I. Policy and Background
2015 is a year that medical and health-related policies are disseminated more. These changes in policy and background have promoted the development of the In Vitro diagnostics industry, urged the industry corporate management more self-disciplined and standardized, and enhanced innovation ability. And they make a positive and profound impact on the entire industry. The main policies this year from near to far in chronological order are as follows:
1. Speed up the new medical service price project to get application
On December 25, in order to carry out the spirit of CPC Central Committee and the State Council on promoting the reform of the price mechanism, NDRC improved the management of new medical service price, encouraged research and innovation, promoted the timely access to new medical clinical technology, created a good environment of popular entrepreneurship and innovation to accelerate the new medical service price project accept audit.
All districts that deal with the new medical service price will not get restricted from "the national medical service price project specification (2012 edition)". Medical product projects that involve reagents, supplies and equipment, as long as they get approval to produce from relevant departments and have market access conditions, can be included in the scope of the new medical service project acceptance.
For the new medical service price projects that the relevant units submit, each district should timely acceptance and efficiently deal with. And they also should further simplify procedures, speed up the audit by the principle of encouraging innovation and the use of appropriate technology combining, and timely announce the audit results.
For the new medical service price projects that get approved, all localities should express the execution within their respective administrative areas, and confirm project code, project name, content, the price level or price management forms, etc.
All districts can’t, in any name or form, try to refuse or shuffle the new medical service price projects to get audit.
2. Control medical expenses in public hospitals
On November 6, NHFPC and other 4 departments issued "Opinions on the control of unreasonable growth of medical costs of public hospitals." It pointed out that with the development of social economy, health care industry had entered a rapid development stage, and the health care costs also had been rising rapidly. Meanwhile, there also existed unreasonable factors in the structure and growth of medical costs that need get controlled, including that urban public hospital expenditures accounted for large in the total amount of medical expenses and drugs, and income of examination and treatment of large medical equipment and medical supplies accounted for relatively higher.
In the future, medical expenses control of public hospitals will be linked with the performance evaluation of public hospital grade assessment requirements, financial allocations budgetary arrangements, dean annual performance appraisal, the merit wage distribution of medical staff and other aspects.
3. Health China is the overall planning of the development of health and family planning of “the 13th-five period”
On October 29, "Health China" was written in the bulletin of "Opinions on formulating the 13th Five-Year Plan of National Economic and Social Development of CPC Central Committee " of the Fifth Plenary of 18th session CCP. In early September this year, NHFPC had comprehensively started the compiling work of "Health China Construction Plan (2016-2020)."
The bulletin promotes health China building, deepens the medical and health system reform, rationalizes drug prices, implements the linkage of medical, health care, and pharmaceutical and establishes the basic medical and health system and modern hospital management system that covering urban and rural to realize food security strategies. It also promotes the balance development of population, improves population development strategy, fully implements the policy that a couple have two children, and actively deals with population aging. It’s expected that fully opening two-child policy will bring 3 to 5 million newly increased population every year, and short-term incremental population may be released in the next five years. The total number will be 15-25 million.
4. The reform opinions of the medical service price points out to lower part of the inspection and check price
On October 21, NDRC said the guidance draft of the medical service price reform had been completed and it was currently in the process of soliciting opinions.
In recent years, NDRC jointly with relevant departments has increased the intensity of medical service price reform. It standardized medical service price project, carried out reform experimental units according to the charging system of diseases, service units and so on. It also guided the local public hospitals to cooperate with public hospitals’ reform. It not only issued comprehensive measures and linkage policy such as eliminating drug addiction as well as lowering drugs accounting, reducing some validation checking price, adjusting the price of medical service, and implementing government medical liability, but also promoted the establishment of new medical institutions compensation mechanism. Some medical service price can be decided by medical institutions independently.
Medical service price reform has strengthened the link among price, health care, medical and other related policies. First, it makes full use of the role of health care costs; second, it establishes a scientific compensation mechanism; third it helps reduce the burden of patients. It helps to ensure medical institutions under sound operation, health insurance fund can withstand, and the burden on the masses without increasing.
