banenr
scroll down

In-depth Research on the In Vitro Diagnostics (IVD) Industry Under the COVID-19 Pandemic

Release time:

2025-03-12 09:41

Preface

The IVD industry has attracted attention under the COVID-19 epidemic. Since the end of 2019, the continued fermentation of the COVID-19 epidemic has pushed China's in-vitro diagnostic industry to the forefront of the fight against the epidemic, and in a very short period of time, it has completed the development and research of diagnostic reagents, taking on the role of an epidemic prevention pioneer in early disease diagnosis. The in-vitro diagnostic industry has become one of the biggest highlights in this sudden public health event. In 2020, the social responsibility, sense of mission, and R&D innovation capabilities of Chinese IVD companies were fully demonstrated. Looking back at the long history of progress in the development of laboratory medicine, in the process of prevention, diagnosis, and disease treatment, the important role of laboratory medicine and in-vitro diagnosis is irreplaceable by any other discipline.

During the COVID-19 epidemic, most companies in the IVD industry achieved outstanding achievements. In terms of revenue, the disclosed Q3 2020 financial reports show that 11 IVD companies had revenue exceeding 1 billion yuan in Q3 2020, and 4 IVD companies had revenue exceeding 5 billion yuan in Q3 2020. Among them, Mindray Medical led the industry with Q3 revenue of 16.064 billion yuan. In terms of revenue growth rate, 4 companies saw their Q3 revenue increase by more than 100% year-on-year, with Shengxiang Bio achieving revenue more than 10 times higher than the same period last year in 2020, exceeding the growth rate of its peers. In terms of net profit, according to the available Q3 financial reports, 6 companies achieved net profits exceeding 1 billion yuan in Q3, with Mindray Medical reaching 5.364 billion yuan, even exceeding the total Q3 revenue of many companies. In terms of net profit growth rate, 6 companies saw their Q3 net profit increase by more than 100% year-on-year, with 3 companies achieving net profit more than 10 times higher than the same period last year. Shengxiang Bio's performance in net profit growth rate was outstanding, with a year-on-year increase of 10702.39% in Q3 net profit. According to the disclosed annual reports, in 2020, it was not uncommon for IVD companies to achieve revenue and net profit several times higher than the same period last year: BGI Genomics stood out with achievements of 8.432 billion yuan, followed by Daan Gene and Shengxiang Bio with achievements of 5.345 billion yuan and 4.767 billion yuan respectively. In terms of revenue growth rate, Shengxiang Bio and Dongfang Bio led with growth rates of 1204.67% and 787.92% respectively. The rapid development of Shengxiang Bio benefited from the impetus of the epidemic and the unique advantages of its in-vitro diagnostic business in this context.

Two major reflections on the IVD industry in the post-epidemic era. The sudden COVID-19 epidemic led to explosive short-term growth in the achievements of some IVD companies, especially those whose main business is molecular diagnostics. At the same time, we have given deep thought to the entire IVD industry under the COVID-19 epidemic and the achievements of second-tier companies whose main business is not molecular diagnostics. This mainly includes: setting aside the catalysis of the COVID-19 epidemic, the overall development situation and prospects of the domestic IVD industry itself. For example, the market space and growth rate of the domestic IVD market, the market share of domestic IVD sub-segments and the progress of domestic substitution, the impact of domestic centralized procurement policies on the IVD industry, and the development trends of the domestic IVD industry, etc. In addition, we have further considered the molecular diagnostics field, which has performed outstandingly during the COVID-19 epidemic, considering the main technical means, Applications and the domestic market of molecular diagnostics, and then considering the entire molecular diagnostics industry in the post-epidemic era.

Based on the above two reflections on the IVD industry—a series of reports on the IVD industry. Based on the above two reflections, we have undertaken the writing of a series of reports on the IVD industry. In this report, we will follow two distinct and characteristic development trends in the in-vitro diagnostic industry: one is chemiluminescence, which is developing towards a more "high, precise, and integrated" direction; the other is POCT, which is developing towards a "simple, convenient, and personal health management" direction. Finally, along the IVD industry chain, we will analyze its circulation links. Later, we will follow the clues to conduct in-depth analysis of molecular diagnostics in the IVD industry and issue industry reports. We hope that this series of reports will serve as a catalyst to enable investors to have a more comprehensive understanding of the IVD industry in pharmaceutical and medical devices, and thus provide guidance or inspiration for their investment. We will also continue to analyze the development trends and dynamics of the pharmaceutical and medical device industry with a pragmatic approach, research its market and technology, and continue to use the method of seeing the microcosm to discover investment opportunities in the biopharmaceutical industry.

Overview of the In-Vitro Diagnostic (IVD) Industry


1.1 The In-Vitro Diagnostic (IVD) Industry—A Focus During the COVID-19 Pandemic

1.1.1 Outstanding Achievements of Numerous IVD Companies—The "Epidemic Prevention Pioneers"

In the ongoing COVID-19 pandemic since the end of 2019, companies in China's in-vitro diagnostic industry have been at the forefront of the fight against the epidemic. In a very short time, they completed the development and research of diagnostic reagents, shouldering the responsibility of being pioneers in early disease diagnosis and epidemic prevention. The in-vitro diagnostic industry also showcased one of the biggest highlights in this sudden public health event. Looking back at the long history of progress in the development of laboratory medicine, in the process of prevention, diagnosis, and disease treatment, the important role of laboratory medicine and in-vitro diagnostics is irreplaceable by any other discipline, and this epidemic has fully verified this.  

During the COVID-19 pandemic in China in 2020, many IVD companies achieved outstanding achievements. From the perspective of revenue, the disclosed Q3 2020 financial reports show that 11 IVD companies had revenue exceeding 1 billion yuan in Q3 2020, and 4 IVD companies had revenue exceeding 5 billion yuan in Q3 2020. Among them, Mindray Medical led the industry with Q3 revenue of 16.064 billion yuan. In terms of revenue growth rate, 4 companies saw their Q3 revenue increase by more than 100% year-on-year, with Shengxiang Bio achieving revenue more than 10 times higher than the same period last year in 2020, far exceeding the growth rate of its peers. In terms of net profit, according to the available Q3 financial reports, 6 companies achieved net profits exceeding 1 billion yuan in Q3; in terms of net profit growth rate, 6 companies saw their Q3 net profit increase by more than 100% year-on-year, with 3 companies achieving net profit more than 10 times higher than the same period last year. Shengxiang Bio's performance in net profit growth rate was outstanding, with a year-on-year increase of 10702.39% in Q3 net profit. According to the disclosed annual reports, in 2020, it was not uncommon for IVD companies to achieve revenue and net profit several times higher than the same period last year: BGI Genomics stood out with achievements of 8.432 billion yuan, followed by Daan Gene and Shengxiang Bio with achievements of 5.345 billion yuan and 4.767 billion yuan respectively. In terms of revenue growth rate, Shengxiang Bio and Dongfang Bio led with growth rates of 1204.67% and 787.92% respectively. The rapid development of Shengxiang Bio benefited from the impetus of the epidemic and the unique advantages of its in-vitro diagnostic business in this context.

1.1.2 The Financing Situation in the IVD Sector During the COVID-19 Pandemic Reveals the Industry's Development Potential

The outbreak and global pandemic of COVID-19 in 2020 led to a downward trend in the global economy and significantly impacted the investment and financing sector. Although the pandemic caused turmoil in the capital market, companies, through capital increases, leveraged the "tailwind" of capital to achieve rapid expansion and standardized operations, while avoiding the risk of being "weeded out." Capital has recognized the enormous potential and development opportunities in the in-vitro diagnostics (IVD) industry, which has become a noteworthy segment in the medical and health sector. In 2020, 62 IVD-related companies received financing.

Domestic and international IVD financing in the medical and health market ranks only below biopharmaceuticals and internet healthcare. The sudden COVID-19 pandemic in 2020 further propelled the development of the in-vitro diagnostics industry. In 2021, IVD financing remained robust. In February 2021, globally, four transactions exceeded US$100 million, three of which were from IVD companies: WuXi NextCODE, a provider of innovative diagnostic services and products; Truvian Sciences, a developer of diagnostic systems and equipment; and Personal Genome Diagnostics, a developer of cancer genomic testing products.


