Intelligence Finance App learned that Guosen Securities released research reports stating that based on calculations of the demand and market size of grade-A hospitals and ICL laboratories, the estimated domestic pipeline installation space is between 8919 and 12738 units; by 2030, the annual output of biochemical and immunological reagents brought by domestic pipeline systems is approximately 11.4 billion yuan. IVD centralized procurement has entered a phase of comprehensive acceleration and expanded coverage. As of mid-September 2024, 89 biochemical reagent projects were included in centralized procurement, with a coverage rate of over 90%; 89 projects in 5 major items of immunological reagents were also included in centralized procurement, with a coverage rate of over 50%. In the context of centralized procurement, having TLA products with low cost and high quality will become the core competitiveness of IVD enterprises.

Guosen Securities' main points are as follows:

In the IVD industry, the production line of in vitro diagnostics is the 'jewel on the crown.' Over the next 3 years, domestic enterprises will enter a golden development period.

The laboratory department of tertiary hospitals is the main user of production lines, with installation demands gradually increasing in secondary hospitals and ICLs. Foreign-funded enterprises have occupied many markets of tertiary hospitals due to their first-mover advantage and closed-loop design. By the end of 2023, the domestic TLA production line inventory is approximately 3000 units, with over 80% of the brands being from Roche, Abbott Laboratories, Beckman, Siemens, and Hitachi. In recent years, with domestic enterprises continuously breaking through in high-speed chemiluminescence, high-speed biochemistry, and self-production line technology, the purchase cost of production lines has greatly reduced. Secondary hospitals will be the main battleground for domestic pipeline installations in the next 3-5 years.

Guosen Securities estimates that the domestic pipeline installation space is between 8919 and 12738 units based on the demand and market size of grade-A hospitals and ICL laboratories. By 2030, the annual output of biochemical and immunological reagents brought by domestic pipeline systems is approximately 11.4 billion yuan.

Domestic brands entered the production line market relatively late and have been making continuous breakthroughs in recent years.

In October 2001, Zhejiang University First Hospital installed a set of Hitachi Y processing system + module system, marking the entry of laboratory automation systems into the domestic market; Until before 2018, domestic assembly line installation demand was monopolized by imported brands; In 2018, Autobio Diagnostics launched the first domestic TLA, marking the entry of domestic brands into the IVD assembly line market.

In the past two years, domestic leading IVD companies, through continuous iteration and update of assembly line solutions, have initially gained the strength to compete with multinational companies in the high-end market. Leading domestic IVD companies such as Shenzhen Mindray Bio-Medical Electronics have accelerated the installation of assembly lines, and nearly half of the newly added assembly line installations in China in 2023 will be domestic brands. In terms of existing installations, as of 24H1, Mindray has risen to the top among domestic brands with the MT8000, with a market share comparable to Abbott Laboratories; Autobio Diagnostics, Shenzhen New Industries Biomedical Engineering, Ya Hui Long, and Maccura Biotechnology closely follow in terms of the number of assembly line installations.

The industry landscape has changed after the centralized procurement of IVD, and assembly lines have become a battleground.

IVD centralized procurement has entered a stage of accelerated implementation and expanded coverage. As of September 2024, a total of 89 projects of biochemical reagents have been included in the centralized procurement, with a procurement coverage rate of over 90%. For immune reagents, a total of 5 major categories and 89 projects have been included in the centralized procurement, with a procurement coverage rate of over 50%. Under the centralized procurement environment, TLA products with low cost and high quality will become the core competitiveness of IVD companies. Assembly lines can build a moat for reagent procurement, and the existing assembly line capacity and reagent output also provide guidance for hospital procurement. With a complete menu of reagent projects and self-produced line bodies, high-speed luminous, high-speed biochemical, and other modules that account for a large proportion of assembly line costs, these companies are expected to stand out in future competition.

With a flourishing domestic assembly line market, it is important to pay attention to the differentiated competitive advantages of each company.

Guosen Securities believes that the performance, cost, sales policies, and services of equipment and supporting reagents are the determining factors for hospitals to choose assembly line brands. In the past 20 years, domestic companies have gradually achieved domestic substitution of biochemical reagents and mid-low-speed biochemical instruments, with the completeness of chemiluminescent reagent menus and the performance of high-speed instruments catching up with or even surpassing that of imported companies. The high-speed biochemical instrument, represented by the 2000-speed biochemical analyzer, represents the ceiling of IVD instruments. Leading domestic companies such as Mindray and Dirui Medical have launched this product for many years; In 24H1, Autobio Diagnostics and Maccura Biotechnology's 2000-speed biochemical instruments were also approved for listing. In addition to catching up in terms of performance, domestic companies also have competitive advantages in terms of cost, sales, and services.

Recommended targets: Pay attention to leading domestic assembly line companies such as Mindray Bio-Medical Electronics (300760.SZ), Autobio Diagnostics (603658.SH), Shenzhen New Industries Biomedical Engineering (300832.SZ), Ya Hui Long (688575.SH), and Maccura Biotechnology (300463.SZ).

Risk Warning: R&D failure risk, patent risk, industry competition risk, risk of the centralized procurement leading to higher than expected price reductions, risk of assembly line bidding falling short of expectations.