The progress of China's biotechnology industry will create opportunities for Indonesia as long as we are smart enough and can take advantage of it.

To this day, it is difficult to deny that the United States is the most powerful country in the world and still dominates technological advancements in various fields.

However, recent developments indicate that US dominance is beginning to be threatened by China's technological advancements.

In the digital technology sector, the popularity of TikTok has even led the US government to consider banning the application made by a Chinese company, unless its shares are sold to US entrepreneurs. Most recently, the artificial intelligence (AI) service from China, DeepSeek, has emerged and shaken the dominance of its predecessors, such as ChatGPT and Meta, products of US technology companies.

The emergence of DeepSeek has caused the stock prices of US technology companies to plummet, with Nvidia's market capitalization dropping by 593 billion US dollars in just one day. This is enough to demonstrate China's prowess as a strong competitor to the US in the digital technology sector.

However, what is quite surprising is that the biotechnology sector, which has long been dominated by the US, is also threatened by China's rapid advancements and it is only a matter of time before China takes over.

China's biotechnology progress

The rise of China has become a focal point in the global biotechnology and pharmaceutical industry. At the prestigious JP Morgan Healthcare Conference recently, pharmaceutical company executives highlighted the rapid development of China's biotechnology research and innovation.

Gilead CFO Andy Dickinson said China is transforming from a manufacturing hub into a powerhouse in biotechnology innovation.

China currently processes 6,280 items of drugs under development, a 1,200 percent increase compared to a decade ago.

This growth reflects rapid technological advancement and significant investment in research and development, making Chinese corporations the strongest competitors in a field previously dominated by the US. As a result, investors in the biotechnology sector and multinational pharmaceutical companies are increasingly turning to China for expansion and innovation development.

There is one example of China's biotechnology advancement. Recently, YolTech Therapeutics, a Chinese biotechnology company, launched the world's first clinical trial for in-vivo CRISPR gene editing therapy targeting the blood disease, beta-thalassemia. This is an extraordinary achievement in the gene editing-based healthcare business.

Quoted from the endpts.com page, this Chinese biotechnology startup has made a surprising breakthrough, starting the first clinical trial using CRISPR gene editing technology to edit cells directly in the bone marrow. This is a major breakthrough in gene therapy methods, different from previous methods that edit cells outside the body before being returned to the patient's body.

This new method edits directly inside the body (in vivo), thus simplifying the procedure, reducing the risk of complications, and increasing the success of the therapy.

The progress reflects a revival of CRISPR research in China, which had been dormant for five years due to the He Jiankui scandal. In 2018, China was in the world spotlight, due to the controversy over He Jiankui's sperm editing, which was considered unethical because it edited unborn babies. He Jiankui was eventually tried and jailed for three years.

The success of the clinical trial of this in-vivo gene editing method has a huge impact on the future of gene editing therapy. This method not only opens up opportunities to treat more types of diseases, but also simplifies the treatment process for patients.

US-China biotech war

The rapid advancement of China's biotechnology has unsettled the US, which has long dominated the field. Consequently, in January, the US House of Representatives proposed a bill called the Biosecure Act, which aims to prohibit US government-funded healthcare services from using biotechnology services from Chinese companies.

Several biotechnology companies from China, such as BGI Group, MGI, and WuXi AppTec, for instance, will be banned from operating in the US. The drafters of this bill argue that the party authorities and the Chinese Government have the power to access personal data stored by Chinese companies, regardless of their operational regions, including in the US.

Handing over the genetic data of US citizens to Chinese biotech companies is seen as a national security risk and should be prevented by law. This case can be likened to President Biden's policy at the end of his term that banned TikTok from operating in the US unless a majority stake was sold to a US company.

The concern is that Chinese companies operating in the US, in addition to serving consumers, are also acting as agents of the Chinese government and Communist Party to absorb the personal data of US citizens.

According to a 2021 Reuters investigation, these fears are not entirely unfounded. BGI (formerly the Beijing Genomics Institute) was found to be working with China’s People’s Liberation Army (PLA) on gene sequencing research, and to be storing data from millions of prenatal tests globally into a Chinese gene database.

