China's In Vitro Diagnostics Market 2018

Jin Zhang discusses several of the major domestic companies in China’s in vitro diagnostics industry.

In the light of aging population, enhanced health awareness, and technology advancement, in vitro diagnostics (IVD) has begun to take the center-stage at the forefront of medical development. It is playing an increasingly important role in a number of fields, including disease prevention, diagnosis, monitoring, and treatment and has already become an inseparable part of modern health management. At present, about two-thirds of medical decision rely on diagnostic information. However, spend on diagnosis only accounts for about 1% of total medical expense. Thus, further improvements on diagnostic technologies and increase on diagnosis spending will definitely provide a more futile ground for scientific evidence-based decisions down the line.

The growing Chinese IVD market

In the recent years, the global IVD market has been riding on a steady upward trend, with an average compound annual growth rate (CAGR) of 5%­–7%. According to Allied Market Research, the total global market value was $61.7 billion in 2016 and is predicted to reach a total of $74.6 billion in 2020.

Developed countries account for the majority of the global market. Their markets are relatively mature. Specifically, North America is currently the largest, accounting for approximately 40.15%, followed by western European at about 29.82%, and the Japanese market at approximately 10.45%. On the other side of the coin, developing countries, such as China, are lagging behind the leading rank; their spend on in vitro diagnostics per capita is still relatively low. However, thanks to the booming economy, they are emerging at a rapid speed.

In 2011, China only represented about 6.7% of the global market, but by 2016, its market share had grown grown to 10.9%. At the same time, its CAGR amounted to 19.1%. According to Research and Markets, China is expected to reach a total of $11.56 billion in 2019.

The competitive IVD landscape in China

Based on the methods and applications, in vitro diagnostics can be categorized into a number of fields, including immune diagnosis, biochemical diagnosis, molecular diagnosis, bedside diagnosis, blood detection, and microbial detection. At present, immune and biochemical diagnosis are the most popular, accounting for the largest market globally, whereas molecular diagnosis is the rising star, representing the biggest market potential in the coming years.

And each market has their own characteristics. In the American and European markets, the diagnostic options are abundant and well balanced. The development of rapid detections is mature, accounting for 29% of the total market. Microbial, immune, and biochemical diagnosis are three pillar fields, accounting for 18%, 15%, and 8% of the market share, respectively. Products in the Chinese IVD market are more concentrated; the competition is also more intense. Currently, immune diagnosis leads the market, taking about 33% of the market share; biochemical diagnosis follows, with about 27% of the market.

1. The competitive landscape in the biochemical diagnosis

Biochemical diagnosis is the determination of enzymes, sugars, lipids, proteins, non-protein nitrogen, inorganic elements, liver functions, etc., through various biochemical or immune reactions. It is a basic component of medical testing, mainly used for routine detections in hospitals.

Biochemical diagnosis started early in China and its market is now mature. The overall level is in line with the international standards. Currently, imported brands reign in the cities, thanks to their technological and quality advantages. Chinese domestic companies have dominated other areas-about two-thirds of the market-primarily because of cost-effectiveness and superior market service. Beijing Strong Biotechnology is the long-term leader in this field, but a slew of newcomers are catching up, including Fosun Pharma, Shanghai Runda Medical, Shanghai Kehua Bio-engineering, Da An Gene, Dian Diagnostics Group, Beijing Leadman Biochemistry, Dirui Industrial, Medical System Biotechnology, Maccura Biotechnology, BioSino Bio-Technology & Science, and Autobio Diagnostics.

Looking forward, the progression of Chinese medical and healthcare reform and increasing investments in the primary medical supply, along with enhanced quality and capability of domestic reagents and biochemical analyzers, will further drive rapid growth in this sector.

2. The competitive landscape in immune diagnosis  

Immune diagnosis is established by a specific reaction between a test substance and its corresponding substance, often achieved through immune reactions of antigens and antibodies. It is a highly selective diagnostic method, mainly applied to the detection of small proteins, hormones, fatty acids, drugs, etc., in the body. Today, it is often used in infectious diseases, endocrine disease, cancers, pregnancy tests, and blood antigen detection.

