integration Selected Hybrid Securities Investment Fund”.

(27) According to PRC press, WuXi AppTec has granted awards to PLA researchers and invited PLA institutes to participate in the selection process of company awards.

(28) Chris Chen, CEO of WuXi Biologics, was previously an adjunct professor at the PLA’s [People’s Liberation Army] Academy of Military Medical Sciences.

It almost feels like an afterthought. But a potentially devasting one.

With ~65% of WuXi's 2023 sales coming from U.S. customers, the legislation cuts the legs from underneath one of the most important CDMOs on the globe.

War Reflections

The BIOSECURE Act reflects the deepening U.S.-China rivalry.

Most of us are worried over China's rising militarism on the one hand, and advancing technological capabilities in strategic sectors like biopharma, on the other.

The CCP is a dangerous, antiquated government overlording ~1.4 billion people, controlling a huge home market, and wreaking havoc on nations around the world.

And we darn well rely on China for too much of our drug supply.

How do we deal with this?

Certainly not by targeting one, two, or three companies.

But here's the rub:

If as the legislation clearly states, ANY company in China must obey the diktats of the CCP, then ALL China-based companies are a potential national risk.

That would, for example, in many cases even include Big Pharma, which is embedded in China – often if not always with some Chinese partners – and invests billions of dollars there? (related editorial here)

Back to H.R. 7085, the allegations against BGI specifically, and WuXi by extension, are serious.

It’s reported U.S. intelligence officials (including the FBI), relying on two unnamed sources, informed senators that WuXi had transferred U.S. intellectual property to Beijing without consent.

Again, an anonymous source says WuXi transferred a U.S. client's intellectual property to Chinese authorities. “Due to the sensitivity of the classified material,” no details have been revealed to the public.

A WuXi AppTec spokesperson responded: "We are not aware of any unauthorized transfers by WuXi AppTec of any U.S. client's data or intellectual property to China."

China's embassy in Washington said,  "If anyone believes that WuXi AppTec or its related companies have violated laws regarding intellectual property rights, they should provide convincing evidence to support their claims.”

This is the first time I've ever agreed with anything coming from the Chinese government.

BIO Backtracks

Reuters reports, “The Biotechnology Innovation Organization, which lobbies for companies in the sector, initially opposed the inclusion in the legislation of WuXi AppTec and others.”

What changed?

According to Reuters, “under pressure from U.S. lawmakers, BIO reversed its opposition to the bill, citing U.S. national security, and said its member WuXi AppTec had ended its ties to the lobby group.”

BIO CEO Crowley (see here) has said, “We can't let China be the biotech center of excellence."

Kneecaping WuXi is not going to stop that evolution.

If the PRC, CCP and the Chinese military apparatus are the real targets here, then show some mettle:

Ban all biopharma-related commerce/trade with China.

Sound ridiculous?

About as ridiculous as the BIOSECURE Act.

We don’t need legislation. We need data and facts, if they exist, made public. Individual U.S. companies and the market as a whole will take care of the rest.


Editor's Note: since publication, new drafts with some revisions are being considered. We'll stay on it ...

Related editorials from Chief Editor Louis Garguilo:

Is WuXi AppTec An Enemy Of The State?
BIO Expels WuXi, Agrees With U.S. Government
From Ally To Adversary: BIO's Swift Rebuke Of WuX
Nothing To See Here! Just Big Pharma Investments In China