1 The demand for upstream raw materials for in vitro diagnostics is diverse, creating a high-profit growth track

The demand for upstream raw materials for in vitro diagnostics is diverse, creating a high-profit growth track

The rapid expansion of the in vitro diagnostics market is the main driver for the growth of the core raw material market. According to the "China Medical Device Blue Book" and CIC data, the scale of China's IVD market has grown from about 42.75 billion yuan in 2015 to about 80.57 billion yuan in 2019, with a compound annual growth rate of 17.2%. It is estimated that by 2030, the scale of China's in vitro diagnostics market will grow to RMB 288.15 billion, accounting for 33.2% of the global market. The rapid growth of the in vitro diagnostics market will bring about a rapid increase in the demand for upstream core raw materials.

Overseas giant of biological raw materials: Thermo Fisher

Since Thermo Fisher's merger and establishment in 2006, the company has continued to expand through mergers and acquisitions, restarted its diversified layout, completed the transition from an analytical instrument company to a life science service giant in 2014, and entered a stage of sustainable growth. It is committed to providing customers with "one stop" type” products and services.

Thermo Fisher's business is divided into four major segments: laboratory products and services, life science solutions, professional diagnostics, and analytical instruments. It mainly provides reagents, consumables, instruments, etc. for downstream sectors such as pharmaceuticals, biotechnology, clinical laboratories, and healthcare. Comprehensive scientific services such as products and scientific solutions. Among them, IVD upstream biological raw materials such as antibodies, enzymes and recombinant proteins have a prominent position in the life science solutions business.

The market scale of disposable biological experimental consumables in my country is rapidly expanding

According to Frost & Sullivan data, the market size of disposable plastic consumables for biological laboratories in my country in 2014 was 4.28 billion yuan, accounting for only 7.2% of the global market. However, the demand for disposable plastic consumables for biological laboratories in my country has accelerated significantly in recent years. The main reason is that on the one hand, the rapid development of downstream biomedical diagnostics and clinical products in my country; In 2019, the global disposable biological experiment consumables market size was US$11.56 billion, and the disposable consumables market in my country reached 8.72 billion yuan, a year-on-year increase of 15.2%, significantly higher than the global growth rate of 5.0%.

The international well-known comprehensive service providers of biological laboratory supplies are mainly concentrated in developed European and American countries such as the United States and Germany. Multinational companies represented by Corning, Thermo Fisher, VWR, GE Healthcare, Merck KGaA, Sarstedt and Eppendorf have long dominated global biological laboratories Supply of disposable plastic consumables industry. Most of the domestic polymer plastic consumables manufacturers are in the early stage of development, and the industry concentration is low. However, with years of technology accumulation and the development opportunities brought by the new crown epidemic to the industry, the quality of products from leading companies in the industry, Jiete Bio, Gongdong Medical, and Changhong Technology, has been rapidly improved, and has gradually been recognized by the market. (Report source: Future Think Tank)

Global leader in polymer plastic consumables: Corning Corning

Corning is one of the world's leading innovators in materials science, delivering life-changing innovations for more than 170 years. Before the 1980s, the company continued to innovate in the fields of special glass, ceramics, and optical physics, and developed many new industries and products and processes that changed human life. After that, it entered the Chinese market and continued to expand its business layout through mergers and acquisitions. Customers are all over the world. .

Corning is divided into five business layouts: display technology, optical communication, environmental technology, special materials, and life science. The main products of the life science department include consumables, a series of laboratory utensils and equipment, etc., dedicated to biopharmaceutical companies, hospitals and other institutions. It provides life science business products and is a leading global supplier of glass consumables and laboratory plastic products for life science research.

2 Objectively benefiting from the new crown, the demand for upstream raw materials accelerates growth

The new crown epidemic has caused a substantial increase in the demand for terminal testing

The new crown testing business promotes the continuous expansion of IVD upstream. Nucleic acid detection and antibody detection, the mainstream detection methods of the new coronavirus, and the "Clinical Application Plan for New Coronavirus Antigen Detection" issued by the State Food and Drug Administration on March 11, 2022 have further promoted antigen detection and promoted a variety of biological raw materials and single-use Increased demand for polymer plastic consumables such as sterile sampling swabs and virus sampling tubes.

According to CIC's forecast, driven by the explosive growth of domestic new crown nucleic acid testing demand, it is expected that the market size of China's domestic PCR diagnostic industry will exceed 10 billion yuan in 2020, and the market size of the PCR diagnostic industry will reach 18.49 billion yuan in 2025. During 2025, the compound annual growth rate can reach about 13.3%.

