In the past August, domestic listed companies concentrated on submitting their business report cards for the first half of the year. A new crown pneumonia epidemic that started at the beginning of the year quickly swept across the country and then hit the world. For any operator in any industry, the first half of 2020 is not special.

The in vitro diagnostic (IVD) industry is very "out of the circle" in the fight against the epidemic. The concept of nucleic acid testing has rapidly penetrated among investors by taking advantage of the new crown epidemic. The changes brought about by the new crown epidemic itself to the industry are quite dramatic:

Although the semi-annual report came late, Daan Gene shared quite exciting performance information. This 16-year-old company has just recorded the fastest growth in performance for 6 months. It has earned the sum of the past 7 years of profits in half a year. Protracted earnings weakness.

The "good student" BGI's anti-epidemic performance is very impressive: it developed a variety of kits in the first time and obtained market access in many countries, and through the overall solution of "Huoyan Laboratory", it quickly improved its detection capabilities. Achieved a good result of 2 times revenue and 7 times net profit. The "star stock" Wantai Biological, which has almost won the market value of 100 billion, relies on the domestic bivalent HPV vaccine to continue to support the heat. This semi-annual report reports nearly 200 million yuan in revenue from new crown virus detection products and almost doubled net profit. A response to questioned fundamentals.

Of course, some companies that are not good at molecular diagnostic technology left regrets in their annual reports due to untimely response or insufficient consideration of the impact of the epidemic: Antu Bio was severely impacted by the reduction of routine diagnosis and treatment business of medical institutions in the first quarter , Net profit growth is negative, and the overall gross profit margin is also declining. Mike Biotech has experienced a similar experience. However, Mike Bio responded quickly in the second quarter, developed nucleic acid and antibody detection reagents for the new coronavirus, adopted a low-price strategy, and both entered multi-province centralized procurement, striving to win back the missed time and performance.

In this article, we plan to conduct a concentrated analysis of the semi-annual reports of IVD companies, including 11 active companies that have entered the provincial centralized procurement of new crown vaccines. While analyzing the short-term impact of the sudden COVID-19 epidemic on these companies, we try to find out the possible strategic changes of IVD innovation companies that are committed to domestic substitution in the post-epidemic era.

Crises are always temporary, and thinking about change in a crisis may be the real meaning of going through a crisis.

Centralized procurement starts, new crown prevention and control enters normalization

Opened a green channel for approval at the end of January, obtained the registration certificate for the first batch of products in early February, and started cross-provincial centralized procurement in mid-May. The industry already has considerable adaptability and flexible production capacity, and our analysis starts here.

If we say what kind of systemic changes the COVID-19 epidemic has brought to the domestic medical and health supply side, strengthening the construction of the public health prevention and control system is one of them. In late May, the National Development and Reform Commission, the National Health and Medical Commission, and the Bureau of Traditional Chinese Medicine jointly issued the "Notice on Printing and Distributing the Capacity Building Plan for Public Health Prevention and Treatment", which clearly requires each province to focus on improving the infrastructure of one county-level hospital (including the county hospital of traditional Chinese medicine). Facility conditions, upgrade medical equipment such as fever clinics, emergency departments, inpatient departments, and medical technology departments in county-level hospitals, focus on improving the configuration of inspection and testing equipment in infectious disease departments in county-level hospitals and relatively independent infectious disease wards, and improve The level of rapid detection and diagnosis and treatment.

As of the end of August, 27 provinces and cities across the country have completed the centralized procurement bidding for new coronavirus-related testing products. After the start of centralized procurement, the prices of nucleic acid detection and antibody detection reagents for the new coronavirus dropped to 10% to 20% of the original price, but the enthusiasm of suppliers was even higher. After all, for IVD manufacturers participating in the fight against the epidemic, the arena has shifted from market access to channel layout.

Overview of companies winning bids for centralized procurement of novel coronavirus testing products

According to the statistics of Arterial.com, by the end of August, Daan Gene has become a centralized procurement supplier of new coronavirus-related reagents in 27 provinces and cities across the country, and is the enterprise with the largest number of shortlisted provinces and cities. Mike Bio was shortlisted in 24 provinces and cities, ranking second. However, Mike Bio's new coronavirus antibody detection reagent was also shortlisted for 17 provinces and cities to collect bids. Among all the winning bidders, it was the only one that won the bid for both nucleic acid and antibody.

The semi-annual report is announced, whose arsenic? whose honey?

From the financial report data summary, we can see that 6 IVD companies achieved operating income exceeding 1 billion yuan in the first half of the year, accounting for more than 55%. Among them, Huada Gene leads the industry with an operating income of 4.108 billion yuan and a net profit of 1.651 billion yuan, far ahead. Da'an Gene, which ranks second in terms of operating income, is relatively close to the third-ranked Sanxiang Biotechnology, but the latter's net profit greatly exceeds Daan Gene.

