The ongoing US-China trade war has already affected sectors from AI to agriculture and shows few signs of slowing. Now the conflict is spilling into medicine, leaving some Chinese biotechnology companies in the cold. Whilst the sector鈥檚 collaborative nature has generally protected subsidiaries operating in the US, two recent legislative moves suggest that this is changing.
The first is by two leading members of the US鈥� Select Committee on the CCP (Chinese Communist Party) that hopes to ban federally funded medical providers from using the services of any Chinese biotechs, particularly BGI Group, MGI and . This would effectively ban the companies from the US market. The bill argues that due to the CCP鈥檚 legal ability to view private data held by any companies based in its territory, handing over genetic data to them constitutes a national security risk.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDatashows that these fears are not entirely unfounded. BGI 鈥� formerly Beijing Genomics Institute 鈥� has been shown to work with the People鈥檚 Liberation Army (PLA) of China in gene sequencing, as well as storing data from millions of prenatal tests globally in China鈥檚 gene database. However, Reuters found no evidence of this data being misused, and the company has stated that it has never provided or been asked to provide genomic data to Chinese authorities.
The question of what exactly China would do with US genomic data is open, though the bill鈥檚 proponents have some ideas. Chairman of the group Mike Gallagher suggested it could 鈥減otentially even [be used] to develop a bioweapon used to target the American people.鈥�
This bill was followed up on 12 February by a letter from members of the Select Committee , a multinational biotech and medical devices company headquartered in Shanghai. The letter claims that the company has ties to the PLA and as such represents a threat to national security, a claim it strongly denies. A states that 鈥淲uXi AppTec has a strong track record of upholding the highest intellectual property, data and privacy protection standards, as well as maintaining the trust of our customers.鈥� The company has in the past worked with , and , amongst others.
The impact of this distrust can be felt beyond the legislative world. MGI, a Chinese company posed as an alternative to the , can decode a genome for around $100, according to Endpoints News. Yet the firm, headquartered in Shenzhen, is facing headwinds due to its links to BGI, . Fears over legislation are limiting the number of labs and hospitals willing to work with the company, both for security and cost reasons.
Collaboration saves lives
by the US-China Economic and Security Review Commission into China鈥檚 biotech development notes the potential security risks but does not view them as major concerns. On the topic of intellectual property theft, the report notes that 鈥渢his reality is not limited to China [鈥 and is generally inherent to high-innovation industries.鈥�
While it does recommend that the US encourage Chinese biotechs to move towards international norms in terms of data sharing, it suggests a range of options from free-trade agreements to tariffs with no mention of sanctions.
It is also clear that the US鈥� biotech industry is not under threat from China given the significant gap in market size ($4.7-$6.2bn compared to $118bn) and states that 鈥渋ntegration and collaboration run deep, and [鈥 disrupting these linkages would bring high costs for innovation, US welfare and public health.鈥�
This is particularly true after a difficult year for the biotech sector in 2023. In January, GlobalData鈥檚 senior director of market research Urte Jakimaviciute commented in a press release that 鈥渂iotech鈥檚 funding and investors are faced with current market uncertainty. [鈥 There were many challenges and changes for the global economy in 2023,鈥� and noted escalating China-West tensions as a key factor in that uncertainty. These recent moves to remove Chinese businesses from the US are likely to have a dampening effect on a market already struggling to recover.
