Bloomberg Businessweek - USA (2019-11-18)

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BloombergBusinessweek November 18, 2019

Likemanyscience-mindedentrepreneursofhisgenera-

tioninChina,Wanggothisstartinpubliclyfundedresearch.

BGIbeganlifein 1999 astheBeijingGenomicsInstitute,a

state-backedlabdedicatedtoassistingtheHumanGenome

Project(HGP)—theClinton-eraefforttoassemblethefirst-

evercomprehensivepictureofhumanDNA.Compared

withtheparticipatingWesterninstitutions,BGIwastiny

anditscontributionmodest.ButtheworkgaveWangand

hisco-founderstheconfidenceandinternationalcon-

nectionstostrike outontheirown.In

2007 theysplitfromtheChinese

Academy of Sciences, the

state-controlledumbrella

forhigh-levelresearch,

to create a private

companyfocusedon

sequencing. They

alsodecidedtorelo-

catetoShenzhen,

China’sentrepre-

neurialhothouse.

At the time,

sequencing was

shifting fromrev-

olutionarytocom-

monplace.TheHGP,

whichwrappedupin

2003,requiredbillions

ofdollars infunding;by

mid-2008, accordingto the

U.S.NationalInstitutesofHealth

(NIH),a human-sizegenomecouldbe

mappedforlessthan$1million.Thecosthasbeendropping

evenfastersince.Withresearchersaroundtheworldhun-

gryforgeneticdataoneverythingfromvirusestoelephants,

BGIestablisheditselfasa sortofFoxconnofsequencing.

It commissionedsomeassignmentsitself,eagertodemon-

strateitsscientificchopsbyplacingarticlesinprestigious

journals.In 2008 itsresearcherspublished,inNature, the

firstgenomesequenceofanAsianperson;later,a BGI

teamrevealedthegeneticdetailsofanE.colioutbreakin

GermanythroughtheNewEnglandJournalofMedicine.

Atthesametime,BGIgaineda reputationfortestingthe

field’slimits.In 2011 it createdtheCognitiveGenomicsLab,

assemblinga multinationalgroupofscientiststoinvesti-

gatethegeneticbasisofintelligence—atabooquestionfor

manyWesternresearchers.Thestudy,whichwouldhave

examinedtheDNAofhigh-IQsubjectsandcomparedthem

witha controlgroupofaverageintellects,wasneverfin-

ished.Later,anexecutiverevealedata conferencethatBGI

wasworkingtowardofferinggene-edited“micropigs”ina

rainbowofcolors.This,too,waseventuallydropped.Both

projectswereemblematicofacertaintendencytowardcor-

porateentropy—aneagerness to pursue anything as long as

it vaguely involved DNA.

As it further diversified its business model, BGI was con-

templating a deal that would make it an important pro-

viderofthefield’sbasicinfrastructure.In 2012 it offered

$118milliontoacquireCompleteGenomics,anunprofit-

ablesequencing-machinemanufacturerinSiliconValley.

Atthetime,BGIwasbelievedtobetheworld’slargest

buyerofsequencingequipment,primarilypurchasedfrom

IlluminaInc.inSanDiego.ControlofCompletewouldgive

theChinesecompanytheabilitytobuilditsownsequenc-

ersandsellthemtoothers,particularlyemerging-market

customersthatmightbalkatIllumina’sprices.

Theproposal

attractedplentyofattentionintheU.S.,

muchof itnegative.Illumina fought

backvigorouslywitha counterbidand

a Washingtonlobbyingcampaign.ButU.S.

authoritiesapprovedtheproposal,despitefears

thatit mightgiveChinaa legupingenomicsorput

sensitiveinformationinBeijing’shands.“It’shardtobelieve

thatanyindividualoranycompanythat’sdirectedbythe

statetoengageincertainactivitieswouldn’tdoso,”says

MichaelWessel,a memberoftheU.S.-ChinaEconomicand

SecurityReviewCommissionwhoraisedconcernsabout

thedeal.

Discussionsaboutthesecurityimplicationsofgenom-

icstendtobeextremelyspeculative,andBGIhasattracted

nothinglikethescrutinythatHuaweiTechnologiesCo.,

China’slargesttechcompany,hasfacedoverallegationsthat

itsequipmentcouldbeusedforespionage.Butthetwocom-

paniesaresimilarinatleastoneimportantrespect:They

haveopaquestructuresthatmakeit difficultforoutsiders

tounderstandthefullextentoftheiroperations,finances,

andownership.

BGI’sofficialorganizationchartis depictedasa massive

planet,BGIGroup,orbitedbyeightmoonsofvaryingsizes.

(Itcouldalsobereadasa nucleusanditselectrons.)Only

oneoftheseeightmoonsis publiclytraded—BGIGenomics,

whichlistedontheShenzhenStockExchangein 2017 andhas

a marketcapitalizationofabout$3.5billion.It derivesmost

ofitsrevenuefromservicessuchasprenataltests.Another

unit,MGI,incorporatesthesequencing-machine business

acquired from Complete. Much of the rest of BGI, which

Woollymammoth

sculptures

outsidethe

CNGB