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1. Background for the emergence of the CDMO model of in vitro diagnostic instruments.
The technology of the in vitro diagnostic industry is updating rapidly. Whether it is diagnostic reagents or instruments, different products have certain technical barriers and are incompatible with each other. In vitro diagnostic equipment is also a complex system project with high technology, high risk, high investment and long cycle from research and development to launch. There are only a few companies in the industry that can achieve a high technical level in both reagents and instruments. Even the international in vitro diagnostic giants Roche, Abbott, Beckman, Siemens, etc., in order to concentrate their resource advantages, most diagnostic instrument products also choose to cooperate with third parties and entrust CDMO platforms to develop and manufacture diagnostic instruments. It can be seen that professional CDMO service providers play an important role in the entire life cycle of diagnostic instrument R&D, manufacturing and launch.
"China's In Vitro Diagnostic Instrument Industry Market Research and "14th Five-Year Plan" Development Trend Research Report"
In China, due to the short industrial development time and limitations of technical level, the companies engaged in the in vitro diagnostic industry are mainly reagent manufacturers, and diagnostic instruments are independently developed and There were few manufacturers, and in the early days they mostly relied on imported instruments. With the improvement of domestic diagnostic instrument R&D and production capabilities, large domestic reagent manufacturers have begun to independently develop and produce supporting instruments. However, on the one hand, most small and medium-sized reagent manufacturers do not have the technical capabilities to independently develop supporting diagnostic instruments, and on the other hand, corporate funds Limited, it is difficult to create and train a professional R&D team, and it is difficult to build an independent production line. Its demand for diagnostic instrument CDMO services is more urgent, and the diagnostic instrument CDMO model was born.
In 2017, my country issued the "Opinions on Deepening the Reform of the Review and Approval System to Encourage Innovation in Drugs and Medical Devices", marking the official implementation of the medical device marketing authorization holder system in the country. In August 2019, the State Food and Drug Administration issued the "Notice on Expanding the Pilot Work of the Medical Device Registrant System", expanding the scope of the pilot to 21 provinces and cities. Before the introduction of the registrant system, medical device registration certificates had to be held by medical device manufacturers, which required huge investments in factory construction and production inspection equipment procurement. At the same time, enterprises were required to have strong production management capabilities and quality system supervision capabilities, and maintain The entry threshold for having a medical device registration certificate is very high. After the introduction of the registrant system, medical device registration certificate holders can entrust medical device manufacturers with sound production quality management systems to conduct research and development and production, thus laying an institutional foundation for the vigorous promotion of the CDMO model in China.
2. Industry competition landscape
In the in vitro diagnostic instrument market, the CDMO model is relatively mature internationally. After years of development, diagnostic instrument CDMO service providers have been formed, mainly represented by well-known companies such as Hitachi, Olympus, and Japan Electronics. Among them, Hitachi develops and produces instruments for Roche, Japan Electronics develops and produces instruments for Siemens, Canon Medical develops and produces instruments for Abbott, and Beckman acquired Olympus' diagnostic instrument business. Different from the global market, the domestic diagnostic instrument CDMO model started late. After 2000, the country began to gradually carry out professional division of labor, and a group of small and medium-sized enterprises appeared that specialized in customized R&D and production of diagnostic instruments. However, early customization The types of R&D instruments are limited, and most only focus on a single application field. After more than ten years of development, some companies have grown into comprehensive CDMO platforms covering multiple application fields such as biochemical diagnosis, immunodiagnosis, molecular diagnosis, microbial analysis, coagulation analysis, POCT, etc., such as Caishi Biotech and Cosmai. Currently, there are no domestic listed companies engaged in the CDMO business of in vitro diagnostic instruments, and there are only a small number of players of a certain scale in the market. At present, the competitive landscape of domestic and foreign CDMO platforms is as follows:
Source: compiled by Puhua Youce
Considering that the market concentration of my country's in vitro diagnostic reagent manufacturers is far lower than that of overseas markets, except for a few large leading listed companies, most participants in the domestic market are still small and medium-sized companies in various subdivisions. Most of the above-mentioned small and medium-sized enterprises do not have the ability to independently develop and produce diagnostic instruments. At the same time, in order to reduce investment in the construction of instrument production lines, they choose to hand over diagnostic instruments to third parties for customized development and production. As the medical device registrant system is gradually promoted across the country, the market recognition of the in vitro diagnostic instrument CDMO model will gradually increase. There are few large-scale CDMO companies in China, and the potential market size of the diagnostic instrument CDMO in the future is very considerable.