5. Improve hierarchical diagnosis and treatment system, strengthen the training of general medical practitioners, and promote physicians freelance
On September 11, the State Council announced the "Guiding Opinions on Promoting Hierarchical diagnosis and treatment system construction." Opinions showed that through a variety of policies, measures and work currently, it would accelerate the establishment of hierarchical diagnosis and treatment system. And at last it would realize the hierarchical diagnosis and treatment model of implementation of the grassroots clinics first, two-way referral, acute and chronic partition, the upper and lower linkage.
Until 2017, Hierarchical diagnosis and treatment policy system will gradually get improved, and division of labor of health care institutions will be basically formed. Then the hierarchical diagnosis and treatment system will be established accord with the basic national conditions. By 2020, the service capacity of hierarchical treatment system will get fully enhanced, and the security mechanism will gradually get improved, forming the basic construction of medical service system of reasonable layout, appropriate scale, hierarchical optimization, responsibilities clear, functional maturation and rich efficiency.
6. “Internet +” healthcare will have a long-term effect on the industry
On June 24, the State Council executive meeting put forward “the Internet +” action guidance deployment, promoting the “Internet +” action. Under the background of the nation vigorously promoting the "Internet +" action plans, Internet medical industry had been entering a rapid development period.
“Internet +” healthcare has changed not only the way of medical treatment, but also helped popularize medical resources. Tele-medicine, mobile medical and other future healthcare can also reduce transaction costs, improve the efficiency of health care, and play a good role in solving the "difficulty and high cost of treatment".
7. Further encourage the development of social medical
On June 11, the State Council issued "a number of policy measures on accelerating the development of social medical." These measures stipulated to reduce operating approval limits, explore and establish a regional center for inspection. It encouraged the mutual recognition and resource sharing between public medical institutions and social medical institutions in medical imaging, medical laboratory, medical sterilization and supply center. It stipulated that the ownership of medical institutions can’t be regard as the pre-condition of medical insurance designated, and districts can’t refuse to include medical institutions into medical insurance for reasons like non-medical service capacity. It also stipulated to further standardize various medical fee bills, refine fees and bills using of different medical institutions and settlement of medical healthcare insurance funds.
According to NHFPC, until the end of April 2015, the total number of national medical and health institutions was 985 000, of which: 26000 hospitals, 921 000 primary health care institutions, 35000 professional public health agencies and 3000 other institutions. For the hospitals: 13314 public hospitals and 13000 private hospitals.
8. Product registration fees
On May 27, China Food and Drug Administration (CFDA) announced the "Registration fee standard of drugs and medical devices product “and "Implementing Rules (Trial) of medical device product registration fees ". It formulated the fee standards for medical devices. Previous in vitro diagnostic product registration was with no fees. In addition, it also announced the classification rules and random inspection methods of medical devices.
CFDA currently has issued domestic vitro diagnostic product number, covering a variety of in vitro diagnostic reagents and equipment commonly used in clinical practice. This year CFDA has issued policies including registration fees, and they will affect the development of the industry.
9. Thousands miles of the quality of in vitro diagnostic reagents
On May 12, “Thousands miles of the quality of in vitro diagnostic reagents” campaign was launched under the guidance of China Food and Drug Administration Medical Device Supervision Division and the host of China Medical Association of news and information. Quality and safety of in vitro diagnostic reagents obtained further regulatory attention.
The theme of "Thousands miles of the quality of in vitro diagnostic reagents" was to strengthen the control of quality, and improve the diagnostic level. It mainly conducted research and interviews in six provinces and municipalities including Beijing, Shanghai, Guangdong, Fujian, Jiangsu, and Zhejiang. And attention was focused on biochemical reagents that was used clinically with a large amount and a wide range, genes that reflected the level of scientific and technological innovation, reagents that can detect tumor, as well as home diagnostic reagents like pregnancy tests, ovulation, blood, urine, etc.