From 2020 to the present, the performance of upstream raw material companies has experienced explosive growth

Affected by the new crown epidemic, on the one hand, the demand for PCR reaction enzymes, new crown antigen antibodies and other biological raw materials and disposable plastic consumables required for epidemic prevention and control testing has exploded; The demand for virus research and virus detection related products, such as tips, sampling tubes, centrifuge tubes, pipettes, PCR plates, etc., has also grown significantly. (Report source: Future Think Tank)

3 Bio-core raw materials: technology upgrade, quality drive

Rich variety of biological raw materials, customer-oriented

The core raw materials of in vitro diagnostic reagents rely heavily on imported products, accounting for nearly 90%. Domestic leading companies continue to launch high-quality products according to customer needs, and there is a broad space for domestic alternatives. From the perspective of subdivided products, molecular diagnostic enzymes and monoclonal antibody products are the two largest products. It is estimated that the domestic market size in 2020 will be more than 2 billion yuan, and it is also a battleground for domestic domestic biological raw material enterprises.

The core competitiveness of domestic IVD upstream biological raw materials is gradually emerging

At present, the overall localization rate in China's immunodiagnosis field is less than 40%. When domestic immunodiagnostic raw materials are used for clinical and third-party laboratory quality control materials, etc. for screening and performance evaluation, technical indicators such as sensitivity, specificity, and correlation are generally benchmarked. Roche, Abbott, Beckman, Siemens and other international mainstream brands. According to the public information of each company, some molecular diagnostic enzyme products of domestic companies have leading advantages in terms of catalytic efficiency, stability and other technical indicators. Taking the most commonly used taq enzyme in molecular diagnosis as an example, in terms of enzyme activity, specificity, sensitivity, and tolerance to no antifreeze, the quality of domestic enzymes is comparable to imported brands.

Protein-directed transformation and evolution technology platform realizes import substitution of some types of diagnostic enzymes

Domestic companies have achieved the directional evolution of multiple core key enzymes through the protein directional transformation and evolution platform, greatly improving the main performance indicators such as enzyme activity, catalytic efficiency, stability, specificity and tolerance, reaching the international advanced level. Novozan TaqDNA polymerase has an amplification speed of up to 15sec/kb, high sensitivity to detect 10copies, and high impurity resistance that is compatible with 20% blood.

Monoclonal antibody preparation technology is very mature

Hybridoma antibody technology is based on cell fusion technology to fuse sensitized B lymphocytes with the ability to secrete specific antibodies and myeloma cells with proliferation ability into B cell hybridomas, and use a single hybridoma with this characteristic. Cells are grown into cell populations to produce specific antibodies against an epitope.

Mindray acquires Hytest, the industry leader strengthens its control over core raw materials

On May 16, 2021, Mindray Medical announced that it intends to acquire Haiti Bio, a world-renowned supplier of in vitro diagnostic raw materials, for approximately EUR 545 million in cash. In 2020, HyTest achieved an operating income of about 28 million euros, an operating profit of about 13 million euros, and a profit margin of nearly 50%. Mindray's acquisition of Haiti Biological aims to fill many gaps in the field of top raw materials in the upstream of in vitro diagnostics. It will enhance its core raw material self-research and production capacity, increase the self-made ratio of core raw materials, optimize the antigen-antibody performance of stock products, and help solve the supply of upstream raw materials for IVD. The "stuck neck" problem.

4 Polymer plastic consumables: supply chain localization brings new investment opportunities for domestic production

The market of polymer plastic consumables has various products, and there is room for import substitution

The main consumable products used for in vitro diagnosis include high-end consumables such as reaction cups, petri dishes, nano-magnetic beads, NC membranes, etc. The overall market size is about 2 billion to 3 billion yuan. Alternative opportunities are great. With the gradual expansion of the market size, the scale of domestic companies in the segmented product field has also grown rapidly, and many companies in the field of polymer plastic consumables have been listed.

High-end products are customer-oriented and effectively empower customers

Polymer plastic consumables have many advantages and are widely used. Product quality directly affects the results of downstream experiments/testing. The technical threshold, quality requirements and added value are high. For example, in the field of IVD, automated diagnosis and high-throughput testing need to rely on the perfect match of instruments and consumables to ensure the accuracy, precision and repeatability of experiments or test results. Therefore, downstream customers have extremely high requirements for product quality and require To ensure that the product is nearly 100% qualified rate.

Changhong Technology signed a contract with Roche Diagnostics, and the laboratory consumables business grew rapidly

On November 8, 2021, Changhong Technology announced that Shenzhen Baimingsheng, a subsidiary of Changhong Technology, signed a strategic cooperation agreement with Roche Diagnostics, upgrading from a Roche supplier to a strategic partner. With its excellent precision mold design and manufacturing capabilities and rapid service response capabilities, as well as its strong strength in precision mold design and manufacturing, automation equipment level and large-scale production capacity, Changhong Technology has been highly recognized by IVD leaders and has become Roche Diagnostics in the Asia-Pacific region. Supply chain localization enterprises.

