Genetic testing has grown to be a business big enough in China to warrant the government's intervention. Early in February, the government quietly put the brakes on the provision of genetic tests to customers by domestic hospitals and a variety of medical and health institutions.
If the ban persists it could blunt the ambitions of Shenzhen-based BGI, which has the world's largest gene-sequencing capacity, and its various competitors, including Beijing-based Berry Genomics, Hunan-based Second Xiangya Hospital of Central South University, and Shenzhen-listed DAAN Gene. BGI itself is in the process of preparing for an IPO to list part of its business.
BGI declined to comment on how the ban would affect its business. It is understood the company is in the process of seeking government approval for the commercial use of its products, including its proprietary sequencing software and the Complete Genomics-branded equipment made by the American company it acquired a year ago. An approval would allow it to sell its noninvasive DNA test, invented in 2010, which screens a fetus for Down syndrome by testing the mother's blood.
The ban has made the country's regulation of genetic testing - which existed till now in a legal grey area - among the most stringent, going beyond the U.S. Food and Drug Administration's recent action in stopping a U.S. company, 23andMe, from offering health-related genetic tests directly to consumers.
The authorities appear to be most concerned about DNA-based prenatal testing. Even though the government is relaxing its notorious population controls to cope with an aging population, many Chinese parents still have only one child, and want to ensure its health if not its sex and other traits. Now providers of genetic tests, with some exceptions, will have to apply for special permission from government agencies to conduct such tests.
Prenatal testing is the most popular in the nascent business of genetic testing in China. A Chinese securities analyst estimates its market to be worth 50 billion yuan ($8 billion) a year, based on the number of expected births and a testing fee of 3000 yuan ($480) each. A more realistic figure might be about 480 million yuan (US$77 million), the amount spent by the 160,000 women who have taken the tests since they were made available in China. In the United States, the comparable market is estimated to be worth upward of $1.3 billion a year.
The official ban was made through a cross-agency announcement posted on the website of the China Food and Drug Administration. The vague wording of the announcement makes it unclear how widely it would apply to different types of genetic testing, but it names prenatal DNA tests as an example of those subject to the ban. It applies to all current projects except those approved by the government, and requires all related medical devices to be licensed by the government before they can be manufactured, imported, sold or used, potentially covering the world's most popular gene-sequencing equipment, made by Boston-based Illumina, Inc.
From now on, clinical applications of gene-sequencing technology can be offered only at locations approved as pilot trial points by the National Health and Planning Commission, the Chinese population control authority. And they have to be done according to regulations, with "proper certifications and evaluations."
Other than that, a blanket ban is enforced. "Before relevant certification and regulations are promulgated, medical institutions cannot conduct clinical applications of gene sequencing. Those ongoing projects have to stop immediately," the announcement states.
In the announcement the government raises its concerns about the fast development of genetic testing as it has moved from labs to clinical applications. "Many genetic testing products and technologies, those for prenatal testing included, belong to the fields of pioneering research studies. They pose problems in issues such as ethics, privacy, the protection of human heredity resources, biological safety, as well as the management of diagnosis expertise of related medical institutions, their pricing policy and quality controls," it states in a long run-on sentence.
Before the ban, Chinese health clinics had offered customers a proliferation of genetic tests for the diagnosis of various diseases, from tumors and diabetes to immunity system deficiency and hearing impairment. In Shenzhen, where BGI has its headquarters, a major newspaper estimated the ban on prenatal testing would result in the birth of some 11,000 babies with congenital disorders, based on a total of 210,000 babies born last year in the city and a national birth defect rate of 5.6%.
Earlier, Chinese newspapers reported that BGI's DNA-based prenatal testing for Down syndrome was being censured by the government after an anonymous letter accused it of using testing equipment that was not certified by the government. The equipment in question, ironically, is the industry's most advanced model, Hiseq2000, made by Illumina.
Shu-Ching Jean Chen, Forbes
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