10、Comprehensively implement the comprehensive reform of public hospitals at the county level
On May 8, the State Council issued "Opinions on Implementation the comprehensive reform of public hospitals at the county level." In 2015, all public hospitals at the county level in the country (city) got rid of compensation system for the medical cost through drug-selling profits, and focused on management system, operation mechanism, the service price adjustment, personnel salaries and health insurance payments, to fully implement the comprehensive reform of public hospitals at the county level. In 2017, the modern hospital management system will be basically established, and the county health service system will be further improved. The level of illness treatment and problem solving in the county public hospitals will be significantly improved. It will basically realize no serious illness in the country, and make the people get medical treatment in their own country.
11. 2025 China making requires innovation ability
On May 8, the State Council issued a new era of "2025 China making", and vigorously promote the breakthrough development of the ten key areas of new materials, bio-medicine and high-performance medical equipment. Medical equipment industry went into the new development period of innovation. High-end medical devices and innovative medical devices had the priority in research, review, registration and other sectors.
12. Actively promote the precision medicine
In January, NHFPC issued “the work notice of high-throughput sequencing screening and diagnosis of clinical experimental application that prenatal diagnosis mechanism develop". 108 medical institutions got approval to carry out this work. NHFPC had unveiled policies to promote the application in non-invasive examination, tumor diagnosis and personalized medication in March and May.
The demonstration phase of precision medicine plans has been completed, and during the "13th five period”, the government will have a very strong support for this project.
II．Present situation and development.
Global IVD market: According to statistics provided by Boston biomedical consultants，inc, in 2014 the global IVD market was $55.8 billion and the increase speed was 4%. In 2019, it is estimated to be $68.9 billion, with an overall increase speed of 4% every year. The US and EU take position of most of the market shares and the US is the center for IVD innovations. The emerging markets occupy less market shares, however they hold the fastest growing speed. Among all the market segments of IVD industry, immunologic diagnosis takes up 23%, biochemical diagnosis holds 17%, molecular diagnosis accounts for 11%, blood diagnosis has 10% and the other segments take up39%.
Chinese IVD market: Since there is a difference among domestic industrial information, we introduce the data of listed IVD companies. Now we have 39 listed IVD companies in China, which are:
Small plates: Shanghai Kehua Bio-engineering Co., Ltd., DaAn Gene Co., Ltd.
Growth Enterprises Market: Guangzhou Improve Medical Instruments Co., Ltd., DIAN diagnostics, Beijing Leadman Biochemistry Co., Ltd., Sinocare Inc., Beijing Bohui Innovation Optoelectronic Technology Co., Ltd., DIRUI Industrial Co., Ltd., Beijing Strong Biotechnologies, Inc., Ningbo Medicalsystem Biotechnology Co., Ltd., Sichuan Maccura Biotechnology Co., Ltd., Guangzhou Wondfo Biotech Co., Ltd.
Shanghai A share: Shanghai Runda MedicalScience and Technology Co., Ltd.
New three board: NYMPHAVN Biotechnology Co., Ltd., Shanghai Kexin Biotech Co., Ltd., Wuhan J.H Biological Technology Co., Ltd., Shanghai BaiO Technology Co., Ltd., Wuhan EasyDiagnosis Biomedicine Co., Ltd., Guangzhou SurExam Bio-Tech Co., Ltd., Jinan Babio Biotech Co., Ltd., Shenzhen New Industries Biomedical Engineering Co., Ltd., Chengdu Rich Science Industry Co., Ltd., Sichuan Xincheng Biological Co., Ltd., Shanghai FengHui Medical Science & Technology Co., Ltd., Xiamen Zeesan Biotech Co., Ltd., Wuhan King Diagnostic technology Co., Ltd., AVE Science & Technology Co. Ltd., MultiSciences (Lianke) Biotechnology Co., Ltd., NingBo Jia Cheng Biotechnology Co., Ltd., Henan Shuguanghuizhikang Biotechnology Co., Ltd., GUANGZHOU DARUI BIOTECHNOLOGY Co.,Ltd., Zhuhai Encode Medical Engineering Co., Ltd., Mokobio Life Science Corporation Beijing. China, Zhuhai Sinochips Biotechnology Co., Ltd., Shanghai ZJ Bio-Tech Co., Ltd., Beijing Enjihe Biological Engineering Co., Ltd., Beijing Lawke Health Laboratory Center for Clinical Laboratory Development, Beijing Promed Co., Ltd.