1.2 Overview of the In Vitro Diagnostics (IVD) Industry

In-vitro diagnostics, or IVD (In Vitro Diagnosis), refers to diagnostic methods that obtain clinical diagnostic information by testing samples such as human body fluids, cells, and tissues in vitro to determine diseases or bodily functions. IVD is a crucial source of clinical diagnostic information, providing important reference indicators for physicians' treatment plans and medication, and is an indispensable part of the healthcare system that safeguards human health. According to Roche Diagnostics statistics, IVD can influence 60% of clinical treatment plans, but its cost only accounts for 2% of the total clinical treatment cost. Currently, IVD has extremely high usage rates in clinical medicine and can be applied throughout the entire disease treatment process, including preliminary diagnosis, treatment plan selection, treatment monitoring, prognosis, and physical examinations. It has significant implications for disease prevention, determining causes and prognosis, improving treatment effectiveness, and reducing medical costs. Driven by factors such as population aging, increasing insurance coverage and expenditure, and income growth, coupled with the ability of IVD to provide accurate and early clinical diagnostic information conveniently, cost-effectively, and with minimal harm to healthcare professionals, providing effective evidence for disease detection, treatment, and monitoring, and significantly saving medical expenses, it has become an important basis for medical decision-making. Currently, the IVD industry has become one of the most active and fastest-growing industries in the world. Classified by detection methods, IVD mainly includes biochemical diagnostics, immunodiagnostics, molecular diagnostics, and hematology and body fluid diagnostics. Different diagnostic methods have different detection principles and technical means, and their Applications also vary significantly.  

The in-vitro diagnostics industry is a branch of the medical device industry, a multidisciplinary, knowledge-intensive, and capital-intensive high-tech industry that combines traditional industries with advanced technologies such as biomedical engineering, electronic information technology, and modern medical imaging technology. IVD products are a type of medical device, including in-vitro diagnostic instruments and accompanying diagnostic reagents. In-vitro diagnostic reagents refer to reagents, reagent kits, calibrators, and quality control materials used in the prevention, diagnosis, treatment monitoring, prognosis observation, health status assessment, and prediction of hereditary diseases, for in-vitro testing of human samples (blood, body fluids, and tissues, etc.). These reagents can be used alone or in combination with instruments, apparatus, equipment, or systems. Their working principle is that diagnostic reagents undergo biochemical reactions with substances in the body in vitro. Certain substances in body fluids (such as sugars, fats, and proteins) will react specifically with in-vitro diagnostic reagents under specific conditions, producing specific products and consuming a certain amount of in-vitro diagnostic reagents. These can be measured qualitatively or quantitatively, and by comparing them with normal values, the physiological state of the subject can be determined. It plays an important role in the prevention, diagnosis, treatment monitoring, prognosis observation, health assessment, and prediction of hereditary diseases.

1.3 IVD Industry Market Size and Growth Rate Analysis

1.3.1 Global Medical Device Industry Size and Growth Rate Analysis

With the increasing health needs of people and the continuous development of the medical and health industry, the medical device market (divided into high-value medical consumables, low-value medical consumables, medical equipment, and IVD in-vitro diagnostics), as an important component of medical services, has also benefited from this and has maintained steady growth for many years. According to Evaluate MedTech's "World Preview 2018, Outlook to 2024," the global medical device market sales reached US$405 billion in 2017, a year-on-year increase of 4.6%; sales are expected to reach US$594.5 billion in 2024, with a compound annual growth rate of 5.6% from 2017 to 2024.



According to the global consulting firm's report "Evaluate MedTech, World Preview 2018, Outlook to 2024," in 2017, the IVD field remained the top-selling segment in the medical device sector, with sales reaching US$52.6 billion, accounting for 13%; cardiovascular, imaging, orthopedics, and ophthalmology ranked second to fifth, respectively. From 2017 to 2024, the IVD field's sales had a compound annual growth rate of 6.1%. The IVD industry is a high-quality sector in the medical device market with a large scale, high growth rate, and increasing market share.

1.3.2 China's Medical Device Industry Size and Growth Rate Analysis

Benefiting from economic development and increasing health needs, China's medical device market has ushered in tremendous development opportunities. According to calculations by the Medical Device Research Institute, in 2018, the size of China's medical device market was approximately 530.4 billion yuan, a year-on-year increase of 19.86%. The medical equipment market is the largest segment of China's medical device market. According to calculations by the Medical Device Research Institute, the medical equipment market size was approximately 301.3 billion yuan, accounting for 56.80%.

1.3.3 Global IVD Industry Market Size and Growth Rate Analysis

From a growth perspective, with the rapid development of biotechnology and the gradual improvement of medical insurance policies in most countries, the proportion of in vitro diagnostics in overall medical expenditure will continue to increase, and the market size will steadily grow. According to Allied Market Research's "Global In Vitro Diagnostics Market: Opportunities And Forecast, 2020–2027," the global in vitro diagnostics market size was US$67.11 billion in 2019, and is expected to reach US$91.09 billion by 2027, with a compound annual growth rate of 4.8% from 2020 to 2027. Given the global pandemic trend of COVID-19 in 2020, the in vitro diagnostics market size is expected to further increase. From the perspective of regional market distribution, the global demand market for in vitro diagnostics is mainly distributed in developed economies such as North America, Europe, and Japan, with North America accounting for more than 40% of the market share, Western Europe 20%, and Japan 9%, totaling more than 70% of the global in vitro diagnostics market. In developed countries, where medical services are relatively well-developed, the in vitro diagnostics market has entered a relatively stable and mature stage, showing a trend of slowing growth and stable development. Emerging markets such as China, India, and Latin America, although currently accounting for a relatively small market share, are experiencing rapid growth due to their large populations, rapid economic growth, and increasing aging population. In recent years, investment in medical insurance and per capita medical expenditure have continued to increase, leading to rapid growth. Emerging markets are becoming the fastest-growing regions in the global in vitro diagnostics market. According to a report released by the US research institution IQVIA, "Global Outlook on the In Vitro Diagnostics Industry," the global in vitro diagnostics market size was US$63 billion in 2018, a year-on-year increase of 6% compared to 2017. Among them, the North American market had the highest share, at US$20.4 billion, accounting for about one-third of the global IVD market; the Asia-Pacific market had the fastest growth rate, with a year-on-year increase of 9.8%, with a total market size of US$20.1 billion. The global IVD market size will reach US$80.4 billion in 2023. According to Kalorama Information's "Global IVD Market (10th Edition)" report, the compound annual growth rate of the Chinese IVD market from 2016 to 2021 was approximately 15%, ranking first among all countries.



China's in vitro diagnostics industry started in the late 1970s and has gone through stages of product introduction, independent production, and rapid growth. Currently, the industry is in a period of rapid growth, and in some widely used areas such as biochemistry and POCT, it has approached the international level. The overall scale of the industry is expanding rapidly. Biochemical diagnostics, immunodiagnostics, and molecular diagnostics are currently the three major areas of in vitro diagnostics, accounting for more than 40% of the global market share and more than 70% of the market share in China. In addition, although the development of China's in vitro diagnostics market is later than that of developed countries, the structure and evolution of its segmented markets are similar to global trends. With the increasing demand for accuracy and precision in China's in vitro diagnostics market and the continuous improvement of China's in vitro diagnostic technology, the dominant direction of the domestic in vitro diagnostics market has gradually shifted from biochemical diagnostics to immunodiagnostics and molecular diagnostics. Immunodiagnostics has replaced biochemical diagnostics as the largest segment of China's in vitro diagnostics market, accounting for 38% of the market share; while biochemical diagnostics has shown weak growth, accounting for only 19% of the market share; molecular diagnostics and POCT are developing the fastest, with their market share continuously rising, accounting for 15% and 11% respectively.

1.3.4 Analysis of Market Size and Growth Rate of China's IVD Industry

China's in vitro diagnostics industry started late but developed rapidly. Compared with developed countries, China's in vitro diagnostics industry is still in its early stages of development. Although the market size is still relatively small, with the increasing health needs of the people, there are higher requirements for disease risk prediction, health management, and chronic disease management. In vitro diagnostics, as an important means of disease diagnosis, is also receiving increasing attention. There is huge development space in the in vitro diagnostics market, especially in regions and countries with underdeveloped medical levels. In China, with the deepening of reform and opening up and the continuous improvement of living standards, people's demand for health is also increasing day by day. In vitro diagnostics, as an important means of disease diagnosis, has also developed rapidly. According to calculations by the Medical Device Research Institute, the market size of China's in vitro diagnostics in 2018 was approximately 60.4 billion yuan, a year-on-year increase of 18.43%. In 2019, the market size of China's IVD industry was approximately 70 billion yuan, with Roche, Danaher, Abbott, and Siemens accounting for a large portion of the global IVD market. In the past 5 years, the CAGR of China's IVD industry has reached 15.91%, and the industry is expected to maintain high growth in the next 3 years. Compared with developed regions and countries such as Europe, the United States, and Japan, there is huge room for improvement in China's IVD market. Although China's IVD industry has maintained a high growth rate, the market penetration rate of China's in vitro diagnostics is far lower than that of developed countries. In terms of per capita consumption of IVD products, the per capita annual consumption of in vitro diagnostic products in China in 2018 was 47 yuan, less than 1/10 of the per capita IVD consumption in the United States, and there is still 3-4 times room for improvement compared with Western European developed countries. In the future, with the continuous improvement of residents' income levels and per capita medical expenses, the continuous development of in vitro diagnostic technology, and the increasing demand for in vitro diagnostics from medical institutions and the public, the in vitro diagnostics market will continue to expand.