Currently, immune diagnosis is the fastest-growing IVD sector in China, with an increase rate of more than 15% annually. Overall, chemiluminescence and ELISA (enzyme-linked immunosorbent assay) are the two technologies dominated this field. In community clinics, ELISA holds the crown and has a sizable market lead, thanks to its mature technology and cost advantage. Chinese providers have emerged as the winners, largely relying on their low cost and flexible sale strategy. Notable Chinese contenders in this sector include Shanghai Kehua Bio-engineering, Wantai Biopharma, shanghai Rongsheng Biopharma, Autobio Diagnostics, and Xiamen Xinchuang Technology.

On the flip side, due to the large sample size and low-cost sensitivity, chemiluminescence has beat the competition and replaced ELISA in major comprehensive hospitals. Overseas providers have long led this space, including Beckman, Roche, Siemens, Abbott, and  Tosoh. Conversely, China’s domestic develop is still in its budding phase, accounting for only 4% of market share. Major Chinese providers include Beijing Bioekon, Beijing Tigsun, Beijing Kemei, Autobio Diagnostics, and Xiamen Boson Biotech.

Worth mentioning is that chemiluminescence immunoassay has emerged at a rapid speed in recent years and is expected to gradually take over ELISA completely.

3. The competitive landscape in molecular diagnosis

Molecular diagnosis, the newest hi-tech method, detects the structural or expression level change of genetic material in a patient’s body. Its core technology is gene diagnosis. Compared to traditional biochemical and immunological approaches, it is more accurate, primarily because of to its quantitative characteristics.

Commonly applied gene diagnostics include polymerase chain reaction (PCR), fluorescence in situ hybridization (FISH), gene sequencing, and gene chip.

Each technology has their own characteristics. Currently, FISH is mainly used in the field of cell genetics, including cancer detection, prenatal testing, etc. Its accuracy and sensitivity are relatively low. Gene chip is a large-scale, high-throughput detection method. Its advantages include high sensitivity, high accuracy, quick and easy application, and simultaneous detection of multiple diseases. It has been widely applied in the examination of prenatal genetic disorders. PCR is simple, rapid, and very sensitive. It can detect the presence of a disease by just 10-100 gene copies. However, the downside is its low detection efficacy; it can only examine one or several genes at a time. Currently, it is mainly used in the diagnosis of infectious diseases, cancers, and hereditary diseases. Gene sequencing is the most accurate technology among them all. It also can measure a large number of diseases at one time, making it very helpful in individualized diagnosis and precision medicine. Undoubtedly, along with the technology advancement and cost reduction, gene sequencing is going to lead the way in molecular diagnosis.

Compared to the leading developed countries, China’s molecular diagnostic market started very late. Its current size is still pretty small. Although it has been growing at a rapid speed in the past few years, several obstacles make it difficult for its domestic development. First, coupled with a complex operating system, the technical requirements and entry barriers are very high. Second, the core technologies are currently shielded by overseas patents and are hard to access. Third, the cost of reagents and equipment is very high, and their development is very difficult. Thus, fewer Chinese domestic companies have dipped their toe into this field. Main players include Da An Gene and Shanghai Kehua Bio-engineering.

Major Chinese players in the IVD field

Overall, a total of 300 to 400 Chinese domestic companies are involved in the IVD industry. Below are some of the major players.

Medicalsystem Biotechnology: leading in biochemical testing and deploying into downstream independent diagnostic laboratories

Medicalsystem Biotechnology primarily engages in the development, manufacturing, and sales of IVD products, including agents and machines, and provides third-party medical diagnosis services. Last year, reagents were its largest income stream, contributing up to 74.56% of total revenue; machine and medical diagnosis services came next (14.35% and 10.31% respectively). The company plans in future to actively seek the integration of the entire industry chain in both the breadth and depth, further deploying into IVD diagnostic reagents, equipment, and third-party laboratories.

