Guosen: The industry landscape has changed after the centralized procurement of in-vitro diagnostic medical devices. Assembly lines have become a competitive battleground.

Guosen released a research report stating that based on calculations of the demand and market size for automated production lines in top-tier hospitals and ICL laboratories, the estimated installation space for domestic production lines is between 8919 and 12738 units. By 2030, the annual output of biochemical and immune reagents brought by domestic production lines is expected to be around 11.4 billion yuan. The centralized procurement of in vitro diagnostic products (IVD) has entered a phase of accelerated implementation and expanded coverage. By mid-September 2024, 89 biochemical reagent projects have been included in the procurement, with a coverage rate of over 90%; and 89 projects for immune reagents, with a coverage rate of over 50%. In the environment of centralized procurement, having low-cost and high-quality TLA products will become the core competitiveness of IVD companies. Guosen's main points are as follows: - Automated diagnostic production lines are the "pearls on the crown" of the IVD industry, and domestic enterprises will enter a golden development period in the next 3 years. - Third-tier hospital laboratories are the main users of production lines, with increasing demand from second-tier hospitals and ICLs. Foreign companies have captured a large portion of the market share in many third-tier hospitals due to their early-mover advantage and closed-system designs. By the end of 2023, the domestic stock of TLA production lines reached around 3,000 units, with over 80% of the brands being Roche, Abbott, Beckman, Siemens, and Hitachi. In recent years, with breakthroughs in high-speed chemiluminescence, high-speed biochemistry, and in-house production lines by domestic enterprises, the purchasing cost of production lines has significantly decreased, making second-tier hospitals the main battleground for the installation of domestic production lines in the next 3-5 years. According to Guosen's calculations of the demand and market size for automated production lines in top-tier hospitals and ICL laboratories, the estimated installation space for domestic production lines is between 8919 and 12738 units; by 2030, the annual output of biochemical and immune reagents brought by domestic production lines is expected to be around 11.4 billion yuan. - Domestic brands entered the production line market relatively late, but have made continuous breakthroughs in recent years. In October 2001, the First Affiliated Hospital of Zhejiang University installed a Hitachi system, marking the entry of automated laboratory systems into the domestic market. Up until 2018, the installation demand for production lines in China was dominated by imported brands. In 2018, Autobio Diagnostics launched the first domestic TLA, marking the entry of domestic brands into the IVD production line market. In the past two years, leading domestic IVD companies have undergone continuous iteration and updates to their production line solutions, giving them the strength to compete in the high-end market against foreign enterprises. Production line installations by Chinese companies, represented by companies like Mindray, have begun to accelerate, with nearly half of the new installations in 2023 being from domestic brands. By the first half of 2024, Mindray has risen to the top position among domestic brands with the MT8000, with a market share comparable to Abbott; Autobio Diagnostics, ShenZhen New Industries Biomedical Engineering, Shenzhen YHLO Biotech, and Maccura Biotechnology closely follow in production line installations. After the centralized procurement of IVD products, the industry landscape has changed significantly, and production lines have become a battleground. Centralized procurement has entered a phase of accelerated implementation and expanded coverage. By mid-September 2024, 89 biochemical reagent projects have been included in the procurement, with a coverage rate of over 90%; and 89 projects for immune reagents, with a coverage rate of over 50%. In the environment of centralized procurement, having low-cost and high-quality TLA products will become the core competitiveness of IVD companies. Production lines can build a moat for reagent procurement, and the existing production line capacity and reagent output also provide guidance for hospital procurement. Companies with a complete menu of reagent projects, in-house production lines, high-speed chemiluminescence, high-speed biochemistry, and other modules with a large proportion of production line costs are expected to stand out in future competition. With various domestic production lines flourishing, attention should be paid to each company's differentiated competitive advantages. Guosen believes that the performance, cost, sales policies, and services of equipment and supporting reagents are determining factors for hospitals when selecting production line brands. Over the past 20 years, domestic enterprises have gradually achieved domestic substitution for biochemical reagents and mid-to-low-speed biochemistry instruments, with the completeness of the chemiluminescence reagent menu and the performance of high-speed instruments catching up with or even surpassing foreign enterprises. The 2000-speed biochemical analyzer represents the ceiling of IVD instruments, with domestic enterprises such as Shenzhen Mindray Bio-Medical Electronics and Dirui Industrial having been in the market for several years. By the first half of 2024, Autobio Diagnostics and Maccura Biotechnology's 2000-speed biochemistry analyzers have also been approved for listing. In addition to performance catch-ups, domestic enterprises also have competitive advantages in terms of cost, sales, and services. Recommended targets: Pay attention to leading domestic production line companies such as Shenzhen Mindray Bio-Medical Electronics (300760.SZ), Autobio Diagnostics (603658.SH), ShenZhen New Industries Biomedical Engineering (300832.SZ), Shenzhen YHLO Biotech (688575.SH), and Maccura Biotechnology (300463.SZ). Risk factors: Risks of R&D failure, patent risks, industry competition risks, risks of price reductions in reagent centralized procurement exceeding expectations, risks of production line tenders falling short of expectations.