The 4 Trends of In Vitro Diagnostics in China

The 4 Trends of In Vitro Diagnostics in China

In recent years, merger and acquisition (M&A) has been the dominant theme in the Chinese healthcare and pharmaceutical industry, especially in the field of in vitro diagnostics (IVD). A number of companies have undergone acquisitions and this trend will continue to grow in 2018. This integration phenomenon has raised new requirements and challenges for large customer-oriented central labs and their automation systems – to simplify the process and provide a better medical information transfer network.

I have observed the following 4 trends in the Chinese IVD market, which I am going to discuss in more details below.

  • Centralization of laboratories – acquisition
  • The increasing influence of Chinese Food and Drug Association (CFDA)
  • The surprising increase of American laboratory developed test (FDT) companies
  • The continuous growth in M&A  

    Central Laboratory: Keyword is Acquisition.

    All major IVD companies have launched new products to strengthen their diagnostic capabilities this year. During the AACC annual conference, Siemens Healthineers has announced its new Atellica solution platform used to automate diagnostics in centralized labs. Abbott has also released its new generation diagnostic solution Alinity. It can be applied to seamlessly connect and integrate 6 analytical sections, including biochemistry, immunology, blood sample analysis, blood infusion, molecular diagnostics, and POCT, enabling a more comprehensive and convenient testing service.

    The Increasing Influence of CFDA

In the past five years, China has become a major competition ground for IVD companies, following closely after American, European, and Japanese markets. In turn, other than FDA and CE, winning a nod from CFDA has become an increasingly important factor to consider for these companies who want to achieve successes globally. A report detailing the CFDA approval was published by Roche in 2016.

Roche has also introduced a new HPV molecular detection technique, which has been approved by the American FDA as a first line screening tool for HPV. It is predicted to have a broader application in emerging markets in the coming years. On another note, CareHPV platform, developed by Qiagen, has already won a nod from CFDA. This platform is developed for the Chinese HPV detection market and can be used in rural cities with scarce healthcare and medical resources.

The most surprising aspect of the Chinese market is its potential in oncology detection space. Often, advanced tumor screening tools are not widely applied in middle-income countries. But China is an exception. Its strong sequencing capability, as well as its urban patient community, provides a huge opportunity for foreign IVD companies. The German cancer diagnostics specialty company Epigenomics has referred to China as its main market for its colorectal cancer liquid biopsy program, Epi ProColon.

In 2016, Epigenomics conducted a series of clinical trials on Chinese patients, providing important data for CFDA’s approval of its cancer liquid biopsy platform using SHOX2 as a biomarker. CFDA has classified Epi ProColon and other advanced molecular oncology detection methods as innovative products and will accelerate their approval processes.

Next generation sequencing (NGS) is another very active area of China’s cancer diagnosis market. Driven by the need of noninvasive pregnancy sequencing technologies, the number of clinical sequencing sites has increased rapidly in the past five years, up to more than 40 sites and serving more than 110 hospitals and clinics nationwide. Cancer screening is currently the second largest clinical application of NGS in China.

The Surprising Increase of LDT Companies

An increasing number of American LDT companies begin to drive their penetrations in the European market. Myriad Genetics, Genomic Health, and Foundation Medicine have all taken on different strategies to increase their LDT products’ acceptances in EU.

Foundation Medicine has formed a strategic partnership with Roche to expand its international market for Foundation One and related comprehensive gene analysis products. Their European central laboratory for LDT is located in Penzberg, Germany, and will start to operate soon.

Myriad Genetics has picked up the MVZ German laboratory and multifunctional ambulatory care centers (ACC); this move has greatly strengthened their presence in EU. Through the merger with MVZ, Myriad Genetics will gain the ability to negotiate the insurance reimbursement with payers and directly recruit physicians and patients.

However, the development of LDT in the European market might limit the growth opportunity of oncology diagnostics. In recent years, CE certified molecular oncological screening and detection kits have covered a wide reach; but it has not translated into a steady market growth yet. Though, the outlook of the market will remain to be promising, thanks to the stable regional political recovery, a better economic environment, and an increased demand for advanced LDTs.

The Continuous Growth in M&A

In 2016, several eye-catching M&A deals have made headlines; as a result, a number of large pharmaceutical companies have acquired new technologies. This is one unique method for IVD companies to achieve globalization.

For example, LabCorp has purchased Sequenom; Abbott has announced its intention to acquire Alere; Cepheid was bought by Danaher; Bio-Techne has invested in 2.5 million to take out of ACD, marking its entry into the genomics market.

Additionally, Oxford Immunotec Global PLC, a global, high growth, immunomodulation detection focused diagnostic company, has acquired all assets from Imugen, a clinical laboratory dedicated to the detection of tick-borne disease in Massachusetts, USA.

Luminex has also bought Nanosphere and its Verigene platform, looking to tap into Nanosphere’s business and benefit from its strong presence in the microbial market.

I expect that M&A will remain to be the major trend in the second half of 2017 and the number of deals will continue to grow.

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