Medicalsystem Biotechnology began with biochemical testing. Currently equipped with a total of 127 biochemical reagents and 11 types of automatic biochemical analyzers, it has covered 11 categories of biochemical detections. Armed with its rich experience in this area, it is currently developing a slew of newer technologies, including 14 enzyme diagnosis reagents, 11 antigen and antibody projects, 7 biochemical reagents, 14 immune reagents, and 4 supporting chemiluminometers and POCT equipment. The company has been growing at a rapid speed, with CAGR over 40% in the past three years.

Maccura Biotechnology: chemiluminescence promoting growth 

Maccura, founded in 1994, is committed to the development, production, sales, and services of IVD. It has adopted a combination business model. On one side, it represents a range of international renown IVD brands, such as Hitachi, Sysmex, Bio-Mérieux, Bio-Rad, Beckton Dickinson, and Qiagen. On the other, it is also actively developing and promoting its own products in the southwest region of China. This move not only helped the company enrich its product line and increase product sales, but also laid solid foundations for its future expansions in both the domestic and international markets.

Da An Gene: leader in molecular diagnosis

Da An Gene has established itself as the leader in molecular diagnostics in China. Currently, it has participated in a wide range of molecular diagnostic technologies, including PCR, FISH, SNP, and gene chip, taking more than 50% of the total Chinese market. In addition, it is equipped with eight independent diagnostic laboratories in Guangzhou, Chengdu, Shanghai, Hefei, Nanchang, Kunming, Taizhou, and Jinan. Riding on the upward trend of gene sequencing in the coming years, Da An Gene will undoubtedly further boost its standing in the market.

Wondfo Biotech: leading the domestic POCT market

Wondfo is leading the race of rapid diagnosis in the point of care testing (POCT) field in China. At present, its business primarily focuses on pregnancy, infectious diseases, drug inspection, etc. In the future, with the increase of its market share, Wondfo is slated to further deploy into chronic disease areas, such as diabetes, cardiovascular and cerebrovascular diseases, and respiratory diseases.

Shanghai Kehua Bio-Engineering: leading the diagnostic reagent industry

Armed with three major product lines-diagnostic reagents, instruments, and vacuum blood collection tubes, Kehua has taken the crown in the Chinese diagnostic reagent market. Particularly, its reagent sector covers four major fields, including biochemistry, immune testing, molecular diagnosis, and POCT. In the light of its complete reagent product line, industry watchers have pegged big hopes on Kehua’s self-developed high-end diagnostic equipment. They are expected to dominate mid-level hospitals and eventually partially replace imported instruments in the high-end market. Kehua’s products have been sold to 38 overseas countries and regions.

Dirui Industrial Co.: diving into biochemistry and immune diagnosis

Coupled with outstanding development capabilities in equipment, Dirui has adopted an instrument plus reagent marketing and sale model. With a clear leg up on its competitors in the IVD field, especially in urine analyzer, it has more than 30% of the total market share. The company is committed to making its way into the renal function, liver function, blood sugar testing, etc.

Runda Medical: comprehensive medical laboratory service provider

Runda currently embraces an “agent + self-produce” business model and constructed a product line with 13 categories and more than 4000 varieties. Its clients spread across a number of institution types, including hospital laboratory, third-party independent diagnostic laboratory, physical examination center, disease control center and blood station, etc. Runda is able to tailor to their needs and provide professional and customized solutions and implementation.

Beijing Strong Biotechnologies(BSBE): fast-growing leader in biochemistry diagnosis

BSBE primarily engages in the R&D, production, and sales of in vitro diagnostic reagents. At present, it has a total of 114 self-produced products, including 113 biochemical diagnostic reagents and 1 biochemical analyzer, mainly covering liver function, kidney function, blood lipids, and sugar testing. The company also represents some international brands, such as Randox and Siemens.

Jin Zhang M.D., Ph.D is project and account manager at LakePharma, and editor at The Pharmaceutical Consultant.