1.4 Analysis of China's IVD Industry Market

1.4.1 Regulatory Regulations of China's IVD Industry

Currently, in China, except for in vitro diagnostic reagents used for blood source screening and in vitro diagnostic reagents labeled with radionuclides, which are under pharmaceutical management, other in vitro diagnostic reagents and medical instruments are under medical device management (except for those explicitly defined by the state). According to different risk levels, China implements a strict classification management system for medical devices, including in vitro diagnostic reagents, and adopts a registration and filing system for medical device products, a licensing and filing system for the production and operation of enterprises, and effectively supervises the use of medical devices.

1.4.2 Analysis of China's Medical Insurance Cost Control Policy on the In Vitro Diagnostics Industry

From the perspective of the macroeconomic policy environment of biomedicine, medical insurance cost control has been the main theme in recent years. The core of medical insurance cost control is to improve the use efficiency of medical equipment and drugs and to cancel drug surcharges. From this point of view, the development and application of the in vitro diagnostics industry helps to optimize the allocation of medical resources and improve efficiency, so medical insurance cost control has a positive driving effect on the in vitro diagnostics industry. In addition, with the cancellation of drug surcharges, hospital pharmacies have changed from previous profit centers to cost centers. Considering overall income, hospitals are also very likely to focus more on medical services and diagnostic departments in the future to compensate for their income losses in drugs.



Chemiluminescence: The Development Direction of "High, Precision, and Integration" in the IVD Industry

2.1 Introduction to Immunodiagnostics

According to statistics, immunodiagnosis is the largest segment of China's in-vitro diagnostic market. Immunodiagnosis is a method for detecting various diseases based on the specific immune response between antigens and antibodies. Based on different marker signals, various immunodiagnostic methods have been derived. From its development history, it has gone through several development stages, including radioimmunoassay, immunogold colloid technology, enzyme-linked immunosorbent assay (ELISA), time-resolved fluorescence immunoassay, and chemiluminescence immunoassay. Among them, chemiluminescence and ELISA are currently the most widely used mainstream immunodiagnostic technologies. The market share of chemiluminescence and ELISA varies in different disease diagnostic fields. In the diagnosis of tumor markers, infectious diseases, sex hormones, and thyroid function, chemiluminescence products have become the mainstream of the market. In the field of allergy and autoimmunity diagnosis, ELISA products are still the mainstream products in the domestic market, while chemiluminescence products have not yet been launched or widely applied. 

2.2 Immunodiagnostic Technology Analysis

2.2.1 Immunomarking Technology

Immunodetection technology originated from serological diagnosis of pathogenic microorganisms' antigens and antibodies. In 1896, G. Widal and A. Sicard used the phenomenon of specific agglutination between the serum of typhoid patients and typhoid bacilli for effective and accurate diagnosis of typhoid fever. Immunoassay technology is an analytical technique based on the specific and reversible binding reaction between antigen and antibody in vitro. It is an ultra-micro-determination technique that combines immune reactions with modern testing methods. Immunoassay methods have the advantages of high sensitivity, specificity, speed, and low cost; they can be used for routine analysis of large numbers of samples; they can be used for qualitative screening of samples, and they can also be used for quantitative determination of samples to determine the content of the analyte in the sample. After the antigen and antibody bind, only when a visible reaction occurs, such as agglutination, hemolysis, precipitation tests, etc., or when methods such as fluorescence, enzymes, or radioisotopes are used to improve measurability, can they be easily used in immunoassays. The appearance of visible reactions requires a much higher ratio of antigen and antibody molecules than their absolute amounts. This means that, on the one hand, the amount of antigen and antibody used should be considered during immunoassay; on the other hand, as long as the visibility or measurability is improved, the sensitivity of the immunoassay method can be greatly improved. Therefore, immunoassay methods often require a signal amplification system to display and amplify the reaction information of antigen-antibody binding, thereby improving the sensitivity of immunological diagnosis, thus giving rise to labeled immunoassay technology. Immunomarking technology refers to the antigen-antibody reaction using fluorescent substances, radioisotopes, enzymes, ferritin, colloidal gold, and chemical and bioluminescent agents as tracers to label antibodies or antigens, and using precision instruments such as fluorescence microscopes, radiation measuring instruments, enzyme-labeled detectors, electron microscopes, and luminescence immunoassay instruments to directly observe or automate the determination of experimental results.

2.2.2 Development History of Immunomarking Technology

According to different markers and principles, immunodiagnostic technology has gone through several technical stages, including radioimmunoassay, colloidal gold method, enzyme-labeled immunoassay, fluorescence labeling method, and chemiluminescence immunoassay. Among them, chemiluminescence has become the mainstream of global immunodiagnosis and is widely used in the detection and diagnosis of infectious diseases, tumors, endocrine function, and hormones.

2.3 Chemiluminescence: The Long-Awaited Arrival of Immunodiagnosis

The earliest form of chemiluminescence originated in the 1980s. The American company Ciba Corning developed a fully automated chemiluminescence immunoassay system, ACS-180, using acridinium ester reagents. This automated chemiluminescence analyzer, along with acridinium ester-labeled reagents, was the first fully automated chemiluminescence analyzer. Later, through continuous improvements, it achieved commercial production and large-scale promotion. Siemens' ADVIA (formerly Bayer) system is developed based on this. In the 1980s, the overseas market gradually replaced traditional radioimmunoassay and enzyme immunoassay methods with chemiluminescence. The four major chemiluminescence companies entered the Chinese market at different paces around 2004-2007. Chemiluminescence involves two reaction parts: an immune reaction (specific binding of antigen and antibody) and a luminescence reaction. The luminescence reaction is the process in which a chemiluminescent substance releases photons through catalysis by a catalyst or oxidation by an oxidant, resulting in luminescence. The chemiluminescence process first involves preparing reagents by labeling luminescent substances or enzymes on antigens or antibodies. After the reagents specifically bind to the antigens and antibodies in the sample, an oxidant or luminescent substrate is added as an exciter. After oxidation by the oxidant or reaction with the luminescent substrate, luminescence occurs. Based on the principle that the concentration of the analyte in the chemical detection system and the chemiluminescence intensity of the system have a linear quantitative relationship under certain conditions, the content of the analyte is determined by detecting the chemiluminescence intensity of the system using an instrument. Enhancing the stability, sensitivity, and speed of the luminescence signal has always been a research focus of chemiluminescence methods. Based on the differences in the luminescence reaction principle, different luminescence platforms such as enzyme-catalyzed chemiluminescence, direct chemiluminescence, electrochemiluminescence, and photo-induced chemiluminescence have been formed. At the same time, enriching detection markers and enhancing the specificity of immune reactions are also important ways to ensure the accuracy and efficiency of chemiluminescence detection, and are also a manifestation of the competitiveness of chemiluminescence companies.

2.4 China's Chemiluminescence Market

The domestication rate of China's chemiluminescence immunoassay market is relatively low, with imported brands represented by Roche, Abbott, Danaher, and Siemens holding a significant advantage. The domestication rate of chemiluminescence immunoassay equipment is about 24%, with considerable room for growth.



Common applications of chemiluminescence include the detection of infectious diseases, tumor markers, reproductive endocrine hormones, cardiac markers, and thyroid. Among them, the market size of infectious disease and tumor marker detection is relatively large, accounting for about 40% and 25% respectively. Infectious disease detection has the largest scale, while tumor marker detection is growing faster.

