The Chinese In-Vitro Diagnostics market post-Covid evolution

From one-seventh (1/7) of the global market in 2018, and despite almost doubling in value (16 bn$ vs. 9bn$), the In-vitro diagnostics post-covid market of China now represents “only” one-eighth (1/8) of the global market. And indeed, this market’s YOY growth is around 20%, which is lower than the growth rates of all other major zones.

How to explain this relative “under-performance” ?

Several factors explain this relative “under-performance”. To start with, the pandemic took its toll on the IVD market evolution, as it focused the vast majority of the industry almost exclusively on Covid-19 diagnostics – thereby delaying much needed innovation in other therapeutic areas. In addition, various zero-Covid policy-related measures taken during 2020-2022 also negatively impacted the smooth development of the local IVD industry.

China’s reopening: new opportunities for foreign companies

• However, now that China has fully reopened, the potential for the country to re-capture this growth differential is massive:
• Diagnostics – and, in particular, early-stage confirmatory diagnostics and large-scale screening products – are still under-utilized in China compared to the rest of the world, which explains a per capita IVD consumption under 10$ compared to >60$ in the USA, 38$ in Japan and 30$ in Europe.
• The large number of PCR testing laboratories set up during the pandemic are being converted to provide diagnostics on various kinds of targets, such as tumor precision diagnosis, reproductive genetics, birth defects, pathogen detection
• Independent Clinical Laboratories (ICL) are on the fast rise and represent now a market size of ~4bn$ within the overall diagnostics market.
• In main cities, following the publication of State Decree 739 in 2021, the government actively promotes the generalization of Laboratory Developed Tests (LDT), which can be viewed as China’s interpretation of the CLIA model.
• The “Healthy China 2030” Plan sets ambitious objectives on multiple health indicators: achieving them will require strong improvements in the diagnostics area, sometimes even more so than in therapeutics.

The Chinese diagnostics market: growth perspectives

Therefore, VVR Medical considers that the Chinese diagnostics market will grow faster than the overall healthcare sector in the coming years, thus providing European Dx innovators with unique international development opportunities.
We estimate a ~25% YOY growth of the Chinese diagnostics market throughout the period 2023-2030.

Key Takeways from the China Association of Clinical Laboratory Practice (CACLP) Exhibition 2023

Integration, high throughput, instantaneous results, affordability, and portability are the key development trends of products and technologies in China IVD Market. This was clearly illustrated during the CACLP Exhibition 2023 (27-29 May, Nanchang) where a significant amount of new product offerings – particularly from up-and-coming Chinese companies rather than the historical big players such as Roche, Abbott or Siemens – revolved around the following domains:

• Flux Management: Affordable Laboratory Automation Systems (LAS) aimed at second-tier hospitals, with such a variety of products and providers that we believe it will eventually lead to industry restructuring and concentration.
• Last Mile Healthcare: POCT diagnostics, with products that tick the affordability box but, so far, in our opinion, lack the capabilities for integration and have not reached the desired level of portability yet;
• Highly affordable NGS: democratization of sequencing via home-grown, China-specific equipment and technologies such as the AXP100 from Shenzhen-based AxBio.

Article written by Irénée Robin, Co-founder & Managing Partner at VVR Medical