The growth rate far exceeds the development status and trend of my country's independent medical laboratories in biomedicine

Independent medical laboratories are rapidly emerging in my country's medical services by virtue of their numerous testing items and large-scale cost advantages.
Although compared with mature markets in Europe and the United States, my country’s independent medical laboratories have a late start, small scale, small number, low penetration rate, uneven regional distribution, and a large gap in market size.
However, in the context of medical reform and industry policies, Driven by this, the growth rate of the market of independent medical laboratories far exceeds the growth rate of the biomedicine market in the same period.
With the development of the upstream and downstream of the industry chain in this field, independent medical laboratories have become an important development engine for industry technology upgrades and business model changes.

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Development history of independent medical laboratories

Development history of independent medical laboratories

Independent Clinical Laboratory (ICL) refers to a medical institution that has independent legal personality, independent of the hospital, performs clinical examination or pathological diagnosis and services, and can independently assume responsibility under the permission of the health administrative department.
It mainly cooperates with medical institutions such as hospitals, regularly collects samples from medical institutions for testing, and feeds back the inspection structure to medical institutions for clinical diagnosis.
It does not have clinicians and only engages in medical testing projects.
Due to its highly specialized and large-scale operation, it can effectively reduce the cost of testing, so it can occupy a place in the medical market.

As early as the 1950s, in order to reduce the burden of rising medical expenses, the US government introduced a market competition mechanism into the medical and health market, which provided strong conditions for third-party inspection agencies to participate in competition.
Some professional independent medical laboratories began to follow one another.
Appeared, such as National Health Laboratories, the predecessor of LabCorp and MetPath, the predecessor of Quest.
As the inspection technology becomes more abundant, the projects are gradually diversified, and the inspection projects tend to be individualized and molecularized.
At present, the large independent inspection institutions in the United States and Japan can achieve more than 4,000 inspection items.
In contrast, the hospital laboratory can only complete about 500 items.

Compared with overseas independent medical laboratories, China's independent medical laboratories started late.
It was not until the 1980s that some early testing service centers appeared in my country, and their scales were relatively small and the scope of testing was relatively single.
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It was only after 2000 that independent medical laboratories operated as chains and large-scale operations began to emerge.
Through the rapid growth period from 2013 to 2018, as of now, my country’s medical laboratories have exceeded 1,800, mainly located in the eastern coastal areas with good economic development and rich medical resources.
Ann Gene, Adicon and Dean Diagnostics, etc.
With the improvement of testing technology in independent medical laboratories in China, there are currently about 2,000 testing items that leading companies can generally do, which is still not a small gap compared with overseas testing giants.
At present, the establishment of independent medical laboratories generally requires more stringent quality system certification such as ISO9000 series certification, American CAP certification, International Joint Commission (JCL) certification, ISO/IEC17025 certification, etc.

Domestic medical laboratories can be divided into large-scale general inspection laboratories and specialized special inspection laboratories.
The large-scale general inspection laboratory only provides 1462 clinical inspection items (items in the table) included in the "Clinical Inspection Items List of Medical Institutions" issued by the former Health and Family Planning Commission, while special inspection laboratories refer to the inspections that are not included in the list.
Items in the catalog (off-list items or special inspection items).
Among them, special inspection items are relatively low in frequency and complicated in inspection methods, requiring more professional technicians and equipment.
Therefore, inspection departments in hospitals are generally rarely carried out, and they basically rely on special inspection laboratories.

Table 1 Classification of domestic independent medical laboratories

Source: According to public information

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The status quo of the independent medical laboratory industry

The status quo of the independent medical laboratory industry

In recent years, the market size of medical laboratories in my country has been increasing year by year.

Data shows that from 2014 to 2018, the market size of third-party medical laboratories has increased from 5.
3 billion to 17.
8 billion, with a compound growth rate of 35%.
It is expected that the industry will maintain a growth rate of about 30% in the next five years, and it is expected to reach 60 billion yuan in 2023.

Figure 1 Industry chain of independent medical laboratories

Source: According to public information

The factors driving the continuous growth of the independent medical laboratory market are mainly due to the introduction of national hierarchical diagnosis and treatment, medical insurance control fees and other policies.