Hong Kong stocks: BioSino Bio－Technology & Science Inc.
According to their annual reports, in 2014 the revenue average growth is 23.1% and the total revenue is ¥11.2 billion. Net income increased by 20.6% and the total net income is ¥2.3 billion. In the first half of 2015, the total revenue is ¥6 billion, with an increase of 18.1% and the net income is ¥1.1 billion, with an increase of 10.3%.
China Association for Medical Devices Industry IVD branch and In-vitro Diagnostics Systems Committee of Shanghai Medical Instrument Trade Association respectively did a survey to their member units in the end of 2015 and the beginning of 2016. Their member units are IVD manufacturing enterprises, including foreign-funded enterprises. Survey result shows that:
For 2015, 2% enterprises think industrial increase is uncertain, 2% enterprises think there’s no increase, 38% enterprises think increase is below 10%, 42% enterprises think increase is between 10-20% and 16% enterprises think increase is above 20%.
For 2016, 2% enterprises think industrial increase is uncertain, 32% think increase is below 10%, 41% think increase is between 10-20% and 25% enterprises think increase is above 20%.
In aspect of increased percentage, most enterprises holding pessimistic opinions are domestic companies, while most of the foreign-funded enterprises believe there’s a considerable increase. In conclusion, the increased percentage in 2015 and 2016 is between 10% to 20%.
The main driving forces of growth:
1. With the implement of healthcare reform in China, coverage rate of healthcare insurance exceed 95%. This leads to more medical demands and brings a larger number of patients seeking diagnosis.
2. The aging of Chinese population brings up the number of geriatrics patients, while morbidity of chronic diseases such as diabetes maintains at a high level. According to NBSC, in 2014, among all the 1.367 billion people in China, people over 60 years old are 212 million, accounting for 15.5% of the total population and people over 65 years old are 137 million, accounting for 10.1%. WHO estimated that in 2050, China will have 35% aged people who are over 60 years old and will become the greyest country in the world.
3. People’s enhanced awareness of disease prevention and physical examination.
4. The increase of clinical diagnosis and treatment items brought by new technologies and new products.
5. Good governmental policies such as price guiding and control bring more chances for import substitution.
Classified by testing principle or method, IVD industry mainly can be divided into biochemical diagnosis, immunologic diagnosis, molecular diagnosis, microbiological diagnosis, blood diagnosis and other diagnostic methods. At present, biochemical diagnostic reagents and immunologic diagnostic reagents take up a larger share of the market.
Import substitution of regular biochemical reagents:
Domestic biochemical reagent has an early start in China and is the most common testing item in hospitals. Most of the biochemical reagents testing systems are open type and don’t need the matching of instruments and reagents. After years of development, now domestic reagents have stable quality, low cost and a relatively complete variety. The number of domestic regent manufacturing enterprises has reached 200 and account for over 50% of the market. However, most domestic products are middle and low end products while foreign-funded products domain the high end. Judging from all the reports in 2015, biochemical diagnostic market increased at a speed of 7%-9%.
Immunochemiluminescence becomes a tendency:
At present, immunochemiluminescence is the trend of most international IVD markets. Chinese hospitals mainly rely on immunochemiluminescence and ELISA. Immunochemiluminescence has a considerable increase speed and gradually domains especially in top three hospitals while the use of ELISA decreased. Immunochemiluminescence is a closed system and uses matched reagents. According to survey reports in 2015, immunologic diagnosis increased at a speed of 20% and is the largest sector of IVD market with a share of more than 30%. The number of Chinese immunologic diagnosis manufacturing enterprises is between 30 and 40.
