Orient: The global IVD industry is experiencing a favorable market climate, with optimistic views on the structural opportunities in the domestic IVD market.

Orient released a research report stating that it is optimistic about the domestic IVD market entering a phase of operational efficiency improvement after price restructuring, presenting structural opportunities for companies capable of product internationalization and localized services. The report suggests focusing on: 1) companies that possess a complete platform of instruments and reagents, and can drive reagent volume through installations while buffering routine project price pressures; 2) companies with differentiated menus and layouts for high value-added projects, which are expected to see continuous upgrades in their product structure; 3) companies with well-established overseas registration, channel development, and after-sales service systems, capable of converting export growth into localized operational capabilities in the region. Orient's main points are as follows: Global Market: Stable Routine Projects, Accelerated Differentiation in Specialty Diagnostics In H1 2026, Roche's diagnostic business grew by 3% year-on-year at fixed exchange rates, with core laboratory, molecular diagnostics, and pathology diagnostics growing by 4%, 3%, and 11% respectively, while near-patient testing (NPC) decreased by 5%; Abbott's diagnostic business grew by 2% year-on-year, with core laboratory growth at 3% and oncology diagnostics at 13%, while rapid and molecular diagnostics saw a decline of 9% due to a high baseline in respiratory testing; Danahers core diagnostic revenue declined by 1% year-on-year, but grew by 4% when excluding respiratory testing. The firm believes that the global IVD market has not entered a demand downturn cycle, and that routine testing demand is still in a normal growth range of about 3%-5%, although the growth momentum is shifting from mature projects like biochemistry and immunology towards early cancer screening, pathology diagnostics, and high-value molecular testing. Chinese Market: Price System Still Restructuring, Marginal Improvement In H1 2026, Roche's diagnostic revenue in the Asia-Pacific region decreased by 5% year-on-year at fixed exchange rates, primarily affected by medical price reforms in China; Abbott also indicated that its core laboratory business in China continues to be challenged by market conditions; Siemens Healthineers' diagnostic revenue in Q2 (fiscal year 26 Q1) fell by 7%, with the company clearly stating that this was mainly due to structural changes in the Chinese market, with the decline narrowing to 6% in Q3. The firm believes that the domestic IVD market is gradually transitioning from a rapid downward adjustment resulting from concentrated policy implementation to a low-level adaptation phase under the new price system: group purchasing and inspection fee reform are still expanding, product prices have not yet fully stabilized, but hospital procurement and testing demand are gradually recovering, and companies are starting to absorb the impact of price reductions through volume increases, cost reductions, and adjustments in product structure. Current marginal improvements are primarily reflected in narrowing revenue declines and recovery of profitability, with price restructuring and demand recovery expected to proceed in parallel. Chinese IVD Enterprises: Enhancing Domestic Efficiency and Deepening Localization in Internationalization The transparency of the domestic testing price system continues to improve, requiring companies to increase self-manufactured ratios, optimize supply chains, and enhance the ability of instruments to drive reagent volume to offset pricing pressures from routine projects, while using high value-added menus to improve product structure. In terms of internationalization, the export value of IVD-related reagents and instruments from China reached $4.49 billion in 2025, a year-on-year increase of 6%, accounting for 6% of the global related trade export value, indicating that the overseas supply scale of domestic products is still expanding. The firm believes that the next phase of internationalization will focus less on merely expanding distribution coverage and more on building localized capabilities around registration access, clinical promotion, after-sales service, and reagent supply. Companies with good cost control, differentiated menus, and overseas operational networks are expected to benefit from both domestic operational efficiency improvements and overseas market expansion. Risk Warning Risks include greater-than-expected price reductions from group purchasing; hospital testing demand recovery falling short of expectations; slower-than-expected registration and clinical promotion progress for high-end products; and overseas market expansion not meeting expectations.