Chinese firms that once supplied fentanyl precursors now eye illicit peptide market

Chinese chemical companies that exported fentanyl precursors are pivoting to peptides as US scrutiny mounts, smuggling bulk shipments disguised as snacks and processing cryptocurrency payments exceeding $10 million a month

Chinese chemical companies that have long supplied fentanyl precursors to US drug cartels are now turning their attention to the peptide market, promoting products for skin tanning, tissue regeneration and weight loss. The Wall Street Journal reported Tuesday, citing company advertisements and analysis from cryptocurrency payment tracking firms.

Some of these companies have already been indicted in the United States on charges related to fentanyl distribution, yet they continue to advertise high-quality ingredients and rigorous quality control.

Cryptocurrency analytics firm TRM Labs, which has tracked roughly 200 companies that sold fentanyl precursors, said at least 50 of them are now selling peptides — a number that has grown steadily in recent months. Traced cryptocurrency payments show the United States among the primary buyer countries.

Most substances circulating in the market under the name "peptides" are unapproved drugs. As major pharmaceutical companies have largely stayed out of the space, gray-market operators from China and elsewhere have been expanding their reach. They are also competing directly with legitimate pharmaceutical companies by selling counterfeit versions of FDA-approved peptide-based drugs — such as GLP-1 obesity medications like Wegovy — at far lower prices.

"They have the know-how and the equipment to make virtually any substance known on earth," said Aloys Afilipoai, a senior blockchain analyst at TRM Labs. "There's a lot of demand for peptides right now, so they're making peptides."

A prominent example is Chinese firm Anhui Renchen Technology. In 2023, the US Department of Justice indicted the company on charges of supplying fentanyl precursors used by Mexican drug organizations including the Sinaloa Cartel. The company's website currently sells melanotan II — a peptide known for its tanning effects — as well as semaglutide, the active ingredient in Ozempic, a GLP-1 obesity drug developed by Novo Nordisk, in salt form. The indictment alleged that the company's chemists even provided buyers with instructions on how to manufacture fentanyl.

Peptides are short chains of amino acids that act as signaling molecules in the body, triggering processes such as growth hormone secretion and tissue repair. Technically, the term encompasses a broad category that includes FDA-approved drugs such as insulin and Ozempic, but it has come to refer primarily to unapproved substances that people self-inject without a prescription.

The Journal said consumer interest in self-injecting various substances has grown among people who witnessed the dramatic weight-loss results of GLP-1 obesity drugs. Most claimed benefits are based on word of mouth, though influencers, podcasters and alternative medicine practitioners have promoted the products — as has Robert F. Kennedy Jr., the secretary of health and human services, who has described himself as an enthusiastic fan.

Some medical spas, telehealth providers and alternative medicine practitioners supply patients with unapproved peptides, but many Americans order them directly from online vendors. Products typically carry labels reading "for research use only" or "not for human consumption." They are sold in powder form, requiring the buyer to dissolve them in bacteriostatic water before injecting, and are also available in pre-measured vials. Distributors and resellers sometimes dissolve the raw material themselves and sell it ready to use. Online communities serve as informal directories where users exchange supplier information, and some American buyers told the Journal they sought out Chinese vendors specifically because of lower prices.

"In an era of rampant health misinformation and deep distrust of institutions, people are not adequately recognizing the warnings that come with the FDA's regulatory and testing framework," said Shabir Imber Safdar, executive director of the nonprofit public health group Partnership for Safe Medicines. The US Department of Health and Human Services said the FDA "is concerned about unapproved drug products, including those sold as peptides, being marketed to American consumers."

Chinese companies have long been the primary source of the chemical ingredients used to manufacture fentanyl. Like peptides, those precursors were sold openly online, and buyers included cartels that produced fentanyl and distributed it across the United States. Washington pressed Beijing for years to crack down, and Chinese authorities did shut down some vendors and tighten export controls, but many companies survived.

Chainalysis, a blockchain analytics firm, said in a report that as pressure from international law enforcement mounted, some Chinese chemical companies came to see the peptide market as a lucrative and legally ambiguous next target. According to the firm, before 2025 cryptocurrency payments for gray-market peptides averaged around $200,000 a month — a niche underground trade. The market began expanding last year and has since surpassed $10 million a month this year.

The distribution method closely mirrors that used for fentanyl precursors. A large share of Chinese peptides enter the United States through a smuggling technique known as "master cartons." Multiple individual orders are consolidated into a single large box, which is then mislabeled as a legal product such as snack food. Once inside the country, a domestic accomplice breaks up the shipment and delivers the individual packages. Buyers may not even know the peptides they purchased came from China.

In December last year, the Cincinnati field office of US Customs and Border Protection made its first seizure of a Chinese shipper's master carton operation. It has since intercepted roughly 400 such attempts, including approximately 6,000 individual shipments already bearing peptide labels. Seizures of illicit pharmaceuticals have jumped nationwide as well. According to CBP, more than 2,400 seizures of products violating regulations or bearing counterfeit labels were recorded from last October through late August this year, encompassing more than 130,000 vials.

mokiya@heraldcorp.com