Molecular diagnosis is a small part of the market but with great potential:
Molecular diagnosis mainly does tests on gene levels, including PCR and gene chip. Clinical applications are used in fields of infectious disease, venereal disease, AIDS, tumours and genetic disease. Among them, infectious disease accounts for most of the market. In aspects of individual diagnoses and treatments, genetic disease screening and diagnosis, therapeutic drug monitoring, drug metabolism genomics and the detection of major outbreaks, Molecular diagnosis has great potential. Compared to ELISA, the advantage of molecular diagnosis application in blood test is shortening of virus detection window period. Now a large number of enterprises are trying to seize molecular diagnosis market, which is reported to increase at a speed of 20% in 2015.
Point-of-care testing:
POCT is wildly used in public health fields of clinical laboratory, chronic disease monitoring, emergency anti-terrorism, disaster rescue medicine, infectious disease monitoring, inspection and quarantine, food safety and drug inspection. In recent years, with the development of biological technology, new materials and internet information technology, POCT is turning to be more real-time and quantitative with miniaturization. In current market, technologies applied in POCT mainly are dry reagent technology, multilayer coating technology, immune chromatography and infiltration technology, micro fluidics, infrared and far infrared spectrophotometric technology, selective electrode technology, biosensor and biochip and miniature microscope image fuzzy recognition technology. Also test objects have gradually extended from biochemical criterion, immune indices to accounting indices and portable PCR devices have also appeared in the market. According to survey results, POCT maintained an increase speed of 20%-30% and has great potential in surgery, emergency treatment, intensive care, NCD prevention, public health emergency, construction of county hospitals and new rural co-operative medical system.
There are also new products in fields of microbial test, hematology and coagulation tests. They have maintained an average increasing speed.
Core IVD materials in upstream include diagnostic enzyme, primer, antigen, antibody and other fine chemicals such as sodium chloride, sodium carbonate and various kinds of amino acid and organic acid. Main function of these fine chemicals is to allocate the buffer solution system of diagnostic reagents. Affected by elements like manufacturing technology and product purity, some domestic IVD raw materials can’t meet the requirements. Now most of the big Chinese IVD enterprises are enhancing R＆D for raw materials and seeking upstream raw material margin.
As to sales models, there are two ways in Chinese IVD market, direct selling and distribution. Direct selling means that manufacturers sell their products directly to medical institutions. Its advantage is that they can meet customers directly and know their demands in time. Distribution means manufacturers sell products through distributors and some manufacturers choose this way because it spreads faster, has shorter payment days and they can have less financial pressure. In domestic IVD business, besides the solo sales of devices and reagents, joint sales has become a trend. In this situation, enterprises undersell, rent or allocate IVD instruments to medical institutions or distributors, in order to form a long-term cooperative relation and promote the sales of their reagents. IVD users mainly are medical institutions, independent clinical laboratories, blood tests and food inspection institutions. In Chinese IVD market, most of the buyers are hospitals. In China, hospitals can be classified into tertiary hospitals, second-class hospitals and standard markets. Tertiary hospitals have more patients and samples so they require faster and more accurate diagnostics. They demand medical equipments with high levels of automation and integration and foreign-funded enterprises domain in this field. Lower-level hospitals require medical devices with high cost performance and which are easy to use, thus most domestic products are focused in this field. However, in recent years domestic products are beginning to enter tertiary hospitals and foreign products are permeating into lower-level hospitals. Also, some foreign enterprises are starting to set up factories in China. For example, Roche has already established its factory in Suzhou.
Famous foreign-funded enterprises in Chinese market are Roche, Siemens, Abbott Laboratories, Danaher, Thermo Fisher Scientific, BD, Alere, SYSMEX, Hitachi and so on.
Besides the 39 listed IVD companies mentioned above, domestic listed companies related with IVD industry are Fosun Pharmaceutical, Livzon Group, Joincare Pharmaceutical Group, Zhongyuan Union Stem Cell Bioengineering CO., Yuyue Medical, Mindray, Wego Group, Humanwell Healthcare, Shinva Medical Instrument, EDAN Instruments, INC., Zixin Pharmaceutical, BeiLu Pharmaceutical, BY-HEALTH, Tofflon Sci &Tech, Challenge ＆ Young, China Sun Pharmaceutical，Tigermed and so on. Fosun is the first listed company. In 2015, the number of IVD companies being listed is 17 and it’s the most ever. What's more, there are still some other IVD companies waiting to be listed or preparing to be listed.
