Mergers, acquisitions and splits in the IVD field have been in full swing, and the same is true for the biochemical diagnostic market in the sub-sector. Recently, the domestic biochemical reagent manufacturer Jiuqiang Biotechnology exported technology to Abbott Diagnostics, a world-leading IVD company. This rare cooperation case has attracted the attention of many industry insiders and has also caused some discussion. In the future, as the competition in China's biochemical market intensifies, especially the competition for the mid- and low-end markets, I believe that such cooperation will increase.

In China's in vitro diagnostics industry, the largest markets are immunodiagnosis and biochemical diagnosis, which account for more than 60%. Among them, chemiluminescence, which accounts for the largest proportion in immunodiagnosis, has always been the market leader for foreign manufacturers, accounting for about 60% of the market share. Foreign manufacturers also dominate the POCT and molecular diagnostics fields, mainly due to technical barriers. Foreign biotechnology is developing rapidly and has a high rate of technology conversion, and has always led the global diagnostic technology innovation. In China's POCT market, foreign manufacturers also have a market share of more than 60%, and foreign brands account for more than 80% of the molecular diagnostics market.

At present, the best performance of domestic enterprises should be in the biochemical market segment, and the biochemical diagnosis market is divided into the biochemical instrument and biochemical reagent markets. Foreign brands still have a higher share in the instrument market. Since the 1980s, the reform and opening up has brought a large influx of foreign capital and foreign advanced technologies to the field of biochemical diagnostic reagents. The domestic biochemical industry has begun the industrialization process. After the rapid development period from the 1980s to the 1990s, the industry integration period from the 1990s to 2000, and the golden development period of the industry from 2000 to the present, the market concentration has continued to increase, the market competition has gradually stabilized and orderly, and the technology update has accelerated. At present, the various biochemical detection projects and corresponding reagent varieties of the domestic biochemical industry are quite complete, and the biochemical analyzer technology is also quite mature. Many technologies have reached the international advanced level. The quality of the reagents of mainstream domestic brands is not much different from that of imported reagents, but they have price advantages and are more easily accepted by hospitals. At present, the market share of domestic brands is more than 60%.

As a basic component of medical testing, biochemical diagnosis still maintains a large market share due to its advantages of low cost and high speed, and it will be difficult to be replaced for quite a long time. In the future, due to the growth of the overall demand for medical and health care brought about by the aging of the domestic population, the application of new testing items brought about by technological progress, and the rapid expansion of the primary medical market after the gradual implementation of hierarchical diagnosis and treatment, my country's biochemical diagnosis market will continue to maintain a rapid and stable growth trend.

As early as December 2013, Abbott and Jiuqiang Biotech signed a strategic cooperation agreement on biochemical reagents in China. Abbott's biochemical analyzers began to be sold in conjunction with Jiuqiang's biochemical reagents in China. In 2015, the two companies signed a technology transfer agreement. In fact, in addition to Abbott, other foreign manufacturers have also been carrying out similar localization strategies.

Roche invested 450 million Swiss francs (about 3 billion RMB) to establish the first Roche diagnostic production base in Asia Pacific in Suzhou Industrial Park. Its products mainly include immunological and biochemical detection products, which will be fully operational by 2018. In March 2016, Roche and Jiuqiang cooperated on biochemistry. Jiuqiang Biotechnology supplied Roche Diagnostics with biochemical reagents suitable for cobas c701/702, cobasc 501/502, cobasc 311, Modular P and other instruments in accordance with Roche Diagnostics' requirements for sales in China. The first batch of cooperation projects included 21 products. Roche Diagnostics has been seeking localization to further reduce costs to gain price advantages and further enhance its market competitiveness. At the same time, Roche Diagnostics China has also continuously strengthened its service marketing strategy of terminal services, and continuously practiced and improved its service system through sales support, application support, maintenance services, reagent distribution and other aspects.

In addition, Beckman's Suzhou Instrument Factory also opened in October 2015. As early as 2014, Beckman and Leadman entered into a strategic cooperation, with Leadman producing Beckman's exclusive reagents. Through the actions of these IVD giants, it is not difficult to see that they are also adopting various strategies to further expand the market share of biochemical reagents. So, what countermeasures should domestic biochemical companies take?

First, leading products and technologies.

How to develop market-leading products has always been a major issue for excellent companies and a problem faced by domestic manufacturers. The mid-to-high-end biochemical instruments on the market are basically dominated by imported manufacturers. For example, Hitachi, Beckman, and Roche account for almost 60% of the market share of biochemical instruments. Due to the weak domestic R&D and industrial foundations, this aspect does require more time to catch up. If the product cannot reach the leading position for the time being, then the goal of obtaining high-quality products can be achieved through cooperation, mergers, overseas acquisitions, etc. Roche's biochemical instruments are produced by Hitachi in cooperation with Hitachi. It must be clear that in vitro diagnosis is an important and inseparable part of clinical diagnosis and treatment, and the requirements for the product itself must be ranked at the core.

Second, the price.

Price is one of the important competitive advantages of enterprises. The prices of biochemical reagents from foreign large manufacturers are less competitive than those of domestic enterprises. In order to make up for this gap, foreign IVD giants have been actively implementing localization strategies. For example, the cooperation between Abbott, Roche and Nine mentioned above, in fact, Roche and Abbott cooperate with many local small reagent companies around the world, and they value local low-cost manufacturing.

Domestic enterprises should take advantage of their relative price advantages, closely follow policy guidance, and quickly seize the low-end and mid-end markets. They should seize market share, expand through capital operations such as mergers and acquisitions, and improve production efficiency through expanding production scale and efficient management to further reduce production costs. In addition, they should further reduce costs and expand price advantages by developing upstream and downstream industries. The upstream is mainly the research and development and production of raw materials, while the downstream is mainly third-party inspection centers, independent laboratories, physical examination centers, etc.

Third, control over the terminal.

General manufacturers often reach the terminal through the agent channel, and the maintenance and service of the terminal are often carried out through agents. There are many brands in the domestic biochemical market, and the competition is fierce. Agents are often not loyal enough. If a company loses control of the terminal, it will often be led by the agent. Therefore, service marketing to terminal customers is crucial. In this regard, foreign manufacturers do better. For example, Roche Diagnostics classifies terminal customers, provides key services to large customers and even establishes a special team for direct maintenance. Small and medium-sized customers are provided with all-round and timely services and value delivery through sales departments, marketing departments, application support departments, maintenance departments, etc., to improve the satisfaction of terminal users. Serving the terminal well and gaining the brand loyalty of terminal customers is the kingly way.

Fourth, innovative sales models and promotion policies.

It is worth mentioning that with the deepening of national medical reform and the implementation of hierarchical diagnosis and treatment, the country has vigorously supported domestic medical equipment. At this stage, it is particularly important to respond quickly to the call and keep up with the pace of policies, and then quickly seize market opportunities. At present, domestic biochemical products are seriously homogenized. Sometimes, through innovative sales models and good execution, it is possible to quickly expand market share and enjoy policy dividends. There are various sales models on the market, including laboratory trusteeship, instrument placement, instrument leasing, instrument and reagent linkage sales, cross-brand cooperative sales, etc. There are even some cooperations with financial companies to provide risk guarantees and financial support for all parties involved. In short, in this special historical stage, innovating different sales models around terminal and channel needs will also help improve competitiveness and increase market share.

I personally believe that among the above four core competitiveness, as long as one has an outstanding capability, you can occupy a place in the market. If you have two outstanding capabilities, you can lead the market. If you have three or more capabilities, you can be called a top enterprise.