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National security experts worried over SC pharmaceutical company's ties to China

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Ritedose Corp

The Ritedose Corp. employs 350 workers at its headquarters and plant in Columbia.  

COLUMBIA — Because of its ties to a Chinese investment firm, a South Carolina pharmaceutical manufacturer caught the eye of national security regulators when it was approached as a possible subcontractor for COVID-19 vaccine distribution.

Despite a 25-year history of making generic drugs in the Palmetto State, the combination of the international coronavirus pandemic and a 2017 sale has put Columbia-based The Ritedose Corporation in the crosshairs of The Committee on Foreign Investment in the United States, according to The Wall Street Journal.

Ritedose CEO Jody Chastain did not return phone messages left at the company from The Post and Courier this week but said in statements to The Wall Street Journal he wasn’t aware of any inquiries from the federal watchdog run by the Treasury department with eight other agencies, including the departments of Defense, Justice and Homeland Security. 

The committee is tasked with reviewing foreign investments in U.S. companies that it thinks could threaten national security. It has largely focused on military equipment and technology firms with data gathering capabilities, but the onset of the virus has expanded the definition of national security concerns to include drugs, protective gear and medical supplies.

Ritedose was acquired three years ago by Hong Kong-based private-equity fund AGIC Capital and Chinese pharmaceutical company Humanwell Healthcare, based in Wuhan, the province where the coronavirus pandemic originated.

The Committee on Foreign Investment has the ability to scuttle past deals, like when it forced the Chinese majority owner of Massachusetts-based healthcare company PatientsLikeMe to sell his stake last April. Before that, Chinese firms had become major health and biotech industry investors in the United States. 

Paul Marquardt, a Washington, D.C., lawyer who specializes in reviews conducted by the committee, said scrutiny of the Ritedose deal, while an oddity for the length of time since it was completed, is not shocking.

He said the committee has been reviewing biotech firms for several years. As long as emerging technologies are not involved, 80 to 90 percent of those transactions ultimately go through following assurances from companies that U.S. supply won’t be disrupted.

“If I were advising these firms I’d tell them you’re probably going to go through a process, but at the end of the day, it’s something that’s going to be resolved,” Marquardt said.

Ritedose, which employs 350 people at a 270,000-square-foot facility northeast of the city, gained the attention of federal authorities when they learned the company had been approached by Connecticut-based ApiJect Systems America.

ApiJect, the inventor of a prototype for a low-cost, prefilled syringe originally intended to reduce the need to reuse needles in the developing world, received a $138 million federal contract to production of prefilled syringes in anticipation of a vaccine.

ApiJect reached out to a number of subcontractors, including Ritedose, Chastain told CNN, saying "although we have not reached any arrangement or agreement with ApiJect, we certainly would be honored to do so and have our company as part of this effort against COVID-19."

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ApiJect did not return messages from The Post and Courier.

The technology, called blow-fill-seal, being targeted by ApiJect and used by Ritedose molds the syringes or containers, fills them and seals it in one continuous motion to keep it sterile.

ApiJect also holds another $456 million contract to bring up to eight factories online to make another 500 million syringes to “contain the pandemic spread to minimize the loss of life and impact to the United States economy," according to federal documents.

U.S. Sen. Lindsey Graham, R-S.C., said he hadn't heard of Ritedose or its connection to China, but was uncomfortable with any foreign company playing a role in the production of a vaccine meant for Americans.

"I just don't like the idea that to combat the virus, the weapons you need are produced in China," Graham said, who has been pushing tax incentives meant to bring the manufacturing of health care supplies back to the U.S.

But the company has enjoyed the support of other S.C. officials when it announced a $10 million expansion of its facility in 2017, one month after its purchase by Chinese investors.

“To see a company like Ritedose choose to continue investing in our state is an important sign to the business community around the world that South Carolina is the place to be. We look forward to seeing the new heights the relationship between our state and this company will reach in the years to come,” Gov. Henry McMaster said at the time.

S.C. Secretary of Commerce Bobby Hitt added, “We’re excited to see the continued success of our state’s thriving life sciences industry."

The ApiJect work is not Ritedose's only federal contract.

In July 2017, a month after the Chinese investors announced their deal, the Defense Logistics Agency, which manages the global supply chain for the U.S. military and other federal agencies, granted Ritedose a five-year contract to support daily pharmaceutical purchases for the government, The Wall Street Journal reported.

A Defense Logistics Agency spokesman told The Journal “DLA is currently reviewing the contract given the (The Committee on Foreign Investment) inquiries."

Jessica Holdman is a business reporter for The Post & Courier covering Columbia. Prior to moving to South Carolina, she reported on business in North Dakota for The Bismarck Tribune and has previously written for The Spokesman-Review in Spokane, Wash.

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