1.

Hierarchical diagnosis and treatment, the demand for primary medical care drives the growth of inspection outsourcing services

In 2015, the General Office of the State Council issued the "Guiding Opinions on Promoting the Construction of a Hierarchical Diagnosis and Treatment System", which clearly stated that by 2017, the proportion of grassroots medical care must reach 65%, and achieve primary care at the grassroots level, two-way referral, emergency and slow treatment, and upper and lower levels.

The goal of linkage.
The shortage of resources, scattered distribution, and limited capital investment in grassroots medical institutions means that it lacks relatively large-scale testing equipment and service capabilities.

Figure 2 ICL development opportunities due to insufficient inspection capabilities in primary hospitals

Source: According to public information

2.

Cost control of medical insurance, ICL's cost advantage is reflected, and it is favored by hospitals

With the intensification of the aging of the population in our society, the income growth of medical insurance funds has begun to slow down, while the growth rate of expenditures has continued to increase, resulting in increased pressure on medical insurance payments.

As a result, medical insurance fee control came into being and will be a long-term policy that needs to be adhered to.
Such policies first control the proportion of drugs, and then gradually spread to inspections.
The main method is to reduce the cost of inspection items, and the cost of some special inspection items is high and difficult.

3.
The growth of the medical market drives the development of the ICL industry

At present, the aging of the domestic population is intensifying, and the medical service market is showing a trend of continuous growth.
The increasing number of doctors has brought about an increase in the demand side of clinical testing items, and has effectively promoted the development of my country's independent medical laboratory industry.
At the same time, with the rapid economic development and the deepening of urbanization, the disposable income of residents has also increased significantly.
People have continued to increase their investment in medical care, and their meaning in medical care has gradually increased.
They are more willing to consume in the medical and health field.
This is also a promotion of ICL.
Another important reason for the development of the industry.

Table 2 National policies related to independent medical laboratories

Source: Official website of National Health Commission, National Medical Insurance Administration, CNCA

In recent years, the ICL industry has initially shown a trend of centralized development.

The cumulative market share of the four leading companies-Golden Field Medical, Dean Diagnostics, Aidekang and Daan Gene has reached about 70% of the overall domestic ICL market.
These leading companies have basically completed the layout of provincial laboratories nationwide.
At the same time, in the increasingly fierce market competition, some smaller laboratories have been eliminated.
According to data, there are currently less than 100 ICL laboratories with a registered capital of more than 10 million, and most of the laboratories often last less than three years.

Table 3 Four leading companies in the domestic ICL industry

Source: According to public information

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The development trend of independent medical laboratories

The development trend of independent medical laboratories

With the support of policies such as hierarchical diagnosis and treatment, medical insurance control fees, and DRGS pilot programs, the overall development trend of the domestic independent medical laboratory industry is improving.

Refer to the US and Japanese markets with more than 6,000 independent laboratories respectively, and there is a gap of more than 4,000 in China, so the market size still has a large room for growth.
However, it should also be noted that with the continuous development of the industry, the Chinese ICL industry has passed the explosive development stage, and the trend of group and chain development has appeared.
It is relatively difficult for small-scale inspection laboratories to make profits.
The risk of being eliminated.

Figure 3 Factor analysis of the growth of the special inspection market

Source: According to public information

Therefore, the independent medical laboratory industry has two development directions in the future.

The first is a basic market based on general inspection projects.
It is now mainly dominated by several large-scale giants.
The entire industry chain layout and platform strategy will become Long-term development trend in the future.
Through continuous iteration and optimization of existing platforms and products, gradually increase the number of testing items, continue to reduce the cost of products, collect feedback from customers in the process of use and continue to improve, with the help of the broad masses of the grassroots, continue to penetrate the stock market and win by volume.

Summary of this article

Summary of this article

The development of independent medical laboratories has become a major trend in my country's medical service system.

In addition, the development model of product + service + platform and the business model integrated with the Internet may provide emerging ICL companies with the possibility of overtaking in corners.