2.5 Development Trends of Chemiluminescence in China

In China's high-end IVD market, due to the rapid improvement of domestic R&D capabilities and obvious channel advantages in recent years, domestic products are in a stage of rapid development, with chemiluminescence being representative. Regarding the influencing factors of the domestic substitution process, firstly, there are the technical barriers, industry access barriers, capital barriers, and sales channel barriers of the chemiluminescence industry analyzed above. In addition, from the perspective of the special attributes of chemiluminescence business, its products generally consist of instruments and reagents, and are a closed system, that is, generally speaking, instruments need to be forcibly matched with reagents from the original manufacturer for testing. Therefore, hospitals using a certain manufacturer's instruments must use the manufacturer's matching reagents, and reagents are the main source of income. Such a closed system enables chemiluminescence manufacturers to easily establish long-term beneficial relationships with hospitals, resulting in strong customer stickiness, making it difficult to shake the advantages of leading enterprises. The signing time between foreign companies and hospitals generally lasts for several years or even more than ten years, so this is also an important reason why foreign companies currently dominate China's chemiluminescence market and domestic substitution has not yet been implemented on a large scale. However, it is precisely because of the closed nature of the chemiluminescence industry and the resulting strong customer stickiness that we can also analyze that domestic leading chemiluminescence enterprises will also obtain strong barrier advantages with their first-mover advantages, so that the domestic market industry will become increasingly concentrated, and the leading trend will become more obvious.

Technological upgrading and substitution Chemiluminescence, with its advantages of high sensitivity, wide linear range, good specificity, and accurate quantification, is gradually replacing traditional enzyme-linked immunosorbent assays and qualitative products. At the same time, early microplate chemiluminescence is also gradually being replaced by magnetic microparticle chemiluminescence technology. Non-enzyme-involved direct chemiluminescence and electrochemiluminescence are more popular than enzyme-linked chemiluminescence. Direct chemiluminescence labeling molecules have a very small molecular weight, making it easy to label small molecules, and can detect more items than enzyme-linked chemiluminescence, with wider applications in clinical testing.

Domestic enterprises go global to expand overseas influence Domestic enterprises are actively promoting overseas sales, and domestic companies such as New Industries and Mindray are actively participating in major laboratory medical equipment exhibitions such as the American Association for Clinical Chemistry Annual Meeting and Clinical Laboratory Medical Equipment Expo and the Arab International Laboratory Equipment Exhibition. New Industries officially became the first Chinese chemiluminescence manufacturer to obtain FDA certification in 2017. The COVID-19 epidemic in 2020 laid the foundation for opening up the overseas market for related manufacturers such as Mindray and New Industries.

Chemiluminescence instruments are developing towards high-throughput and automated lines Chemiluminescence instruments are developing towards high-throughput, modular, and multi-project online automated lines, such as New Industries' Maglumi X8 and Maglumi 4000 Plus, and Mindray's M6000. As chemiluminescence instrument systems develop towards high-throughput and automated lines, it will greatly shorten sample turnaround time and improve laboratory efficiency.

Chemiluminescence projects are becoming increasingly comprehensive Chemiluminescence projects are becoming increasingly rich, covering tumor markers, thyroid function, hormones, cardiac markers, diabetes, infectious diseases, anemia, and other immune tests, providing complete testing solutions for more clinical departments and research institutions. At present, domestic manufacturers have both conventional projects and some characteristic projects, such as liver fibrosis, tumor marker carbohydrate antigen CA50, CA242, and autoimmune diseases, etc. Differentiated projects can also enable domestic instruments to enter tertiary hospitals faster.

POCT, the development direction of the IIVD industry towards "simple, convenient, and personal health management"

3.1 Overview of the POCT industry

POCT (Point-of-Care Testing) is usually defined as a testing method that uses portable analyzers and matching reagents to quickly obtain results at the sampling site. Its core element is to meet the needs of rapid diagnosis for clinical treatment or home monitoring, with the ultimate goal of quickly and immediately obtaining reliable diagnostic results, complementing traditional diagnosis. 

According to different testing conditions and environments, the in-vitro diagnostic industry is divided into professional laboratory diagnosis and point-of-care testing (POCT). POCT is usually defined as a testing method that uses portable analyzers and matching reagents to quickly obtain results at the sampling site. Its core element is to meet the needs of rapid diagnosis for clinical treatment or home monitoring, with the ultimate goal of quickly and immediately obtaining reliable diagnostic results, complementing traditional diagnosis. Professional laboratory diagnosis refers to the detection of large sample volumes using automated and high-throughput instruments in a testing laboratory or independent laboratory. Clinical laboratory in-vitro diagnosis needs to be performed by professionals, which is time-consuming, but the quality of the testing results is higher. Point-of-care testing (POCT) is a testing method that uses portable analyzers and matching reagents to quickly obtain testing results at the sampling site. The operator of POCT can be a non-professional tester, or even the subject being tested. Because POCT does not require a central laboratory and can be performed directly at the patient's bedside, it can quickly perform diagnosis and treatment, nursing, and disease course observation, thereby improving the quality of medical care, so its penetration rate in ICU, surgery, emergency room, clinics, and patients' homes is gradually increasing. As an emerging diagnostic field, POCT has developed rapidly in recent years and has broad future prospects. Antigens and antibodies are the core raw materials of POCT reagents, and their performance affects the key performance indicators of POCT reagents and largely determines the upper limit of POCT reagent performance. The antigens and antibodies required for POCT reagents are usually divided into two categories: specific antigens and antibodies, and general antigens and antibodies. Specific antigens and antibodies mainly use the specific binding reaction of antigens and antibodies to identify whether there is a corresponding substance to be tested in the sample; general antigens and antibodies mainly play an auxiliary role in the detection, such as being used for quality control lines, improving product sensitivity and specificity, etc. 

In terms of testing items, POCT testing includes blood glucose testing, cardiac marker testing, prenatal and postnatal care testing, infection factor testing, infectious disease testing, glycosylated hemoglobin determination, coagulation testing, etc. In terms of growth rate in subdivided fields, cardiac markers and infectious disease POCT products are in a period of rapid growth, with faster demand growth and great future development space. This is because the timeliness requirements for rescuing cardiovascular patients are much higher than those for other diseases, and POCT, with its maximum characteristic of fast testing speed, meets this need, so cardiovascular testing has become the fastest-growing application of POCT. Infectious disease POCT mainly refers to products for on-site screening and rapid detection of various common infectious diseases and major infectious diseases at the grassroots level, mainly including rapid detection products for infectious diseases such as AIDS, syphilis, viral hepatitis, malaria, and influenza. Due to the infectiousness, prevalence, regional characteristics, and seasonality of infectious diseases, they have attracted different degrees of attention worldwide, and China has also gradually increased its efforts in the prevention and control of major infectious diseases, and POCT products have become important tools for related work. 

At present, China's POCT products are generally in the growth stage, with faster market growth in sub-fields such as infectious diseases and cardiac markers. Although blood gas is also a relatively mature market, few domestic enterprises are involved. Cardiac markers, coagulation, diabetes, and blood gas products are all in the growth stage. Internationally, diabetes and cardiac marker products have entered the mature stage, and there is still a lot of room for growth for these products in China in the future. 

With the advent of the internet and medical informatization, the IPOCT concept has emerged in recent years, contributing to the datafication of primary-level medical equipment and improved diagnostic capabilities. Ease of use, immediacy, and flexible sample type selection have been the pathways for past POCT improvements. Different sub-sectors are at different stages of their life cycle, with the fastest-growing segments being FOB (fecal occult blood test) and glycated hemoglobin, while the slowest-growing segment is early pregnancy testing. The distribution of mainstream products differs between the home and professional markets.  

In terms of current market share, infection-related and cardiac marker POCTs account for the highest proportion of total products (excluding blood glucose), followed by blood gas, pregnancy, and other rapid tests. Overall, infection and cardiovascular products are still in the growth stage. With the establishment of chest pain centers, stroke centers, and other specialized centers, their market share will continue to grow. More POCT products will enter the home market in the future, continuously expanding the overall industry capacity.

3.2 POCT Market Size Analysis

3.2.1 Drug Abuse Testing Field

Drug abuse testing POCT products are mainly qualitative, primarily using colloidal gold methods for urine or saliva testing. These tests are widely used in drug rehabilitation centers, hospitals, military conscription, customs and border inspections, and screenings for high-risk groups in road traffic safety, special industries, and pre-employment physical examinations. According to the United Nations Office on Drugs and Crime's 2018 World Drug Report, the global drug market is expanding year by year, with cocaine and opium production reaching record highs. In 2016, global cocaine production was estimated at 1,410 tons, the highest ever; from 2016 to 2017, global opium production surged by 65%, reaching 10,500 tons, the highest estimate since global opium production monitoring began in the early 21st century; cannabis was the most widely used drug in 2016, with at least 192 million people having used it at least once, and the number of global cannabis users continues to rise, increasing by approximately 16% in the decade leading up to 2016. In addition, drugs such as heroin and cocaine are increasingly co-occurring with new psychoactive substances and prescription drugs. Many drugs of unknown origin intended for non-medical use, as well as poly-drug use and trafficking, make the drug problem unprecedentedly complex.