2015 is a year of merger for IVD industry. DIAN Diagnostics purchased Boshen Bio, entering the field of eugenics genetic testing. It also formed cooperation with Alibaba to enhance platform building and spent ¥26.4 million to buy 55% of Beijing Joinscience Medical’s share. WuXi AppTec purchased NextCODE at a price of $65 million and established a bioinformatics company. Guangzhou Pharmaceuticals Corporation has signed strategic cooperation with CapitalBio Technology, Military Medical Sciences, Tianjin Institute of Pharmaceutical Research, Siemens and Boehringer Ingelheim, in order to enter IVD related fields. Livzon Group spent 60 million on tumor genetic testing company, arranging for Precision Medicine. BSBE worked together with Mindray, to expand its biochemical IVD reagent market. DIRUI Industrial Co., Ltd. spent 550 million to purchase Reebio. EVERFINE Corporation spend 49.5 million on genetic testing industry. China Sun Pharmaceutical spent 70.1 million on Shanghai Shenyou. Sequoia Capital lead the investment on diagnostic company Natera, aiming to versus Roche and Illumina. LUYE Pharma purchased a Singapore genetic testing company and entered Precision Medicine. BY-HEALTH invested on Shanghai Fandi. Verealgroup bought a US diagnostic company for 1 billion. Anke Biotechnology purchased AGCU ScienTech Incorporation for 450 million to promote genetic testing business. Xinbang Pharma absorbed Chinese Peptide Company, aiming at IVD industry.
In recent years, with the advantages of their product’s high cost performance and being close to local market, domestic IVD companies are expanding their shares in IVD market. Now the concentration ratio is not high and there are many small companies in this industry. However, when governmental requirement becomes more and more strict and international advanced companies are paying more attention on Chinese market, domestic companies with low technology levels and small production scale will have the risk to drop out. But for sure, companies with stronger competitiveness will take up more market shares and have higher profit levels. With the development in R＆D and product quality control, some domestic companies are beginning to show their advantages in competition. However, most domestic companies can only compete with international giants in one or two aspects and there are few strong comprehensive enterprises. Generally speaking, the level of Chinese IVD companies is only medium on the globe. According to CFDA, the number of registered products has reached 17 thousand. The number of manufacturers is over 1000 and the number is over 10000 for distributors. Most of them have limited production scales and companies with annual sales revenues of 500 million are rare.
One trend in Chinese IVD market is high integration and automation. The other trend is to be fast and simple. The emphasis of China healthcare reform is turning to rural area and primary health care institutions. Also, diagnostics plays an important role in healthcare reform, so faster and easier diagnostic ways are the choice of healthcare reform. In early period of the industry, clinical chemistry diagnosis has the largest share. In recent years, it is exceeded by immunologic diagnosis. As a newly-developed technology, molecular diagnosis has the fastest increasing speed because of human’s deeper study in genome research. Therefore, the emerging technologies and inventions, added with the application of Internet information and electronic technology, are always the strongest driving force for IVD market.
With the development of the industry and the bullish capital market, the number of industry conferences and forums is growing more and more. It plays a positive role for enterprises in upgrading at home and abroad.
