The Annual Report of China IVD Industry 2021 Part II-I Opportunities

1.5    The policies of SFDA drive registration fast and convenient

This year is the year in which the State Food and Drug Administration issues most relevant laws and regulations on medical devices and IVD products, which will play a positive role in promoting the vigorous development of the IVD industry. Moreover, many regulations are new, such as the ones related to emergency registration procedure, LDT, registration and self test, overseas clinical data use, clinical exemption, etc. It is believed that the promulgation of these laws and regulations will have a significant positive impact on the registration of IVD products.

1.6    Localization of foreign capital (production, R&D, decision-making process)

While foreign-funded enterprises set up production bases in China, more and more foreign-funded enterprises also set up R&D systems in China. The products developed and produced in China are not only supplied to the Chinese market, but also re-exported to the world, from the original "in China, for China" to the current "in China, for the World". Moreover, the foreign-funded enterprises grant the Chinese team more decision-making authorities to actively and quickly respond to the development of the Chinese market. The localization of foreign capital makes foreign capital not only actively develop in China, but also play a positive role in continuously stimulating and promoting the development of the Chinese market.

1.7    The opening up of the capital market brings more listing opportunities

Since the opening of the Science and Technology Innovation Board in 2019, the number of IPOs in China's IVD industry has dramatically increased. The number of new listed companies in 2020 was 5 more than that in 2019. In 2020, a total of 9 companies were listed (including 4 in Science and Technology Innovation Board), 13 were approved (including 12 in Science and Technology Innovation Board), and 23 were accepted (including 18 in Science and Technology Innovation Boards), by the end of 2020, the market cap of listed companies was 1183.6 billion CNY, an increase of 151% over the end of 2019, in 2021, a total of 18 companies were listed (including 13 in Science and Technology Innovation Board), 3 were approved (including 2 in Science and Technology Innovation Board), and 9 were accepted, by the end of 2021, the market cap of listed companies was 1201.6 billion CNY, an increase of 1.5% over the end of 2020, and the CAGR of the market value of IVD listed companies in 18-21 was 42.75%. From the perspective of the financing scale of the capital market, the net amount of funds raised by the four listed companies in 2019 totaled 1.35 billion with an average of 450 million raised by each company, the 9 companies listed in 2020 (including Burning Rock and Genetron, the companies listed in NASDAQ) raised 9.53 billion CNY in total with an average of 1.19 billion CNY. In 2021, 18 listed companies raised 19.03 billion CNY with an average of 1.06 billion CNY. The incremental exit channels provided by GEM registration system and the establishment of Beijing Stock Exchange will inevitably further expand the IPO in the medical and health sector in China in the future, which will also drive the investment in the primary market, stimulate capital to enter the IVD industry, and promote the rapid development of domestic IVD enterprises. According to incomplete statistics, as the industry that has benefited the most from COVID-19, IVD had 82 financing events in 2021 with a financing scale of more than 10 billion CNY.

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