Under the conditions of a globalized drug market, the risk of drug spread to many other regions is constantly increasing. From 2000 to 2015, the number of global deaths directly caused by drug use increased by 60%, with the proportion of deaths among those over 50 years old rising from 27% in 2000 to 39% in 2015. In China, according to data from the 2018 China Drug Situation Report, there were 2.404 million drug users nationwide by the end of 2018. Although the proportion of drug users is lower compared to European and Southeast Asian countries, the problem of drug abuse is generally spreading, especially with new types of drugs such as methamphetamine and ketamine.

In recent years, the global market size of drug abuse POCT products has maintained a steady growth trend, increasing from $622 million in 2015 to $832 million in 2018. The global demand for drug abuse POCT products is projected to reach $1.107 billion in 2021. With the expansion of the world drug market and the continuous emergence of various new types of drugs, the cost of drug use has decreased, and the number of drug users has increased year by year. In the future, the world will increase its monitoring and crackdown on drug abuse, which will greatly drive the market demand for drug abuse monitoring and detection POCT products. The market development potential of drug abuse monitoring and detection POCT products is enormous.



3.2.2 Infectious Disease Testing Field

Infectious disease POCT products are mainly used for on-site screening and rapid detection of various common and major infectious diseases at the primary level. These include rapid detection products for viral hepatitis (hepatitis A, B, C, and E), respiratory diseases (such as tuberculosis, pneumonia, and influenza), digestive system diseases (such as gastric ulcers caused by Helicobacter pylori), tropical diseases (such as malaria and dengue fever), and sexually transmitted diseases (HIV, syphilis, and gonorrhea), as well as C-reactive protein (CRP) rapid quantitative detection systems for differentiating bacterial or viral infections. The immediacy of POCT products is of great significance for controlling infectious diseases globally and reducing the frequency and harm of outbreaks. Infectious diseases are a significant burden on global public health and economic stability, having been a major cause of death and disability for centuries. With the globalization of economic trade and frequent logistics, while some infectious diseases have been controlled, new infectious diseases are showing a spreading trend.

In the past three decades, at least 30 new infectious diseases affecting humans have emerged, most of which are zoonotic diseases, their origins closely related to socioeconomic, environmental, and ecological factors. At the same time, due to the uncertainty of the etiology of new infectious diseases and the lack of specific treatment and prevention methods, they have caused immeasurable harm to humanity and posed severe challenges to the prevention and control of medical public health institutions. In addition to their infectious, epidemic, and seasonal characteristics, infectious diseases also have strong regional characteristics. In the United States, sexually transmitted diseases such as HIV, syphilis, and gonorrhea have high incidence rates; in Africa, infectious diseases are mainly AIDS and tropical diseases such as malaria; in Latin America, infectious diseases are mainly tropical diseases such as dengue fever and malaria. Therefore, infectious diseases are attracting varying degrees of attention worldwide.

With the increasing frequency and harm of outbreaks of major infectious diseases (such as influenza A H1N1, SARS, and COVID-19), many countries have increased their prevention and control efforts. POCT products have become powerful tools for preventing and monitoring infectious diseases. The main driver of the infectious disease POCT market is the continuously increasing incidence of infectious diseases globally. Immediate infectious disease POCT testing products can significantly improve the monitoring capacity of infectious diseases, especially in underdeveloped regions of Asia, Africa, and Latin America, where the incidence of infectious diseases is high, the population base is large, and medical infrastructure is inadequate. Infectious disease POCT immediate testing products can assist doctors in timely and accurate diagnosis and treatment of patients, reducing the likelihood of disease transmission among the population and improving local medical standards. In recent years, the global market size of infectious disease testing POCT products has grown from $935 million in 2015 to $1.43 billion in 2019, maintaining a continuous growth trend. The global market capacity for infectious disease testing POCT products is expected to reach $1.73 billion in 2021. Due to seasonal factors, influenza and other infectious diseases will have varying degrees of outbreaks in different parts of the world each year. At the same time, with the frequent international movement of people, some emerging infectious diseases still pose a serious threat to countries worldwide. The demand for infectious disease testing POCT products will continue to exist and maintain steady growth. Due to their ease of operation and relatively low cost, POCT products will continue to be widely used in the prevention and screening of infectious diseases, with broad future market prospects.

3.2.3 Pregnancy POCT Testing

Pregnancy POCT products are mainly used for pregnancy testing and early detection of eugenics, including human chorionic gonadotropin (HCG) detection, luteinizing hormone (LH) detection, and follicle-stimulating hormone (FSH) detection, using urine or blood tests. The main driving factors in this market include women's increasing emphasis on their own health and privacy needs; an increase in infertile and late-pregnant populations, and a rise in the number of patients with gynecological diseases; and the gradual adjustment and relaxation of national fertility policies, influenced by the two-child policy, all of which have promoted the development of the pregnancy POCT product market. In 2016, the global market size of pregnancy POCT immediate testing products was approximately US$1.25 billion. According to Rncos's prediction, the pregnancy POCT product market will grow at a compound annual growth rate of 7.4% from 2016 to 2022, reaching a market size of US$1.92 billion by 2022.

3.2.4 Cardiovascular POCT Testing

Globally, cardiovascular disease has become one of the leading causes of death. According to data from the World Health Organization (WHO), approximately 17.9 million people died from cardiovascular disease in 2016, accounting for 31% of the total global deaths, with over 75% of cardiovascular disease deaths occurring in low- and middle-income countries. It is estimated that approximately 23.6 million people will die from cardiovascular disease by 2030. From the demand side in China, cardiovascular POCT products have a large market base in China.

According to statistics from the "2018 China Cardiovascular Report," there are 290 million cardiovascular disease patients in China. Since 2015, the mortality rate from cardiovascular disease has remained the highest, exceeding that of tumors and other diseases. The age of onset of heart failure patients is also decreasing year by year. According to the "2019 China Cardiovascular Disease Health and Disease Report," the prevalence of cardiovascular disease is continuously increasing, and cardiovascular disease has posed a serious threat to human life and health. In 2019, the number of cardiovascular disease patients was 330 million, and the mortality rate from cardiovascular disease remained the highest, exceeding that of tumors and other diseases. On November 1, 2017, the former National Health and Family Planning Commission Office issued the "Guiding Principles for the Construction and Management of Chest Pain Centers (Trial Implementation)", requiring secondary comprehensive hospitals or related specialized hospitals to establish chest pain centers. At the same time, it requires emergency departments to conduct 24-hour bedside electrocardiograms and echocardiograms, rapid tests such as troponin and D-dimer, and proposes quality control indicators for chest pain centers, divided into basic indicators and classification indicators. Basic indicators apply to all chest pain centers, including "the time from blood draw to report acquisition for immediate testing items such as troponin, D-dimer, brain natriuretic peptide, and blood gas analysis" and "the proportion of combined testing of D-dimer and troponin." The establishment of chest pain centers has significantly increased the demand for cardiovascular disease POCT testing.

Cardiovascular POCT products are mainly used for rapid quantitative or qualitative detection and screening of common cardiovascular diseases (myocardial infarction, heart failure, etc.), such as cardiac troponin I (CTnl) test reagents, myoglobin (Myo) quantitative test reagents, heart-type fatty acid-binding protein (H-FABP) test reagents, N-terminal B-type natriuretic peptide prohormone quantitative test reagents (NT-proBNP), etc. Cardiac markers are mainly or only present in the heart under normal conditions, but are released in large quantities into the blood from the heart under abnormal conditions. Therefore, the detection of cardiac markers in the blood can sensitively and specifically reflect myocardial injury and its severity. For most cardiovascular diseases, rapid clinical diagnosis, risk assessment, prognosis judgment, and timely treatment are crucial for reducing mortality and controlling disease progression. Taking acute myocardial infarction as an example, the first three hours after onset is the golden time for rescue treatment, and the time of treatment initiation is closely related to the efficacy and prognosis of acute myocardial infarction. Early diagnosis is extremely important for such diseases, and obtaining accurate diagnostic information quickly through POCT is a prerequisite for implementing effective treatment measures. POCT testing can significantly shorten the detection time and, through the detection of multiple cardiac markers, accurately determine the classification of the corresponding diseases and achieve targeted treatment.

