China DNA Deal Clears U.S. Hurdle ; National Security Waiver, despite Outcry, Advances Bid for a Sequencing Firm

By Pollack, Andrew | International Herald Tribune, January 2, 2013 | Go to article overview

China DNA Deal Clears U.S. Hurdle ; National Security Waiver, despite Outcry, Advances Bid for a Sequencing Firm


Pollack, Andrew, International Herald Tribune


BGI-Shenzhen has been given approval by the U.S. Committee on Foreign Investment to proceed in its acquisition of Complete Genomics, which some in the industry have said poses a security threat.

The U.S. government has given national security clearance to the controversial purchase of an American DNA sequencing company by a Chinese company.

The Chinese company, BGI-Shenzhen, said in a statement over the weekend that its acquisition of Complete Genomics, based in Mountain View, California, had been cleared by the Committee on Foreign Investment in the United States, which reviews the national security implications of foreign takeovers of U.S. companies. The deal still requires antitrust clearance by the Federal Trade Commission.

Some scientists, politicians and industry executives had said that the takeover represented a threat to American competitiveness in DNA sequencing, a technology that is becoming crucial for the development of drugs, diagnostics and improved crops.

The fact that the $117.6 million deal was controversial at all reflects a change in the genomics community.

A decade ago, the Human Genome Project, in which scientists from many nations helped unravel the genetic blueprint of humankind, was celebrated for its spirit of international cooperation. One of the participants in the project was BGI, which was then known as the Beijing Genomics Institute.

But with DNA sequencing now becoming a big business and a linchpin of the biotechnology industry, international rivalries and nationalism are starting to move front and center in any acquisition.

Much of the alarm about the deal has been raised by Illumina, a San Diego company that is the market leader in sequencing machines. It has potentially the most to lose in the deal because BGI might buy fewer Illumina products and could even become a competitor. Weeks after the BGI deal was announced, Illumina made its own belated bid for Complete Genomics, offering 15 cents a share more than BGI's bid of $3.15. But Complete Genomics rebuffed Illumina, saying such an acquisition would never clear antitrust review.

Illumina also hired a lobbyist, the Glover Park Group, to stir up opposition to the deal in Congress. Representative Frank R. Wolf, Republican of Virginia, is the only member of Congress known to have publicly expressed concern.

BGI and Complete Genomics point out that Illumina has long sold its sequencing machines -- including a record-setting order of 128 high-end machines -- to BGI without raising any security concerns. Sequencing machines have not been subject to export controls like aerospace equipment, lasers, sensors and other gear that can have clear military uses.

"Illumina has never previously considered its business with BGI as 'sensitive' in the least," Ye Yin, the chief operating officer of BGI, said in a November letter to Complete Genomics, which was made public in a regulatory filing. In the letter, the BGI executive accuses Illumina of "obvious hypocrisy."

BGI and Complete Genomics said that Illumina was trying to derail the agreement and to acquire Complete Genomics itself so it could "eliminate its closest competitor, Complete."

BGI is already one of the most prolific DNA sequencers in the world, but it buys the sequencing machines it uses from others, mainly Illumina. …

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