However, Reuters also found no evidence that this data was misused, and the company stated that it had never provided or been asked to provide genomic data to Chinese authorities.

The bill has been under discussion, with a letter proposing sanctions against WuXi AppTec, a Shanghai-based multinational biotechnology and medical device company, claiming that WuXi AppTec has ties to the PLA and is therefore a threat to U.S. national security.

WuXi AppTec denied the allegations in a statement on the company website which stated: “WuXi AppTec has a strong track record of upholding the highest standards of intellectual property, data and privacy protection, and maintaining the trust of our customers.”

The company has previously collaborated with top multinational companies, such as Pfizer, AstraZeneca, and GSK.

If this protectionist law is enacted, it would at first glance protect US biotechnology companies that are threatened by competition from their Chinese competitors.

But supporters of the bill are already imagining things even further ahead, arguing that the collection of US citizens’ genomic data could potentially be used to develop biological weapons that could be used to target Americans.

Fears among the US government and the House of Representatives regarding the invasion of Chinese biotechnology companies are growing.

According to a report by Endpoints News, MGI, a Chinese company that is an alternative to US biotech company Illumina, can decode genomes for only about US$100, much lower than the costs charged by US companies.

Shenzhen-headquartered MGI is facing obstacles because it is accused of having ties to BGI Group, one of the Chinese biotech companies targeted by the Biosecure Act.

Collaboration is more promising

Will the Biosecure Act be universally approved by the US and stop China’s biotech invasion? It seems unlikely. In 2019, the US-China Economic and Security Review Commission produced a report on China’s biotech developments, which noted potential security risks but did not consider them a major concern.

The topic of intellectual property theft, for example, occurs not only in China, but also in other countries, and generally occurs in industries with high innovation.

The report does not recommend sanctions on Chinese biotech companies, but recommends that the US encourage Chinese biotech companies to move toward international norms on data sharing. A range of alternative options are outlined, from implementing free trade agreements to imposing tariffs on Chinese biotech products.

The report even states that so far integration and collaboration have been so close that protectionist policies, such as the Biosecure Act, would actually impose high costs on innovation, welfare and the health of US citizens.

The Biotechnology Innovation Organization, a leading U.S.-based trade organization, said it is evaluating a number of policy and legislative proposals to help accelerate medical innovation and ensure the U.S. remains a leader in this critical sector.

But maintaining U.S. dominance won’t be easy. The U.S. biotech industry still has significant strengths, including a long history of innovation, a robust regulatory infrastructure, capital clout and established partnerships. But experts warn that an inability to adapt to new competitive realities could cost the U.S., especially as China combines speed and scale.

Rather than viewing this shift as a zero-sum game, some experts see opportunities for collaboration, including through licensing agreements and research collaborations between countries, that could allow the two major powers to more effectively address challenges together.

For investors and citizens of the world, the question is not who will dominate, but how this competition can be transformed into a collaboration that will bring mutual benefits. However, it seems that collaboration between these two biotech superpowers is still difficult to realize in the near future.

Challenges for Indonesia

The progress of China's biotechnology industry will create opportunities for Indonesia, as long as we are smart enough and can take advantage of it.

Research and trade cooperation in biotechnology, pharmaceutical, and health products with China is believed to be more open than with the US. If they are not yet able to produce their own products, importing biotechnology and pharmaceutical products from China is certainly cheaper than products from the US and other Western countries.

In terms of the pharmaceutical industry, so far Indonesia is still very dependent on imports of raw materials, especially from China and India. According to data from the Ministry of Industry, more than 90 percent of the raw materials for the national pharmaceutical industry are still met from imports.

For example, our imports of raw materials for medicines (BBO) continue to increase from 27,050 tons or worth 294 million US dollars in 2019, to 35,890 tons or around 509 million US dollars in 2022. The largest imports come from China (45 percent), followed by India (27 percent) and the US (8 percent).

Indonesia's entry into BRICS will enhance bilateral relations with China, including in education, biotechnology and pharmaceutical research. Moving closer to China does not mean moving away from the US. We can benefit from working with both.

Djoko Santoso
Professor of Medicine, Airlangga University
Chairman of the Health Agency of the MUI of East Java Province