Due to the high mortality risk and strong emergency timeliness of cardiovascular diseases, such as the close relationship between the emergency and treatment time and efficacy of acute myocardial infarction, early diagnosis is crucial. Therefore, POCT products have obvious advantages in rapid diagnosis in the field of cardiovascular diseases, and the market size has continued to grow rapidly. In 2018, the global market size of cardiovascular disease detection POCT products was approximately US$2.8 billion, and it is expected to exceed US$3.5 billion in 2020. In the future, with the implementation of tiered diagnosis and treatment policies in China, increased equipment procurement by primary hospitals, and the construction of chest pain centers, the Chinese cardiovascular disease POCT market will maintain rapid growth of around 30%, and the market size is expected to reach 4.8 billion yuan in 2020.

3.2.5 Tumor POCT Testing

The POCT products for tumor detection mainly involve the detection of tumor markers (TM). In the research and clinical practice of tumors, early detection, early diagnosis, and early treatment are key. Tumor markers have significant practical value in tumor screening, diagnosis, prognosis and outcome judgment, evaluation of treatment efficacy, and follow-up observation of high-risk populations. Since the 1980s, with the continuous maturity of the application of B-lymphocyte hybridoma technology to prepare tumor monoclonal antibodies, a large number of anti-tumor monoclonal antibodies have emerged, and combined with the rapidly developing immunological detection technologies, numerous tumor marker detection projects have been developed and continuously applied clinically, becoming an important examination indicator for tumor patients. Common tumor marker detection includes alpha-fetoprotein (AFP), carcinoembryonic antigen (CEA), and prostate-specific antigen (PSA) detection.

According to data released by the International Agency for Research on Cancer (IARC), a branch of the World Health Organization (WHO), 18.1 million new cancer cases were reported globally in 2018, with 9.6 million deaths. Global cancer cases are increasing. Among them, 5.477 million cancer deaths occurred in Asia, accounting for 57.05% of the global total. In 2018, almost half of the newly diagnosed cancer cases and more than half of the cancer deaths worldwide occurred in Asia, where many countries have limited access to timely diagnosis and treatment for cancer patients. From the perspective of patient scale, the future market for tumor marker detection is huge.

In China, the incidence of cancer is also showing a continuous upward trend. According to the latest cancer data from China released by the National Cancer Center in 2018, 4.29 million new cancer cases occur in China each year, equivalent to about 10,000 people being diagnosed with cancer every day in China, equivalent to 7 people getting cancer every minute on average. China's cancer incidence rate is at the mid-to-upper international level. Against the backdrop of accelerating population aging, continuously increasing tumor incidence rates, and continuously improving the popularization rate of early tumor screening and diagnosis, the future growth space of China's tumor marker detection market is huge.

3.2.6 POCT Market Size

Global POCT Industry Development Overview

The global POCT market size was US$20.2 billion in 2016 and is expected to reach US$35.5 billion in 2021, maintaining a compound annual growth rate of 12% between 2016 and 2021. It is one of the fastest-growing segments in the global in-vitro diagnostics industry. With the continued growth of the global in-vitro diagnostics market, POCT, as one of the most promising areas, is also in a rapid development stage and will remain an important development direction and trend in the in-vitro diagnostics industry in the future.

From the perspective of global market layout, due to the increasing differences in economic levels, population base, and medical and health conditions in various regions, there are significant regional differences in the global POCT market size. Developed countries such as Europe, America, and Japan remain the main battlefields for POCT. In recent years, with the growth of economic levels and improvement of medical and health conditions in emerging developing countries such as China, Brazil, and India, the application of POCT has been further promoted. These countries are gradually becoming potential growth areas for the POCT market and the main driving force for the expansion of the global POCT market scale.

China POCT Industry Development Overview

China's POCT industry started late. The concept and technology of POCT were first introduced to China in 2004, and the POCT subcommittee was established in 2006. In October 2013, the General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China and the State Standardization Administration Committee issued "GB/T29790-2013 Requirements for Quality and Capability of Point-of-Care Testing", naming POCT as "immediate testing". This standard came into effect on February 1, 2014. The industry as a whole is still in its early stages of development, with a small market size and low penetration rate in hospital clinical departments, especially in primary-level and personal testing equipment. Compared with developed countries such as Europe, America, and Japan, the overall market size is still relatively small. However, benefiting from the rapid economic development and continuous innovation of the medical system in China, the overall medical device market is in a rapid development stage. At the same time, with the promotion and implementation of tiered medical systems, the demand for POCT products from hospitals is becoming increasingly prominent. The POCT industry in China is also seizing market development opportunities and therefore has great market development potential.

In 2016, the market size of POCT in China was only 6.175 billion yuan. According to TriMark's prediction, the market size of China's POCT industry in 2018 was US$1.43 billion, and it will maintain a compound annual growth rate of 22% in the following years. The market size is expected to reach US$2.6 billion in 2021. Due to China's large population base, serious aging phenomenon, and uneven development of medical resources, China will be a potential development market for POCT. With the implementation of China's tiered diagnosis policy and the promotion of medical reform, as well as the continuous improvement of residents' health management awareness, the POCT industry in China is expected to maintain rapid growth in the next few years.



With the continuous upgrading of POCT technology, the strong promotion of tiered diagnosis policies, the gradual improvement of national five major center construction, and the hard demand of clinical departments, new market space will be brought to the POCT field.

Comprehensive Service Links (Distribution + Service) in the IVD Industry

In recent years, China's medical insurance cost control and volume-based procurement policies in the biopharmaceutical industry have been making rapid progress. For enterprises in the pharmaceutical distribution sector, while medical insurance cost control puts cost pressure on hospitals, this pressure will inevitably be passed on to distribution enterprises. Therefore, the transformation of distribution enterprises in the industrial chain is imperative, and enterprises in the industry are gradually extending to service-oriented enterprises. Specific transformation methods such as third-party laboratories, centralized procurement services, and regional testing centers will become trends.

4.1 Development Direction of Comprehensive Service Links: ICL

ICL companies undertake outpatient samples. With the low market penetration rate of ICL in China, the increasing social recognition and the unique monopoly attributes of the industry, the prospects for leading ICL companies are promising. For China's hospital-based medical system, hospital-based comprehensive service enterprises that provide comprehensive services to hospitals through product channels will have great potential for increasing efficiency and reducing costs. The collaborative construction model of in-hospital and out-hospital systems will also provide new growth space for medical device distribution companies and ICL companies.

4.1.1 Domestic Third-Party Independent Laboratories (ICL) are booming

Origin of Independent Medical Laboratories: In the mid-1960s, independent medical laboratories gradually originated and developed in the United States. The United States is a country with developed private clinics and hospitals. Due to the contradiction between expensive medical testing equipment and a small number of testing samples in hospitals, these hospitals turned to rely on external independent testing institutions, thus giving rise to a new industry—the independent medical testing industry (ICL). The ICL industry is involved in disease diagnosis and is related to people's life and health safety, so it is subject to great industry regulation and high policy barriers. The establishment of independent laboratories requires an application process followed by a series of quality inspections. Second, the ICL industry requires high investment. The establishment of a medical testing laboratory alone requires huge capital expenditure, and it is also necessary to achieve the scale and chain operation of the laboratory, as well as the construction of a cold chain logistics chain. Third, there are technological barriers. With the development of group technology, the proportion of special testing items has gradually increased, which has put higher technical requirements on testing personnel and put higher requirements on R&D investment, talent introduction, and training for companies in the ICL industry. China's third-party medical testing industry started late. Compared with developed countries such as Japan and Europe, the market share of this industry in China is relatively low. The main reason is that the supply side of medical services in China is mainly dominated by large public hospitals, while in foreign countries it is mainly based on small and medium-sized clinics. However, judging from the proportion of independent laboratory operating income in the medical testing industry income, the proportion of independent laboratory operating income in the medical testing industry income in China is only about 10% of that in developed countries mentioned above. Therefore, there is still great development space for China's third-party medical testing industry in the future.

According to Sullivan's data analysis, China's medical expenses increased from approximately 4097.5 billion yuan in 2015 to 6519.6 billion yuan in 2019, with a compound annual growth rate of 12.3%. It is expected to further increase to 10620.4 billion yuan by 2024, with a compound annual growth rate of 10.3%. It is expected to increase to 17615.7 billion yuan by 2030, with a compound annual growth rate of 8.8% from 2024 to 2030. In 2019, China's total health expenditure ranked second in the world.