Going down the list of operating income in the first half of the year, Wondfo Bio, Mike Bio, Antu Bio, Wantai Bio, and Dongfang Bio with a revenue level in the range of 1 billion to 2 billion yuan correspondingly obtained a net profit of 500 million yuan Up and down, intuitively form the third echelon of this list. If we continue to divide, Shuoshi Biology, Mingde Biology and Rejing Biology with a revenue of less than 1 billion yuan can be counted as the fourth echelon in the list.

Overall, the surge in performance in the first half of the year concentrated in the first and second echelon companies; while weak performance, or even performance decline, mainly occurred in the third and fourth echelon companies. Of course, there are exceptions to this distinction.

For example, in the first half of the year, Dongfang Biology and Shuoshi Biology, which are in the third echelon, respectively recorded a net profit of over 14 times and over 9 times that of the same period last year. The reason behind this is not unrelated to the sales of new coronavirus detection reagents. section to analyze.

  A brief summary of the financial data of 11 IVD companies in the first half of 2020

Further analyzing the performance growth data, we noticed that for the 11 IVD companies on the list, it is almost normal to obtain several times the operating income and net profit of the same period last year: 6 companies’ operating income more than doubled year-on-year, of which In the first half of this year, 1 company recorded an operating income that exceeded 10 times that of the same period last year; the net profit of 8 companies more than doubled year-on-year, and 3 of them achieved a net profit that was more than 10 times that of the same period last year.

Distribution of operating income of 11 IVD companies in the first half of 2020

In the performance growth revealed in the first half of the year, two sets of data are particularly eye-catching: operating income increased by 1159.39% year-on-year, and net profit increased by 14,700% year-on-year, which made Shengxiang Biotech, which has just been listed recently, stand out. This Hunan company, which is good at viral hepatitis detection, reaped 11 times the operating income and 147 times the net profit of the same period last year in the turbulent first half of 2020.

In addition, Huada Gene, Daan Gene, Dongfang Bio, Shuoshi Bio, Mingde Bio, etc. have doubled their performance. Will be explained in detail below.

Distribution of performance changes of 11 IVD companies in the first half of 2020

Of course, good performance is not necessarily the normal operation of listed IVD companies in the first half of the year. Antu Biology and Mike Biology, which mainly produce and sell biochemical and luminescent detection reagents, have collapsed in the new crown epidemic, with negative growth in operating income or net profit.

As for Rejing Biotech, which was the most damaged, it had just landed on the Science and Technology Innovation Board, and its total net profit was originally not high. During the new crown epidemic, the loss exceeded 80%, and both operating income and net profit showed negative growth.

In fact, as early as late February shortly after the outbreak of the new crown epidemic, people in the industry reached a certain consensus on how the new crown pneumonia epidemic will affect the medical and health industry, that is, the spread of the epidemic will have a staged impact on the medical and health industry, and different The subdivisions will be damaged or benefited at different stages, and the degree will be different.

In the middle of the fiscal year, the impact of these differences has gradually been quantified. Through the aforementioned semi-annual financial report data, we can interpret some of the characteristics of the impact of the new crown epidemic on the in vitro diagnostic industry for the first half of the year.

Preemptive deployment of new crown detection products, they ushered in a bumper harvest

In vitro diagnosis, namely IVD (In Vitro Diagnosis), refers to products and services that obtain clinical diagnostic information by testing blood, body fluids, tissues, etc. of human samples outside the human body, and then determine diseases or body functions. In vitro diagnostic products are mainly composed of diagnostic equipment and diagnostic reagents, such as immunodiagnosis, biochemical diagnosis, molecular diagnosis, etc. are all in vitro diagnostic methods. Either way, the technical barriers to IVD reagents are not high.

Therefore, in the first half of the first half of the new crown virus detection reagent supply war, early entrants basically became the winners. Started to develop testing reagents at the first time, and with the spread of the epidemic, took the lead in obtaining various market access.

First analyze Dongfang Biology and Shuoshi Biology. In the first half of the year, Dongfang Bio achieved operating income of 828 million yuan, a year-on-year increase of 388.05%, and the net profit attributable to shareholders of listed companies was 524 million yuan, a year-on-year increase of 1477.45%. The net cash flow from operating activities was 367 million yuan, a year-on-year increase of 12509.96%. Shuoshi Biotech achieved a revenue of 573 million yuan, a year-on-year increase of 368.65%, and a net profit attributable to shareholders of listed companies of 308 million yuan, a year-on-year increase of 923.30%.

At the beginning of the outbreak of the new crown epidemic, Dongfang Biology and Shuoshi Biotech joined the development team of nucleic acid detection reagents for the first time. Among them, Dongfang Bio has developed three new coronavirus detection reagents, including antibody detection reagents, nucleic acid detection reagents and antigen rapid detection test strips, which have successively obtained EU CE certification, domestic medical device registration certificates and US EUA emergency use authorization. These products have promoted the substantial growth of Dongfang Biology's operating performance in the past six months.

And Shuoshi Bio also clearly stated in the semi-annual report, "The increase in operating income in the first half of the year was mainly due to the outbreak of the new crown epidemic in the first half of 2020, and the market demand for new crown detection products increased, resulting in a corresponding increase in the company's sales."