Main domestic forums in 2015:
The 2th Bode China In-Vitro Diagnostics Industry Forum (March Xia’men)
The 6th International In-Vitro Diagnostics Industry Forum in 2015 (March Shen’zhen)
International In-Vitro Diagnostics Forum in 2015 (June Beijing )
The 2th China IVD Industrial Investment and Merger CEO Forum in 2015(July Shang’hai)
New Normal "Big test" Opportunities and Challenges high-end Forum(July Xia’men)
"Molecular Diagnostic Technology" International high-end Forum and 6th China Molecular Diagnostic Technology Conference (August Gui’yang)
3th Molecular Diagnostics Industry Forum in 2015 (October Cheng’du)
The 4th International Molecular Diagnostic Technology and Application Forum in 2015(October Wu’han)
New Normal "Big test" Opportunities and Challenges high-end Forum in 2015 (Sanya December)
Main domestic Expos:
China Clinical Laboratory Provider & Blood Transfusion Equipment Expo ;
1th National Clinical Laboratory Conference;
China International Medical Equipment Fair (Spring)
Chinese hospitals Conference and the National Clinical Laboratory Management Annual Conference in 2015
2015CCLab Expo
China Laboratory Academic Exchange & Exhibition
China International Medical Equipment Fair (Autumn)
More Regional and provincial Expos
Main overseas Expos:
The total number of 2015 AACC medical equipment exhibitors is 784. Chinese exhibitors are over one hundred, and its number of exhibitors ranks second.
Chinese exhibitors of 2015 Medica is 941, accounting for 18.1%, ranking second. Exhibitors the most is the host country Germany, a total number of 1102;
The total number of exhibitors of 2015 Medlab Middle East was 106. The number of Chinese exhibitors was 27 and accounted for 25.5%, ranking first.
In conclusion, the number of Chinese enterprises exhibitors basically ranks first or second of all various exhibition. It reflects the development of Chinese industry and that companies increasingly focus on the international market. Their cooperation fields are products, market, the equity stake and other aspects.
III. Opportunities and challenges
Enterprise faces more opportunities and challenges under the current multiple elements impact, like health care reform, creation, internet, the 13th Five Years Plan, etc. Therefore, the enterprise needs to transform according to its own situation or avoid the disadvantage to catch the opportunity, the main aspects are:
2. IVD industry still has large increasing spaces in China.
In China many elements promote the medical care demand such as people` s lifestyle diversification, population aging, the increasing of population and diseases coverage for medical insurance, changing of spectrum of disease and rising of physical examination. Meanwhile, with the implementation of the policies of multi-spot disciple, remote Medicare and classified diagnosis, it has more IVD products demand. On the other hand, comparing with the developed countries, $24 has been used per person in IVD payment and $2 in China, but the gap will be shorter with the Chinese Economy developing.
3. The trend of automated and AIO large-scale diagnostic equipment, POCT, precision medical, internet+ are all have opportunities.
The state has always support the enterprise developing on high-end manufacture, precision medical and internet+ fields from policies to funds which created the big opportunity for new products and technology. New technology: the cost reduction of the 2nd generation sequencing enlarged the market and microfluidic chip pushed forward the high-edged POCT. New mode: through IVD examination produces huge number of health data analysis will combine the internet+ mode to carry out the healthy management and open the new market.
4. Growth of export
Made in China has deeply influence globally, an enterprise has technology and cost advantages will have good opportunities in product export, also more companies go aboard and build the manufacture base, marketing network to reduce the costs will enhance the competitive power in international market. Chinese product line is one the largest and most completed product in the world, moreover, we can see in annual reports from some of listed companies that half of revenue is from the international market.
5. Expend to other fields like precaution and food industry.
With the aggravating of hospital competition, some of enterprise expands to CDC market and the state always have public bidding in infectious testing like tuberculosis, Aids, syphilis, etc. The country attaches the importance to food security and has the arrangement in the 13th five-year plan so the food security detection has big potential and new product has been sold in the industry.
1. Industry attributes, capital market promotion, going public and merging must be imperative.
In 2015, the quantity of the industry listing occupied 44% of listed companies in total industry. We can see the number of investing participants surged highly in industry forum and exhibition. Capital marketing opening and risk investing increasing will heighten the enterprise value of assessment which has become a significant investing field. Because there` re so many small companies, some enterprises with fund advantages will merge and acquire them with technology or channels to form and improve themselves and to enlarge their scales and marketing share. It is a main path to view the in-outside enterprises in this industry.
2. Classified diagnosis and the county level hospitals medical reform made more people to visit the second level or basic-level medical institutions
These medical institutions normally use the domestic product which created new opportunity for domestic enterprises. Some hospitals adopted double-side transfer treatment through health alliance form. At the same time, foreign fund enterprises started to layout from product to market with low price and easy operating equipment specifically to go down the marketing channel and seize the market. So we must pay attention to the change of traditional market interpenetrating.