5 Key Enterprise Analysis

Novozymes: a leading bioreagent featuring high-end enzymes

Novozan was established in 2012. Its main business is the development of upstream reagent biological core raw materials and the production of terminal POCT products. It has developed more than 200 genetically engineered recombinases and more than 1,000 key raw materials such as high-performance antigens and monoclonal antibodies. With more than 500 terminal products, it has broken the long-term import monopoly in many fields and provided a strong boost to the localization of the domestic supply chain. (Report source: Future Think Tank)

Build the upstream core of life sciences and in vitro diagnostics, with rapid growth in performance. The company continues to develop upstream biological raw materials in the three major fields of life sciences, in vitro diagnostics and biopharmaceuticals. From 2019 to 2021, the company achieved operating income of 268 million yuan, 1.564 billion yuan and 1.864 billion yuan respectively, and the net profit attributable to the parent in 2020-2021 was significantly higher than the same period last year. The growth is mainly due to the explosive growth in the demand for molecular diagnostic enzymes required in nucleic acid reagents for new crown detection and monoclonal antibodies required in antibody antigen reagents.

Yiqiao Shenzhou: The world's leading protein reagent expert in the number of varieties

Yiqiao Shenzhou was first established in 2007 and was spun off from Shenzhou Cell in 2016. At present, it has formed a product matrix covering recombinant proteins, antibodies, genes and culture media, and covers recombinant proteins, antibody development and biological analysis testing, etc. Serve. The company currently produces and sells more than 47,000 kinds of spot products, including more than 6,000 kinds of recombinant proteins and more than 10,000 kinds of antibodies, covering many fields of life science research, and customers include universities, scientific research institutes, pharmaceutical R&D enterprises, etc. at home and abroad Various biological R&D units have accumulated more than 5,000 customers.

Ipsis: The leader in biological reagents focusing on recombinant protein distribution

Founded in 2010, the company is mainly engaged in recombinant protein and detection services. At present, it has formed a product matrix covering kits, antibodies, fillers, culture media and other products. Its customers include Johnson & Johnson, Pfizer, Roche, Merck and other global top 20 pharmaceutical companies and Hengrui. Pharma, Innovent Bio, Junshi Bio, WuXi Biologics, BeiGene and other well-known domestic biopharmaceutical companies, as well as global biotechnology industry leading companies such as Thermo Fisher Scientific, VWR, Abcam, and WuXi AppTec.

Feipeng Bio: IVD core raw material supplier

The development history of Feipeng Bio: 2001-2008 "in vitro diagnosis core raw material supplier" stage; 2009-2016 "in vitro diagnosis core raw material and reagent solution supplier" stage; "in vitro diagnosis overall solution supplier" since 2017 stage. The company has now covered the vast majority of in vitro diagnostic industry customers in the country, including Mindray Medical, BGI, Shengxiang Bio, Xinye, Antu Bio, Mike Bio, Wantai Bio, Wanfu Bio, Oriental Bio, and Jiuqiang Bio. , Dean Diagnostics, etc.

Gongdong Medical: A Featured Supplier in the Field of Customized Business and Functional Consumables

Gongdong Medical was established in 2009. Its main products can be divided into vacuum blood collection systems, laboratory testing consumables, body fluid collection consumables, medical nursing consumables and drug packaging materials, etc., which are widely used in clinical diagnosis and nursing, scientific research testing, and drug packaging. and other fields. From 2017 to 2021, the company's revenue and profits have grown rapidly. The compound annual growth rate of revenue is 29.01%, and the compound growth rate of net profit rate attributable to the parent is 63.05%. The accelerated revenue growth is mainly due to the contribution of new crown-related products. With the accumulation of product SKUs and the accumulation of customers, it maintains rapid growth.

Changhong Technology: Invisible Champion of Polymer Plastic Consumables

Changhong Technology was established in 2001. Since 2010, it has established a subsidiary, Bai Mingsheng, to enter the medical plastic consumables market by virtue of its advantages in the field of polymer plastic precision manufacturing. The company's operating income in 2020 was 1.118 billion yuan, a year-on-year increase of 56.29%, and the compound growth rate of revenue from 2017 to 2020 was 23.12%; the net profit attributable to the parent company in Q3 in 2021 decreased by 37.44% year-on-year, mainly due to the increase in upstream raw material costs.

From the perspective of the main business structure, the medical device business will decline in 2021 after a year-on-year increase of 361.99% in 2020, mainly due to the decrease in sales revenue of related products directly related to the epidemic. On November 8, 2021, the subsidiary Shenzhen Baimingsheng signed a strategic cooperation agreement with Roche Diagnostics, upgrading from a Roche supplier to a strategic partner. It is expected that more orders will be placed in the future.

Jiete Bio: China's leading manufacturer of laboratory polymer plastic consumables

Jiete Bio was established in 2001. Since its establishment, the company has been committed to the research and development, production and sales of biological laboratory consumables. The main products are two categories of biological laboratory consumables, including biological culture and liquid handling, involving more than 700 kinds of products. The company's operating income in 2021 will reach 856 million yuan, a year-on-year increase of 69.80%, and the compound growth rate of revenue from 2017 to 2021 will be 50.47%; the net profit attributable to the parent in 2021 will be 171 million yuan, a year-on-year increase of 43.38%. The speed is 43.79%.