Macroeconomic and Policy Environment Analysis of the In Vitro Diagnostic Industry

Industry opportunities under the global economic development trend

Against the backdrop of a "K-shaped recovery" in the global economy, the in vitro diagnostic industry is facing opportunities for differentiated development. In 2023, the global medical device market size will exceed $580 billion, with the in vitro diagnostic sector continuing to increase to 13.2%. As the largest individual market, the export value of IVD products in the United States increased by 8.7% year-on-year, while the European Union's market concentration has significantly increased after the implementation of the In Vitro Diagnostic Medical Device Regulation (IVDR), with the top ten companies having a market share exceeding 65%.

As the world's second-largest medical market, China's in vitro diagnostic market is expected to reach 125.8 billion yuan in 2023. With a stable GDP growth rate of around 5% in the new normal of the economy, the industry is exhibiting countercyclical growth characteristics. It is worth noting that the export volume of diagnostic reagents exceeded 30 billion yuan for the first time, among which the contribution rate of countries along the "the Belt and Road" increased to 37%, marking a new stage in the global layout of the industry.

The market transformation brought about by economic structural adjustment

Driven by the development pattern of "dual circulation", the domestic in vitro diagnostic market presents three major structural changes:

1. Consumer upgrading drives an increase in the proportion of high-end products, with an annual increase of 25% in the installed capacity of chemiluminescence detection equipment. The number of single machine detection projects in tertiary hospitals has exceeded 150

2. The rapid rise of the county-level medical market has led to a 41% year-on-year increase in the purchase of POCT equipment by primary healthcare institutions in 2023

3. The innovation of service models is accelerating, and the revenue growth rate of third-party medical testing services has reached 34%, significantly higher than the sales growth rate of traditional products

Of particular note is the surge in demand for products that combine cost-effectiveness and diagnostic accuracy among medical institutions in the context of healthcare payment reform (DRGs/DIP). In 2023, the daily average detection volume of a single fully automatic biochemical analyzer in China exceeded 2000 tests, which is three times higher than five years ago, confirming the trend of equipment upgrading driven by operational efficiency.

The dual empowerment effect of policy environment

The coordinated efforts of regulatory policies and industrial policies are reshaping the competitive landscape of the industry. After the implementation of the new version of the "Classification Catalogue of Medical Devices" in 2023, the average registration period for Class II IVD products will be shortened to 14 months, and the utilization rate of the special approval channel for innovative products will increase by 60%. The "14th Five Year Plan" for the development of the medical equipment industry clearly proposes five major technological directions for key development, including microfluidic chips and single-molecule detection. Under policy guidance, the R&D investment intensity in related fields has reached 12.8%.

At the level of quality supervision, the frequency of flight inspections conducted by the National Medical Products Administration has increased by 45% year-on-year, and the failure rate of flight inspections has decreased from 17% in 2019 to 6% in 2023, significantly improving the standardization level of the industry. It is worth noting that the IVD reagent UDI (Unique Identification) full process traceability system launched in 2024 will drive the industry into a new stage of digital supervision.

Resonance between Capital Market and Industrial Innovation

Under the background of deepening the registration system reform, the IPO financing in the IVD field reached 21.8 billion yuan in 2023, setting a new historical high. The average R&D investment of the 15 IVD companies listed on the Science and Technology Innovation Board accounts for 19%, significantly higher than the industry average. The strong support of the capital market drives enterprises to accelerate their layout:

1. In the field of molecular diagnostics, the localization rate of digital PCR equipment has exceeded 40%

2. Mass spectrometry detection field: Domestic enterprises have obtained 25 clinical mass spectrometry reagent registration certificates

3. Smart Laboratory: LIS system penetration rate increases to 78%, AI assisted diagnostic module installation increases by 150% annually

Under the dual drive of policies and capital, the industry is forming a virtuous cycle of "innovative research and development clinical validation industrialization". In 2023, the number of PCT patent applications in the IVD field in China will reach 1562, with a year-on-year increase of 28%, of which technological breakthroughs in subdivisions such as infectious diseases detection and early screening of tumors will be particularly significant.

Hubei Xindesheng Material Technology, as a well-established enterprise in IVD core raw materials, helps domestic molecular diagnostic equipment shorten the technological gap with imported products. Through the dual wheel drive of "raw materials+algorithms", Xindesheng is providing the industry with a bottom-up technology solution that combines cost advantages and quality breakthroughs.