3. Reduction of hospital` s testing items guide the enterprise products sale with lower price.
With the pressure of medical insurance charge control, hospital testing items charge reduction has been fulfilled in some provinces. Single disease charge, compress medicine and inspection charge proportion reduces the product price. Common product will depend on the revenue scale to produce the benefit so enterprises must invest research or import the new product to ensure its healthy development, otherwise, it would be eliminated by the market.
4. New inspection items will cost a lot and spend more time from registration, to enter into the toll catalog and Medicare system.
Because of the variety of IVD product and small quantity of single product, current registration charge aggravates company` s burden obviously. New item` s clinical charge and medical insurance supervised by provinces themselves which means application a new product separately in different area and to cover into the whole market will spend very long time.
5. Different mode of bidding in different area makes the enterprises face large pressure.
Because of the different mode, it appears several situations, the bidding with only lowest price, only bidding no purchasing and variation of bidding time, main body and frequency. In order to keep staying into the market some products won the bid with the below-cost price but the quality can be ensured.
IV. Opinions and suggestions
Enterprises, industrial groups and government department have to start from current situation to confront the big policies and surroundings and adopt positive method thus the industry can move forward.
1. To strengthen and support creation: At present domestic companies has entered into the stage that the product develops from intermediate to high-end. However, most of us lacks of the core technology without creative ability. Under the background that the big economic environment supporting for innovation, government must publish policies aiming to heighten IVD enterprises` core technological ability to enter into the market swiftly thus these enterprises can produce international competitive product with good performance, quality and price, moreover, to form benefits rapidly then returning the benefits back to invest new product research constantly and constitute to virtuous circle. Except to strengthen independent research as well as unite research, cooperative manufacture, common market promotion and industrial integration.
2. To establish the industrial self-discipline and credibility: We must promote standard operating to carry out self-discipline and credibility establishment. The relevant industrial groups have to maintain fair competition and suggest to publish the industrial self-discipline treaty which will guide the industry develops in order under the competition. More difficulties and opportunities would be facing but we must make a great effort to adjust and strengthen ourselves, then the surroundings will be better and we will be recognized by the market.
3. To build the brand awareness and create strong brand: local companies should reinforce brand establishment to create credible and distinguished product through brand, technology, quality and service. Good brand is a key factor of distinguished strategy and also a premium of one kind of product, meanwhile, it is another point to enter into the high-end market. To elaborate the brand strategy and build up the awareness for users then strengthen users` sense of identity through service. Establishing a specific brand image needs product design, salesman services, guaranteed quality, added value of product as well as honest communication with customers.
4. Talents training positively: IVD is a multidisciplinary and cross-connected industry embracing optical, mechanical, electrical, hard & software and biological subjects. In this field, its lack of talents especially high level research and integrated managers. For a rapid developing industry, enterprises must enhance its internal training and industry itself needs more multilevel communication. Additionally, enlarging global views, cooperating with excellent companies, research institutions, upgrading people` s professional ability to produce powerful product.
5. To support enterprises especially these distinctive middle and small-sized enterprises: Technology in IVD industry upgrades very fast, so it needs to focus on certain distinctive enterprise. Relevant departments have to provide help on R&D, industrialization, tax revenue and financing to make them earning more opportunities. We hope more advantage policies can be published for patients, enterprises and Medicare, also make the new product can be applied immediately to solve patients` disease. Industrial policies and laws formulation has to refer to double sides of international level and domestic practical situation including China economic developing, Chinese medical institute, IVD industry, government operating as well as management situation.
Currently almost all of foreign IVD giants have entered into domestic market, and the market occupation for local enterprises have formed stable pattern, combining with present state policies, opportunities and challenges, for the big picture, IVD industry development will experience a long-term stable increasing.
Finally, we hope through our joint efforts to provide better product conferring benefits to society!
China Association of In-vitro Diagnostics
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