Last year, China invested $2.8 billion in U.S. health care companies, a big jump from the $702.9 million in 2017.
Continued Sino-American trade relation concerns are forcing one company to rethink its investment opportunities in the United States.
Kevin Xie, a spokesperson for China-based Fosun International, told Bloomberg that the conglomerate plans to limit its investments in U.S.-based biotech companies to “small stakes.” The cautious investment plan is a response to the increased scrutiny of Chinese investments in U.S. pharma and biotech by the federal government. Washington has been increasingly focused on Chinese investment in the United States, particularly in the areas involving intellectual property and biotech. Earlier this year, Congress almost unanimously passed an updated version of the review powers of the Committee on Foreign Investment in the United States. That review power though has raised concerns in companies like Fosun, particularly after the White House ordered the Chinese majority owner of Massachusetts-based healthcare company PatientsLikeMe to sell his stake, as well as the more recent issues with Chinese tech company Huawei Technologies.
“Trade friction has impacted our investments in the U.S., but not to the extent of stopping all deals,” Xie told Bloomberg. “Companies in the U.S. still welcome investments and are willing to work with us, so we are making some changes in the wiggle room allowed under the law.”
As Bloomberg notes, Chinese investment in the U.S. pharmaceutical industry has been significant in recent years. Last year, China invested $2.8 billion in U.S. health care companies, a big jump from the $702.9 million in 2017, Bloomberg said. Some of the deals from 2018 include a team-up between BeiGene and SpringWorks Therapeutics to develop therapeutics that will target advanced solid tumors that contain RAS mutations, as well as other MAPK aberrations. Also last year, WuXi’s subsidiary Shanghai SynTheAll Pharmaceutical Co., Ltd., a contract development and manufacturing organization, secured a physical toehold in the United States, opening an operation site in San Diego that will provide process research and development as well as API manufacturing services for early phase clinical studies. WuXi also previously formed a partnership with Seattle-based Juno Therapeutics to develop treatments for cancer with the formation of a new Chinese company called JW Biotechnology Co., Ltd. The new Chinese company’s mission will be to build a cell therapy company in China.
China’s increased focus on investing in health care and becoming a global leader in the field has become a concern for Washington, particularly related to issues of intellectual property and patient data. Typically, the power of CFIUS has come into play when deals are involving billions of dollars, but as more Chinese money flows into the U.S. sector, the government is using the program more and more to scrutinize even the smallest of deals.
A 2017 report issued by the FBI noted that that intellectual-property theft by China costs the U.S. as much as $600 billion annually. Last year, two Chinese scientists pled guilty to stealing intellectual property from GlaxoSmithKline. Those trade secrets were going to be part of the foundation for setting up a company in China called Renopharma. Even researchers at vaunted colleges and cancer centers have come under scrutiny over funding from China or concerns of espionage. Emory University terminated some employees over funding from China the college said was not disclosed, while MD Anderson dismissed three ethnically Chinese scientists who have been associated with espionage conducted by the government of China following an investigation conducted by the National Institutes of Health.