At present, hospitals play the most important role in China's medical service industry. In 2019, the market share of hospital revenue in the entire medical industry in China was 77.5%. The scale of the hospital industry, calculated by revenue, increased from 2288 billion yuan in 2015 to 3597 billion yuan in 2019, with a compound annual growth rate of 12.0% from 2015 to 2019. The large scale and fast growth of Chinese hospitals have promoted the development of the domestic ICL market, because independent clinical laboratories (ICL) work closely with hospitals and provide support for them, and provide comprehensive testing services that cannot be performed within the hospital.

In addition, hospitals in China are divided into three levels: first-level, second-level, and third-level. By the end of 2019, there were a total of 2749 third-level hospitals, 9687 second-level hospitals, 11264 first-level hospitals, and 10654 unclassified hospitals nationwide. According to the 2019 statistics, 2749 third-level hospitals received 2.057 billion outpatient visits, while 10654 unclassified hospitals received only 212.3 million outpatient visits. The small number of third-level hospitals has led to a serious mismatch between medical resources and diagnostic needs. In terms of total quantity and number of specialties, third-level hospitals generally have the greatest demand for special tests, so they must outsource some testing services to ICLs.

In recent years, a flurry of policies have been introduced in the pharmaceutical industry. Policies such as volume-based procurement, medical insurance cost control, and tiered medical treatment have brought about new changes to the independent clinical laboratory (ICL) industry. ICL is a capital-intensive and labor-intensive industry. As a leading domestic ICL enterprise, the company possesses strong scale advantages and cost control advantages, thus leading public hospitals to outsource some testing projects that they do not have a comparative advantage in. Policies such as the "two-invoice system," centralized procurement, and medical insurance cost control have also brought about new changes to the industry. On the one hand, hospitals are facing the separation of medicine and healthcare, drug price reductions, and reduced profitability. Due to the high cost of medical examination equipment and related personnel, after regulatory authorities require downward adjustments to the price of examination items, the profits of the inspection department decrease. High costs of medical testing equipment and consumables drive hospitals to adopt outsourcing policies for testing. On the other hand, because ICL provides centralized outsourced medical testing services to various medical institutions, a large number of testing equipment and consumables are required, thus having good supply channels. Through the scale effect of centralized procurement of equipment and reagents, procurement costs are effectively reduced. The introduction of policies has also effectively promoted the development of ICL.

4.1.2 A Representative of Domestic IVD Device Circulation Enterprises Transforming into ICL—DIAn Diagnostics

Currently, in the ICL field, DIAn Diagnostics has a leading independent medical laboratory with leading scale and technology. It has accumulated 16 years of operational management experience. It has established 39 chain independent medical laboratories nationwide, forming a development trend of "national coverage, regional penetration" and "chain-based, standardized, and scaled" development. It provides services to over 18,000 medical institutions and over 200 million people nationwide.

DIAn Diagnostics and KingMed Diagnostics are developing in competition with each other.

DIAn Diagnostics, from its early agency business to the completion of its national layout of third-party independent laboratories in 2017. Currently, DIAn Diagnostics, together with KingMed Diagnostics, has occupied a leading position in domestic third-party medical testing. Both companies are leading companies in the industry. DIAn Diagnostics follows the strategic model of "products + services" with existing business development. KingMed Diagnostics started with independent medical laboratory services. Its national layout of laboratories was completed relatively earlier and its laboratories are currently more mature. DIAn Diagnostics completed its national laboratory layout in 2015-2017. With the gradual increase in the number of profitable independent medical laboratories, the medical diagnostic services business will show a rapid upward trend.

By comparing the expansion of independent laboratories of DIAn Diagnostics and KingMed Diagnostics, it is clear that the completion time of DIAn Diagnostics' independent laboratory layout is later than KingMed Diagnostics.

DIAn Diagnostics and KingMed Diagnostics are both leading companies in the domestic third-party diagnostic industry. Their independent laboratories have a presence in almost every province in China, with nationwide business coverage. KingMed Diagnostics has 38 independent laboratories, while DIAn Diagnostics has 39 (including one CRO laboratory). In 2019, KingMed Diagnostics' diagnostic service business revenue accounted for 94.22%. KingMed Diagnostics' laboratories are relatively mature, and the vast majority have achieved profitability. For DIAn Diagnostics, 2016-2017 was the most intensive period for the establishment of the company's medical testing laboratories. In 2017, the national layout of laboratories was achieved. Up to now, the company's laboratories are relatively young, and a considerable number of laboratories are in the growth stage, so the revenue share of diagnostic services is relatively low. Therefore, in the domestic third-party medical diagnostic market, KingMed Diagnostics' independent medical laboratories are relatively mature, and the proportion of diagnostic service business is also high, while DIAn Diagnostics is also rapidly rising. By leveraging industry development trends and favorable policies, the company continuously adjusts its strategic layout, gradually highlighting the core business status of diagnostic service business, and the company's diagnostic service business will accelerate its growth in the future.

4.1.3 ICL Supplier Focusing on Hematology Special Tests—Conson Global

The Chinese ICL market includes two types of testing services: routine testing and special testing. Routine testing usually refers to routine testing items in the "Catalog of Clinical Laboratory Items for Medical Institutions" issued by the National Health Commission, such as blood biochemistry, body fluid biochemistry, and blood type testing. Special testing usually refers to special testing items not included in the "Catalog of Clinical Testing Items for Medical Institutions," such as tuberculosis bacillus and hepatitis virus detection. In recent years, the growth rate of China's special testing market has been significantly faster than that of the routine testing market. According to statistics, the scale of China's special testing market increased from 3.529 billion yuan in 2015 to 9.766 billion yuan in 2019, with a compound annual growth rate of 29.0% from 2015 to 2019. It is expected to further increase to 24.065 billion yuan in 2024, with a compound annual growth rate of 19.8% from 2019 to 2021.

The scale of China's routine testing market increased from 5.74 billion yuan in 2015 to 11.383 billion yuan in 2019, with a compound annual growth rate of 18.7% from 2015 to 2019. It is expected to further increase to an additional 18.474 billion yuan in 2024, with a compound annual growth rate of 10.2% from 2019 to 2024. China's ICL special testing market has grown from 3.529 billion yuan in 2015 to 9.766 billion yuan in 2019, with a compound annual growth rate of 29.0%. It is expected that from 2019 to 2024, the compound annual growth rate will be 19.8%, reaching a scale of 24.065 billion yuan in 2024. In contrast, the US ICL special testing market grew from US$10.6 billion in 2015 to US$18.3 billion in 2019, with a compound annual growth rate of 14.7%, and is expected to further grow at a compound annual growth rate of 10.0% from 2019 to 2024, reaching US$29.5 billion in 2024. By applying the latest technologies to molecular diagnostics, protein chemistry, cellular immunology, and advanced microbiology, special tests are particularly suitable for disease diagnosis, identification of different subtypes of diseases, precision medicine qualification assessment, and pandemic diagnosis.

In China, special tests are mainly used in six specialized fields, including hematology, genetic diseases and rare diseases, infectious diseases, oncology, neurology, and gynecology-related diseases, and are constantly expanding. Blood diseases are diseases that mainly affect the blood and hematopoietic organs, including rare genetic diseases, anemia, sickle cell anemia, and complications of chemotherapy or blood transfusion. Hematological examinations include the detection of blood, blood proteins, and hematopoietic organs.



4.2 The Direction of Transformation for IVD Circulation Enterprises: Integrated Medical Laboratory Service Providers

IVD distribution service providers are a crucial link connecting upstream IVD manufacturers and downstream medical institutions. They are an essential component of the national medical and health services and the in-vitro diagnostic industry. Medical testing primarily relies on testing systems. Beyond testing equipment, reagents, standards, quality control products, and other consumables and testing personnel, these systems also require comprehensive quality management, laboratory environments, specimen collection and transportation, and technical maintenance services. To illustrate, a clinical testing laboratory is like a production workshop for generating test reports. The test samples and reagents are the raw materials and auxiliary materials, the testing equipment is the production tool, and the testing personnel are the technicians. The final product from the laboratory is the patient's test report. Currently, national medical insurance reimbursement for related testing fees is based on the test report fee, not the price of the reagents or other end products. As an IVD distribution service provider, due to the characteristics of the testing field, unlike traditional pharmaceutical distribution companies, in addition to purchasing related testing instruments and reagents from upstream manufacturers, they also need to participate in various stages of work from reagent procurement to the production of test reports. Logistics and delivery of instruments and reagents are only part of their work; they also need to provide medical laboratories with a series of comprehensive services, including quality control, technical maintenance, and laboratory operation management, making their service attributes stronger. With the continuous development of diagnostic technology, the types of testing items continue to increase, requiring the continuous introduction of new diagnostic items and advanced diagnostic technologies and equipment. The timeliness and accuracy of diagnostic results are also becoming increasingly important. To improve the efficiency and management level of the testing system, medical laboratories need more professional technical support and management services in terms of equipment selection, technical application training, process operation standards, quality control measures, reagent and consumable management and storage, and equipment maintenance. This ensures the stability and sustainability of the testing system, thus increasing the demands on the service capabilities of IVD distribution service providers.

