A report by The Economist Intelligence Unit Emerging In-vitro Diagnostics Markets: Seeking the Next Phase of Growth in ChinaThe world leader in global business intelligence The Economist Intelligence Unit (The EIU) is the research and analysis division of The Economist Group, the sister company to The Economist newspaper. Created in 1946, we have over 70 years experience in helping businesses, financial firms and governments to understand how the world is changing and how that creates opportunities to be seized and risks to be managed. Given that many of the issues facing the world have an international (if not global) dimension, The EIU is ideally positioned to be commentator, interpreter and forecaster on the phenomenon of globalisation as it gathers pace and impact. EIU subscription services The worlds leading organisations rely on our subscription services for data, analysis and forecasts to keep them informed about what is happening around the world. We specialise in: Country Analysis: Access to regular, detailed country-specific economic and political forecasts, as well as assessments of the business and regulatory environments in different markets. Risk Analysis: Our risk services identify actual and potential threats around the world and help our clients understand the implications for their organisations. Industry Analysis: Five year forecasts, analysis of key themes and news analysis for six key industries in 60 major economies. These forecasts are based on the latest data and in-depth analysis of industry trends. EIU Consulting EIU Consulting is a bespoke service designed to provide solutions specific to our customers needs. We specialise in these key sectors: E IU C onsumer : We help consumer-facing companies to enter new markets as well as deliver greater success in current markets. We work globally, supporting senior management with strategic initiatives, M and more importantly: how sustainable is their growth. In this section, we explore the competitive scene in Chinas IVD market, and the expansion of Chinas domestic players into other emerging markets. Smart strategies: The reason for the rapid growth of domestic IVD companies Undoubtedly, domestic companies are a force to be reckoned with in Chinas IVD market. They are capturing a larger share of Chinas fast-growing market. In 2012, domestic companies have captured 15% of Chinas CDx market. By 2017, they have grown to occupy 21% of the CDx market, and established strongholds in areas of clinical chemistry, immunoassays and haematology. Over the five years, the growth in market share has translated to an additional US$750m for domestic players in CDx. Chinese companies are also quickly gaining share in other more traditional market segments such as POC cardiac testing and IHC products for TDx, while also making impressive strides in segments such as MDx oncology and next-generation sequencing. What drives the immense success of Chinese players in capturing a growing share of Chinas IVD market? Much more than offering products of increasingly better quality, at lower-cost, domestic companies are clearly making good strategic maneuvers to bring its business forward. The growth of Hybribio, a domestic company that newly entered the ranks of 2017s top five biggest MDx players in China, can be traced back to the companys key strategy in building and maintaining its leading position in Chinas market for human papillomavirus (HPV) screening and sub-typing. As one of the first few domestic companies in Chinas HPV testing market, it has won over the opportunity to provide the tests to a large number of hospitals. Providing low-priced reagents and partnerships with the Chinese government to provide HPV screening programmes form part of its strategy for maintaining market leadership. Hybribio will use funds raised from its 2017 initial public offering to further develop its distributor networks and establish a new research centre focused on developing virology and microbiology related reagents. Beyond China: Strong competition from Chinese companies in other emerging markets Chinese companies are also vying for a share of other fast-growing emerging markets. Mindray, the biggest domestic player in China, is expanding in Asia, LATAM, and more recently in the Middle East and Africa. EMERGING IN-VITRO DIAGNOSTICS MARKETS: SEEKING THE NEXT PHASE OF GROWTH IN CHINA © The Economist Intelligence Unit Limited 2018 4 Mindrays clinical chemistry business showcases the companys success in expanding to other emerging markets by targeting expansion into small and mid-sized hospitals. Five years ago, Mindray had no market share in Indonesia. Today, it has captured some 12% of Indonesias clinical chemistry market. In LATAM where Mindray has actively engaged with the regions key opinion leaders, it has captured a significant share in several LATAM clinical chemistry markets such as Colombia (11%) and Peru (8%). As IVD companies expand further into emerging markets, they should be prepared to face fiercer competition from not just more domestic players but also increasingly stronger domestic companies. EMERGING IN-VITRO DIAGNOSTICS MARKETS: SEEKING THE NEXT PHASE OF GROWTH IN CHINA © The Economist Intelligence Unit Limited 2018 5 MN v j S:E U(G ) T F27, y Aub,l MNlyquz lyu x byMNly. F- yu S R&v 50% A 5 Tu b lyP GB W,. F- yP TPO v 2 PO T Ayxybb, 27'5b Mxly.N,u b Mxly . F- yMx Tu b lyTx MxZ , . F- yTx T x v FA v Mx EGFRKRASHER2 T H F GB' F FAvH M FAvH O ' vv R& EMERGING IN-VITRO DIAGNOSTICS MARKETS: SEEKING THE NEXT PHASE OF GROWTH IN CHINA © The Economist Intelligence Unit Limited 2018 6 IVD Gateway: Growing your IVD business in emerging markets Successful growth strategies in emerging markets must address each markets distinct challenges through: C ount r y-le v el insight s: The ability to access fast-growing emerging markets requires companies to understand the varying challenges and factors in the macro environment, policies, local healthcare systems, disease burden and infrastructure, that influence the demand of IVD tests in the country. IVD Gateway provides comprehensive, in-depth market insights on IVD markets in Asia-Pacific, LATAM and the Middle East. Segment-level insights: Knowing and correctly anticipating demand in IVD tests can be powerful in helping IVD companies grasp the true value and size of the opportunities that exist in emerging markets, and to anticipate upcoming demand trends to uncover unpenetrated market segments and opportunities. IVD Gateway delivers granular insights with current and 5-year forecasts of market size and share of four main market segments in IVD CDx, MDx, POC diagnostics and TDx, and 55 sub-segments across IVD. Competitor insights: Staying ahead amid fierce competition in emerging markets requires companies to develop a differentiated growth strategy from the competition. IVD Gateway monitors the activities of some 60 new and established market players to provide intelligence on their market strategies and operations in emerging markets. IVD Gateway data on market share of key competitors helps companies size their competition. Customer insights: Keeping up with shifting customer demands as hospitals and laboratories develop rapidly in emerging markets is a key challenge. IVD Gateway provides in-depth analysis of customer needs of different customer segments public and private hospital-based laboratories, commercial laboratories, public health laboratories and blood banks. About EIU Healthcare Part of The Economist Group, EIU Healthcare delivers world-renowned analytical and strategic advisory services, providing businesses and institutions with unparallelled custom insights and strategies, evidence-based solutions and robust health data analytics on all areas of the global healthcare industry. Our specialised practices comprising Health Policy & Clinical Evidence, MedTech & Life Sciences and Pharmaceuticals, in addition to our Data Solutions offering, ensures we provide our clients with focused expertise to support their business and commercial decisions. 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