Domestic IVD Industry Dilemma: Price Advantage No Longer, High-End Products Difficult To Break Through

With the development of IVD, the development of domestic IVD has entered the market.

A few days ago, Lepu medical (300003. SZ) announced that it plans to spin off its wholly-owned subsidiary Lepu diagnostics for an IPO on the science and technology innovation board. At present, the application has been accepted. This time Lepu diagnosis plans to raise 411 million yuan for two major construction projects. In the first half of 2020, the operating revenue of Lepu diagnostics was 523 million yuan, and the net profit was 273 million yuan. In the first half of the year, the income of Xinguan detection reagent products was 390 million yuan, accounting for 74.66% of the main business income. The company has invested 102 million yuan in R & D in the past three years, accounting for 15.58% of the operating revenue in the last three years.

"With the gradual elimination of the traditional enzyme-linked immunosorbent assay (ELISA) and the increasing number of IVD market entrants, many domestic leaders have begun to develop into the subdivision fields of high-tech barriers such as chemiluminescence and molecular diagnosis. From this point of view, the road of Lepu diagnosis after listing is not smooth. " On December 8, Wang Jun, investment manager of Beijing first industry investment fund, told reporters of 21st century economic report that up to now, most of the products in the laboratory of Grade-A hospitals still use imported products, and more than 90% of the products of chemiluminescence use imported products.

At present, domestic substitution in the field of chemiluminescence is difficult, which reflects that in addition to the performance and recognition of domestic equipment and reagents are still inferior to imported products, how to improve the competitiveness of domestic IVD products in the future puts forward a severe test for every domestic IVD enterprise.

The competition channel of the basic market is king

The so-called in vitro diagnosis (IVD) is a kind of product and service which can obtain clinical diagnosis information by detecting the blood, body fluid and tissue of human body outside the human body. It is an important means of modern medical diagnosis. In vitro diagnostic products can be divided into immune diagnosis, biochemical diagnosis, molecular diagnosis, microbial diagnosis, coagulation diagnosis, tissue diagnosis, blood and body fluid diagnosis, etc.

According to the blue book of Chinese medical devices, the scale of IVD market in China will reach 70 billion yuan in 2019, maintaining double-digit growth for many consecutive years, far higher than the global single digit growth. Among them, immunodiagnosis, biochemical diagnosis and molecular diagnosis are the most widely used in vitro diagnostic methods in China's medical institutions, with market share of 38%, 19% and 15% respectively.

At present, after 20 years of development in China's IVD industry, a number of domestic IVD listed companies, such as Antu biology, new industry, Mike biology, Kehua biology, have emerged. In the early stage, these leading enterprises mainly built platforms with traditional biochemical diagnosis, enzyme-linked immunosorbent and other products, and seized the positions of hospitals with sales orientation. Now they have developed into large enterprises with annual revenue of 2-3 billion yuan and net profit of hundreds of millions yuan.

Wang Jun said: "most of the domestic IVD leading enterprises have two kinds of origins. One is the company that started to gradually develop one or two simple products in the 1980s and 1990s, such as Hunan Chemical Reagent Room, the predecessor of Kehua biology; the other is the transformation of product development by trading companies, such as new industries. However, no matter which way to start, its product form and technical level are far behind that of foreign capital. "

In this case, the entry point of domestic manufacturers all choose biochemical diagnostic reagents and enzyme-linked immunosorbent reagents with relatively low technical threshold. Even so, after 30 years of development, imported equipment and reagents are still the main raw materials in the laboratory departments of tertiary hospitals.

According to the director of the laboratory of Shenzhen Hospital of Peking University, "at present, top three hospitals still mainly purchase equipment and products from leading international manufacturers such as Roche, Abbott and Beckman. At present, only some domestic reagents will be used in biochemical detection. Although the equipment of each domestic manufacturer is basically available in immunoassay, it is rarely used."

Domestic products have not been able to achieve further substitution in the field of IVD, and the fundamental reason is the gap in technical level. Similar to chemiluminescence technology threshold is high, imported products still maintain an absolute leading position, the market share of tertiary hospitals is more than 90%, and that of secondary hospitals is more than 60%.

"Although IVD is not directly used in the human body, the accuracy of its diagnosis directly affects the doctor's diagnosis. At present, in addition to more varieties of imported products, the accuracy and stability of the test results are far better than those of domestic products. Therefore, at present, most of the domestic products can be put into the tertiary hospitals for free, but the actual consumption is very small. " Wang Jun introduced.

For a long time, secondary and below hospitals have become the main battlefield of domestic manufacturers. Limited by the level of diagnosis, primary hospitals themselves have low requirements for diagnostic accuracy, and most complex diseases are directly referred up, which weakens the relatively poor performance of domestic products in primary hospitals. At the same time, as the budget of primary medical care is more tense, the price advantage of domestic products has been better played.

In the competition of secondary hospitals and below, product performance is no longer the first factor in the competition between manufacturers. Higher cost performance, stronger channel relationship, wider sales network and more timely service response are the capabilities that many domestic manufacturers need to have in the competition in the grassroots market.

High end products are struggling

In the field of IVD, importers still hold the absolute leading position in several sub fields with high technical barriers, including chemiluminescence, ngs, flow cytometry, etc. Although domestic products have great advantages in terms of price and channel, these advantages can only help domestic products achieve initial substitution and seize a small amount of market.

According to the 2019 annual report of Antu biology, a leading domestic immunodiagnosis company, its products have entered 5600 end-users of class II hospitals and above, including 1608 tertiary hospitals, accounting for 60% of the total number of tertiary hospitals in China. But in the field of immunodiagnosis, Antu has a market share of less than 10% in China.

"Although the relationship between domestic manufacturers and hospitals is generally good, most hospitals, especially tertiary hospitals, have already established their inspection system, which makes it difficult for some products or manufacturers that are not better than the current testing system to make changes. At the same time, in recent years, the state has been very aggressive in "bargaining" on products. At present, imported products are only about 10% more expensive than domestic products. The purchase of domestic equipment can only help hospitals reduce costs

Wang Jun added: "overall, in the future competition, it has become extremely difficult for domestic manufacturers to rely on pure prices or channels to compete. Only by building a more complete R & D system and developing testing products with higher technical level can we gain further advantages in the future competition. "

Take the IVD company of science and technology innovation board (IVD) listed in 2019 as an example. Due to the successful breakthrough of Roche electrochemiluminescence technology route, Pumen technology officially launched its own equipment and reagents in 2016, but in the IVD market with extremely fierce competition, with the technical advantages of electrochemiluminescence products, it has achieved nearly 300 million yuan of sales in just three years, and successfully promoted the company Go public.

Wang Jun said frankly: "objectively speaking, the backwardness of domestic manufacturers is an inevitable law of industrial development. Chinese manufacturers have gradually developed and improved their own technical system in the past 10 years after building a preliminary platform and realizing profits. The import manufacturers may have completed these works 30-40 years ago. At present, after nearly 10 years of accumulation, Chinese manufacturers have seen many top-notch equipment and reagent products in their product lines in Antu biology, new industry, Mindray and other leading enterprises, and domestic products are still in continuous progress and development. "