3. The main technical level and development trend of the industry - the improvement of R&D and production capabilities of domestic manufacturers.
In the field of in vitro diagnostic instruments, from 2010 to the present, domestic enterprises have gradually mastered chemiluminescence technology, PCR, NGS sequencing, flow cytometry and other technologies. With the The state strongly encourages the development of in vitro diagnostic devices and companies continue to increase investment in R&D. New technologies will continue to be launched in the future, such as microbial mass spectrometry, digital PCR, microfluidic chips, third- and fourth-generation gene sequencing, etc. In addition, with the continuous upgrading of detection technology, the number of detectable items will also increase, such as the detection of new immune targets, gene SNPs, CTDNA (circulating tumor cell DNA), DNA methylation, miRNA, and pathogenic microorganisms, all of which make it clinically feasible. The increase in the number of projects carried out will also lead to the expansion of the industry.
4. Main trends in the industry
(1) The intellectual property protection system is gradually improving.
An important consideration for in vitro diagnostic companies when choosing third-party R&D and manufacturing services is core technology and intellectual property protection. At present, some third-party R&D and manufacturing service providers have begun to spontaneously establish intellectual property protection systems to solve the trust problem. By signing agreements, splitting work links, keeping supply chain channels confidential, and cryptographically encoding important component information, the client’s Intellectual property rights are fully protected. With the standardization and processization of the intellectual property protection system in the third-party R&D and manufacturing service industry, more potential clients will quickly become stable sources of orders.
(2) Customized and integrated services
After the client provides ideas and parameters, the in vitro diagnostic third-party R&D and manufacturing service provider will provide a full set of services from design, production to sales, including production process research and development, mold casting, screening of raw materials and intermediates, and packaging, and will continue to follow up on production. planning, sales forecasting, etc. Therefore, in the future, there may be a group of in vitro diagnostic companies with fewer fixed assets such as self-owned factories, land, and instruments, focusing on cutting-edge in vitro diagnostic R&D technologies and hot areas of the current market. This is due to the development of customized and integrated services in the third-party R&D and manufacturing service market. In the future, how third-party R&D and manufacturing service providers can effectively communicate with the client and meet the client's needs depends on the maturity level and detailed connection of its customized and integrated services, so as to ensure R&D and production while meeting the client's needs. quality, shorten time to market, reduce friction, improve efficiency, increase product launch rate, and provide end-to-end solutions.
(3) Promote the rapid update of technology in the field of in vitro diagnostics
. The current technology in the field of in vitro diagnostics is rapidly updated. Domestic in vitro diagnostics companies strive to move closer to multinational giants while also actively seizing opportunities in cutting-edge technologies, such as direct chemiluminescence technology and photostimulated chemiluminescence. technology, digital PCR, multiplex ligation probe technology, third and fourth generation sequencing, microfluidic and microarray chips, biochips, etc. Therefore, the technological path in the field of in vitro diagnostics is far-reaching, making the research and development of equipment with corresponding technologies highly active, and the demand for new technology equipment will exist for a long time. At present, sequencers, mass spectrometers and chemiluminescence immunoassay analyzers are the focus of market attention. With the advancement of domestic sequencing technology, chemiluminescence technology and other international advanced technologies, the industry will develop from upstream equipment research and development to downstream clinical testing terminals. Promote the development of the business of third-party R&D and manufacturing service producers.
(4) Domestic enterprises actively explore core parts, raw materials and technologies
Parts and raw materials are the upstream of the in vitro diagnostic industry and an important part of the manufacturing cost of in vitro diagnostic instruments and consumables. In the early years, foreign companies occupied the market position, which limited the space for domestic in vitro diagnostic companies to reduce manufacturing costs, made the scale effect not obvious, and limited the space for extending the industrial chain. Today, companies led by third-party in vitro diagnostic R&D and manufacturing service providers are actively exploring core parts, raw materials and technologies, breaking the monopoly of foreign companies to a certain extent. Our country encourages and supports the development of materials science, promotes the reform of interdisciplinary disciplines such as physical materials science, biochemical materials science, and computational materials science, introduces and attracts domestic and foreign talents, and provides various support such as entrepreneurial guidance, start-up funds, and taxation. CDMOs in the mid-range Enterprises will also gain wider space for growth driven by the optimization of industrial chain structure.