In recent years, under the pressure of medical insurance cost control and the gradual cancellation of surcharges on drugs and high-value consumables, hospitals and testing departments have paid more attention to cost optimization, thus placing higher demands on IVD distribution service providers for more comprehensive services to help them achieve cost reduction and efficiency improvement. The integrated model effectively integrates the human, material, financial, and management resources of the testing department, unifies and optimizes resource allocation, and starts from the overall needs of the laboratory. It not only reduces the procurement and management costs of reagents and consumables for hospitals at the external "supply chain" level by providing "centralized procurement and unified delivery," but also further improves the internal operation capabilities of medical laboratories by providing a series of value-added services such as information services, quality control services, after-sales technical services, and academic support. This helps testing departments build more advanced laboratories, improve their economic benefits and academic level, improve personnel performance, and enhance the hospital's influence in its region.

Simultaneously, with the country's vigorous promotion of tiered medical treatment policies and the active promotion of close-knit medical consortia and medical communities, regional testing center models are flourishing across the country. Through the construction of regional testing centers, the utilization level and efficiency of medical testing resources within the region are significantly improved, enhancing the overall capabilities and levels of primary medical institutions, reducing redundant testing within the region, achieving mutual recognition of testing results, and balancing medical resources. This achieves the tiered medical treatment goal of "minor illnesses not leaving the village, major illnesses not leaving the county." As a comprehensive IVD service provider, by improving service capabilities, the overall diagnostic testing level of the region can be improved. Large IVD comprehensive service providers with strong service capabilities will have better development opportunities.

4.2.1 Development Trends of Medical Laboratory Comprehensive Service Providers

Industry market size continues to grow. Due to population growth, accelerated aging, the continuous improvement of the medical insurance system, increased per capita disposable income, and improved medical consumption concepts, the demand for the domestic in-vitro diagnostic market has been rapidly released. China has become one of the fastest-growing regions in the global in-vitro diagnostic market. Overall, the IVD industry maintains steady and sustained growth.

Industry concentration is increasing. Currently, China's IVD distribution channel market presents an overall fragmented competitive landscape, with more than 20,000 small and medium-sized IVD agents. With the deepening of the new medical reforms, the state has introduced a series of policies to encourage the integration of the IVD distribution service industry. The implementation of policies such as the "two-invoice system" and "sunshine platform procurement" aims to adjust the structure of China's IVD distribution field, solve the problems of small, scattered, and low-level enterprises in the industry, and encourage stronger and larger enterprises through strengthened management and standardized behavior. This promotes structural adjustments, and future industry competition will inevitably be a competition of scale and comprehensive service capabilities. Industry concentration will further increase, presenting an oligopoly pattern.

Increased dependence of manufacturers and end customers on IVD distribution channel service enterprises. Due to the large number of IVD product reagents, exceeding 20,000, and with the continuous development of diagnostic technology, the types of testing items continue to increase, requiring the continuous introduction of new diagnostic items and advanced diagnostic technologies and equipment. For end hospital customers, the management difficulty of medical laboratories is gradually increasing, requiring IVD distribution service providers to provide comprehensive services including quality control management, information management, product procurement management, reagent inventory management, personnel performance appraisal management, and invoice management. For upstream manufacturers, they can leverage the extensive and professional sales networks of intermediate distribution channel enterprises to achieve sales and provide timely after-sales technical maintenance services. This helps manufacturers quickly introduce products to the market. Therefore, after market competition and industry integration, large IVD distribution service enterprises with strong market coverage capabilities, supply chain capabilities, information platforms, service technology teams, and experience advantages will occupy more upstream and downstream resources and market share. The informationization level has significantly improved, accelerating industry development. With the gradual deepening of China's various medical reforms, under the impetus of multiple policies such as the two-invoice system and tiered medical treatment, medical laboratories have increasingly higher requirements in terms of mutual recognition of medical laboratory test results, higher quality control standards, and more accurate test results. The needs of medical laboratories have expanded from the most basic efficient and stable operation to the refinement and informationization of management processes, effective control of operating management costs, and the standardization of testing standards.

Information technology tools can provide simplified management processes and reduced comprehensive management costs for medical institutions and medical laboratory comprehensive service providers at all levels. The promotion of informationization, on the one hand, helps reduce the operating cost rate of laboratory service providers and other enterprises and improve the operating efficiency of enterprises in the industry. Through the upgrading and development of the information service system, it can meet the customers' needs for information management while accelerating the speed of information transmission and the efficiency of information exchange between companies and distributors, companies and customers, and companies and suppliers. This allows for more efficient service provision to end hospital customers. On the other hand, by building high-quality, high-level, and highly intelligent information technology platforms, intelligent, simplified, standardized, and refined management of hospital clinical laboratories can be achieved. This helps hospitals reduce costs and increase efficiency, improve hospital service quality, and enhance patient satisfaction.

4.2.2 Leading Medical Laboratory Comprehensive Service Provider - Runda Medical

As a leading domestic provider of comprehensive services for medical laboratories, the company leverages information and data technologies to provide a full range of services to various laboratories (primarily hospital testing departments, also known as clinical laboratories, as well as medical laboratories belonging to third-party medical testing institutions, physical examination centers, disease control centers, blood banks and other medical units), including in-vitro diagnostic products, technical support and laboratory operation management. Supplementary businesses, including R&D and production of in-vitro diagnostic products, development of medical information systems, and third-party laboratory testing, further expand the company’s unique integrated IVD business system. Since its establishment, the company has maintained an organic compound annual growth rate (CAGR) of approximately 20%; from 2016-2018, high growth was partly driven by the consolidation of the performance of acquired subsidiaries; 2019 marked a year of organic growth for the company. Since its IPO, the company has maintained a stable gross profit margin of 26%-28%, with net profit margin steadily improving year-on-year. In 2020, the gross and net profit margins declined due to the impact of the epidemic, but have improved quarter by quarter.

 

 

 

​

Medical; In-vitro diagnostics; Disease prevention;

Previous Page

Safeguarding Healthy Living Through Quality: Olympus Awarded the 2021 (Industry) Quality Model Award

Analysis of the Regional Market Competition Pattern of China's Medical Device Industry in 2021: The Pearl River Delta and the Yangtze River Delta become two major industrial clusters

Next Page

Previous Page

Safeguarding Healthy Living Through Quality: Olympus Awarded the 2021 (Industry) Quality Model Award

Next Page

Analysis of the Regional Market Competition Pattern of China's Medical Device Industry in 2021: The Pearl River Delta and the Yangtze River Delta become two major industrial clusters

COOKIES

Our website uses cookies and similar technologies to personalize the advertising shown to you and to help you get the best experience on our website. For more information, see our Privacy & Cookie Policy

COOKIES

Our website uses cookies and similar technologies to personalize the advertising shown to you and to help you get the best experience on our website. For more information, see our Privacy & Cookie Policy

These cookies are necessary for basic functions such as payment. Standard cookies cannot be turned off and do not store any of your information.

These cookies collect information, such as how many people are using our site or which pages are popular, to help us improve the customer experience. Turning these cookies off will mean we can't collect information to improve your experience.

These cookies enable the website to provide enhanced functionality and personalization. They may be set by us or by third-party providers whose services we have added to our pages. If you do not allow these cookies, some or all of these services may not function properly.

These cookies help us understand what you are interested in so that we can show you relevant advertising on other websites. Turning these cookies off will mean we are unable to show you any personalized advertising.

Contact Us

Room 618, 36 Gaoke Road, Tianhe District, Guangzhou, China

national unified free service hotline:400-020-6788

 

Facebook Linkedin Twitter Tumblr Pinterest

Copyright©2025 All Rights Reserved of Rencheng (Guangzhou) Medical Equipment Maintenance Co., Ltd.

粤ICP备16004010号

Powerby:300.cn|Label|   Business License