Look at Shengxiang Biotech again. Shengxiang Biotechnology is known as "the first anti-epidemic company". On January 28, Sunshine Biotechnology's new coronavirus nucleic acid detection kit was approved for listing, and it was also one of the first six companies to be approved. As of June 30, 2020, Sanxiang Bio's new coronavirus nucleic acid detection kits have been supplied to nearly 38.8513 million copies at home and abroad, more than one third of which are supplied to the international market.

It is understood that Sanxiang Bio has built a strong production and sales service network, and on this basis, its products are quickly supplied to the frontlines of epidemic prevention and control in more than 30 provinces, municipalities, and autonomous regions including Hubei, Hunan, Beijing, and Shanghai.

With the global spread of the epidemic, Sanxiang Bio's new crown virus detection reagent has successively obtained more than 20 international authoritative registration certifications such as the US FDA emergency use authorization, the European Union CE certification, and Brazil ANVISA certification. In the first half of the year, Shengxiang Biotech achieved an operating income of 2.1 billion yuan and a net profit of 1.232 billion yuan, a year-on-year increase of 1159.39% and 14687.20% respectively.

Then there are Daan Gene and Huada Gene.

Daan Gene achieved operating income of 2.13 billion yuan and net profit of 778 million yuan, a year-on-year increase of 313.63% and 1186.48% respectively, corresponding to sales expenses of 272 million yuan and a gross profit margin of 67.41%. This is the fastest growth in performance since its listing 16 years ago. 6 months.

At the same time, since the beginning of this year, the stock price of Daan Gene has risen by 270%, setting 14 daily limit records since the beginning of the year, and reached the peak of 45.35 yuan since the beginning of this year on August 4, corresponding to a total market value of 39.779 billion yuan.

Huada Gene achieved operating income of 4.108 billion yuan, a year-on-year increase of 218.08%. In H1, BGI’s operating income from the precision medical testing business required to provide new crown testing reagents, instruments, and comprehensive solutions for sequencing laboratories reached 2.992 billion yuan, a year-on-year increase of more than 12 times, contributing 72.83% to total revenue.

In addition, BGI's infection prevention and control business revenue related to the research and development of nucleic acid detection kits and antibody detection kits also recorded 184 million yuan, a year-on-year increase of 429.94%.

According to reports, Daan Gene is one of the first seven companies to enter the fast-track approval channel of the State Food and Drug Administration. On the 14th, it was included in the World Health Organization (WHO) emergency use list.

BGI has successively completed the research and development of several new coronavirus detection kits, covering fluorescent PCR method, combined probe-anchored polymerization sequencing method, enzyme-linked immunosorbent assay method and colloidal gold method.

At the same time, Daan Genomics has been producing at full capacity, and the production capacity of kits has increased from the standard production capacity of 50,000 servings per day to the highest peak of more than 1 million servings per day. Products related to COVID-19 testing have been sent to more than 140 countries and regions around the world.

On the other hand, BGI’s new crown nucleic acid detection kit (fluorescence PCR method) has obtained market access in many countries and has been included in the emergency use list by the WHO. As of the end of the reporting period, more than 35 million copies have been shipped overseas.

In addition, with the development and production of new crown detection kits in place, the demand for biosafety laboratories has increased significantly. BGI has launched the "Huoyan" laboratory integrated comprehensive solution service, which includes detection instruments and equipment, detection kits And the design of testing laboratories, etc., to rapidly improve the testing capabilities. BGI participated in the design of a new air-film version of the "Huoyan" laboratory that meets the P2 biosafety laboratory standards. It adopts a closed air-film building model and has the advantages of rapid construction and rapid layout.

Respond quickly and grab the second place in the world,

They also won the first half

Although most IVD companies responded immediately, from the development, production to sales of new coronavirus detection products, companies need to coordinate various internal and external resources to support them. The cycle of building a closed loop of production, supply and sales for each company is bound to be different. .

Therefore, some companies have seized the first place of the new crown epidemic, such as the companies discussed in the previous section, while some companies have become the main force in the second place of the market, such as Wantai Bio, Mingde Bio, Wondfo biological etc. A notable feature of these companies' operations in the first half of the year is that, in addition to meeting the domestic demand for new crown virus testing, they also regard the spread of overseas epidemics as an important growth point.

According to reports, Wantai Biotech has successively launched three different detection reagents for colloidal gold, luminescence, and nucleic acid, and developed the first internationally approved sandwich method for new coronavirus antibody detection kits, of which five new crown detection products have obtained EU CE certificate, one new crown reagent obtained EUA from US FDA, and one obtained TGA certification from Australia. In the first half of the year, the company's new crown virus detection products achieved an additional operating income of 186 million yuan.

In terms of operating data, Wantai Biotech achieved operating income of 724 million yuan in the first half of the year, accounting for 85.76% of the company's revenue. Among them, reagent products achieved operating income of 547 million yuan, accounting for 64.89% of the company's revenue.

After Mingde Biology obtained the registration certificate of the new coronavirus detection kit in China, the product won the bids in many provinces across the country.