China's Government Investment, Policies Sustain IVD Market With High Double-digit Growth

SHANGHAI - China's in vitro diagnostics market was valued at $2 billion in 2009 and is expected to keep a steady pace of 18.5 percent compound annual growth rate in the next three to five years, according to global consulting company Frost & Sullivan.

In China, around 200 companies are competing in the IVD market, which includes instruments, reagents and services that analyze human body fluids to diagnose diseases and other medical conditions.

Compared with leading international IVD companies such as Roche, Abbott, Johnson & Johnson, Siemens and Beckman Coulter, most of the domestic reagent providers are "small scale, with fewer categories and unbalanced development, few of which have annual revenue more than RMB 100 million," Sophia Wang, Frost & Sullivan's Research Manager of Health Care Practice, told PharmAsia News.

Mindray, Kehua Bio-engineering, Fosun and BioSino are the leading local players, according to Wang.

The point-of-care and self-monitoring blood glucose testing devices are anticipated to have the highest growth in the next three to five years, she said. Technology to drive automation and large-scale capabilities to meet requirements from high-end health institutions with large samples, will also see high growth, she said.

Large Market Potential

Last year, China launched its $124 billion healthcare reforms, which aim to provide health insurance to 90 percent of the country's 1.3 billion people in three years (Also see "China Issues Three-year Healthcare Reform Plan To Invest RMB 850 Billion" - Scrip, 8 Apr, 2009.). Under the new healthcare system, China's government is emphasizing the importance of disease prevention, which will further boost the diagnostic market.

China's IVD market has seen consistent growth in recent years, with demand expected to continue alongside growing urbanization, an aging population and the new medical reforms. "The importance of the rural market, which saw much less attention previously, has been reinforced by new medical reforms announced in March 2009," Wang said.

On the other hand, "automation in the clinical laboratory business remains low," the manager added.

In China, there are more than 13,000 laboratories, one-quarter of which are automated and run 65 percent of total testing in the country. The trend toward automation in the IVD market will be a big boost to develop China's IVD market.

Meanwhile, the government continues to aid that growth with favored policies and funding. The central government raised 32.8 billion RMB ($4.8 billion) in 2009 as well as 30 billion RMB ($4.4 billion) in 2010 for 11 mega technology projects, which included a project to prevent infectious diseases such as HIV/AIDS and viral hepatitis, according to Frost's Wang.

In the upcoming 12th five-year plan, the biotech industry will be raised as a pillar industry and China is increasing its support to facilitate development of the industry (Also see "China Is Raising Government Support For Biotech Industry In Next Five-year Plan" - Scrip, 8 Jun, 2010.).

However, increasing price sensitivity and competition that drives down prices is making China's market less attractive to new entrants, according to Wang, who noted that a lack of funds and qualified technologists "is a big problem" for domestic IVD companies.

Still, partnering with local companies is the favorite shortcut For MNCs to enter the Chinese market. Wang cited Siemens Venture Capital's investment in Kemei Bio in 2007. Kemei was established in 1999 and has become one of the leading domestic IVD reagent companies with a wide distribution network covering 30 provinces.

-Dai Jialing ([email protected])