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Scientists Indicted for Allegedly Selling Stolen Drug Secrets to China

A grand jury has indicted five people, two of them employees of a research facility near Philadelphia, with conspiring to steal pharmaceutical trade secrets and resell them in China, using a corporate front that may have ties to the Chinese government.

The indicted scientists are Yu Xue and Lucy Xi, former employees of British pharmaceutical giant GlaxoSmithKline’s facility in Upper Merion, Pennsylvania.  The New York Times notes that Xue, although only 45 years old, is described in the indictment as “one of the top protein biochemists in the world.”  Xue was fired by Glaxo earlier this month, while Xi left the company in November.

Prosecutors allege that Xue and Xi “emailed and downloaded confidential data about a dozen or more company products to associates who planned to sell and market the trade secrets through a company they set up in China, called Renopharma,” according to the Times.  One of the products in question was a revolutionary cancer treatment, whose development Xue was spearheading.

The Wall Street Journal reports that Xue used her Glaxo email account to move “trade secrets and confidential information about at least a dozen products” into her personal email account between 2012 and 2015, including “slide presentations about the design of certain drugs,” according to the indictment.

Reuters says the stolen information was worth “millions of dollars” to rival drug companies and would also be “useful information for a start-up pharmaceutical company.”  The indictment describes the cancer treatment Xue was working on as a billion-dollar project.  However, Glaxo representatives said they did not believe the breach of their security had significantly damaged their operations.

The Renopharma company was a trans-Pacific endeavor in practice, according to a report at Philly.com, with one company based in Delaware and two in China — specifically, Shanghai and Nanjing — all working under the same name.

Three other people were named in the indictment, all involved in setting up the Renopharma entities and transferring information to them.  One of them is Yu Xue’s twin sister, Tian Xue, whose name was used to conceal the proceeds from the operation.  Another is Yan Mei, the husband of Lucy Xi, whose role involved marketing the pilfered information in China.

“The indictment quotes emails among some of the people charged in the indictment, and accuses them of plotting to seek investors in China to market their own products from stolen research,” reports the NYT.

There’s a possible connection to the Chinese government, as well: “Prosecutors said the defendants boasted that their company, based in Nanjing, had received some financial support and free laboratory space from the government and that its ultimate goal was to develop its own antibody drugs.”

Considering the amount of brainpower involved in the operation, it’s ironic to note that it seems to have struggled with some rather petty personal disputes.  The NYT quotes one email in which Xi complained to her husband about Xue “annoying” her, and when Mei told her not to lose her temper, she snarked: “I won’t… she is the queen.”

Other emails show the conspirators getting nervous when similar cases of industrial espionage popped up in the news and shutting down their operation when such a story prompted Glaxo to talk with employees about the theft of trade secrets.

Despite the evidence presented in the indictment, Yu Xue’s attorney Peter Zeidenberg said his client denies the allegations.  “She has pled not guilty and intends to contest these charges vigorously in court,” he said in a statement quoted by Reuters.  He predicted she would be exonerated at trial.

Zeidenberg described the case as one of many “brought against Chinese Americans in the last several years, some of which have proved to be vastly overstated.”

The New York Times mentions a few cases certain to be cited by the defense, including the accusations against Temple University physicist Xi Xiaoxing, who was accused of giving American technology to China, but saw the charges dropped when it became clear federal prosecutors “had misunderstood the science involved in the case.”

There have been several high-profile cases of foreign students and workers stealing trade secrets and selling them overseas and much concern about Chinese economic espionage against Western private-sector targets.

Conversely, there have been allegations that Chinese-Americans are unfairly stigmatized for being especially prone to participating in industrial espionage, with the Xi Xiaoxing case often cited as a paramount example of paranoid prosecution.  (Xi’s daughter Joyce wrote an especially passionate denunciation of the government “targeting innocent Chinese-Americans” at a time of “increased anxiety over China” for USA Today in September.)

The Times further cites expert opinion from lawyer Justin K. Beyer that trade-secret cases “tend to rise and fall on what was being done to protect the information, and does the information truly represent a trade secret.”

At first glance, this case seems considerably less mind-boggling that Xi Xiaoxing’s work, with a fairly clear paper trail the defense will have to discredit somehow.  The prosecutors put much effort into demonstrating that the information was valuable and regarded as sensitive Glaxo property.  Philly.com notes the indictment also makes it clear that Xue and Xi had “received training from their employer about confidentiality,” and were “warned that storing sensitive trade data on personal computers breached company policy.”

As for the other defendants, the Wall Street Journal notes that Lucy Xi’s lawyers didn’t return a call for comment, her sister Tian Xue’s attorney refused to comment, and lawyers for her husband Yan Mei and the fifth individual named in the indictment, Renopharma co-owner Tao Li of Nanjing, China, could not be reached.

Reuters reports that Tao Li is in custody, Yan Mei is still being sought by the authorities, and the other three have all been arrested and released on bail.

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