How does the genetic sequencing industry make money?

The development of the gene sequencing industry can be described as a peak and a turn. It was once "into the cold palace" in February last year, but now it has begun to be used for clinical diagnosis through the spring of policy. As a result, the huge "cake" of genetic diagnosis has emerged as two kinds of "eat":

First, relying on policy advantages, take the road of “clinical diagnosis”. Representative company: Huada Gene, Daan Gene;

Second, relying on price and service quality, avoiding “clinical” and using “health assessment” to indirectly market the genetic testing.

"Clinical" road: good policy, slightly less approval

In February 2014, the General Administration of Food and Drug Administration and the Health Planning Commission announced that they had stopped clinical gene sequencing because the related products and technologies were not approved. It is a serious violation of the law to do medical treatment without approval.

But after only four months, on June 30 last year, the General Administration of Food and Drugs approved the second-generation gene sequencing products. Among them, two second-generation gene sequencers and test kits of Huada Gene passed the examination and approval.

On December 22, 2014, the Health Planning Commission evaluated and announced the first batch of high-throughput sequencing technology clinical application pilot units. The two companies that obtained the second-generation sequencing registration certificate were re-elected and will soon be produced. Pre-screening and diagnostic professional pilot.

Before the clinical gene sequencing application was stopped, China's non-invasive production inspections were mainly concentrated in the top three hospitals or high-end private hospitals in first-tier cities. The data show that in the past three years, a total of 200,000 pregnant women in China have received prenatal genetic testing, and the market size is about 1 billion yuan. Industry insiders predict that if non-invasive production tests achieve 100% penetration for pregnant women over 30 years old, it will bring 7.6 billion yuan market capacity to the industry; if it achieves 50% penetration rate for all pregnant women, it will bring 14 billion yuan market capacity.

Although the market for clinical applications of genetic testing is huge, it is not that simple to join this competition. At present, only a few products of a few companies have obtained CFDA approval, so can other excellent enterprises be able to come later? In the face of competitors such as Huada and Daan, can they occupy a mountain? It still seems to be an unknown number.

“Health assessment”: high price, subtle market

In recent years, as medical needs have escalated from disease treatment to disease prevention, more and more Chinese people have begun to accept the concept of “paying for health”. Especially under the "Angelina effect", many subjects are willing to carry out genetic testing projects such as genetic diagnosis and cancer risk prediction.

According to data provided by Frost & Sullivan, China's health check-up market has reached a market size of about 50 billion in 13 years. If the proportion of genetic testing items is about 10%, the diagnostic reagents for physical examination have reached about 5 billion. In addition, the preventive medical examination is not within the scope of medical insurance, and it is not in the field of national fiscal expenditure. Therefore, the genetic testing items for physical examination are generally market-priced, and the terminal has a large profit margin. The general sequencing company charges about 50,000 yuan for high-end group customers, and can even charge up to 100,000 yuan for individual consumers.

Relative to the CFDA approval, the threshold for genetic testing in the field of health assessment is much lower. However, lower thresholds mean more competitors and more chaotic markets.

For example, in February last year, gene sequencing was stopped, a large part of the reason was because the market was too chaotic at the time, and many Chinese companies and hospitals were playing the role of genetic testing. Many private hospitals claim to have genetic testing programs, boasting that only one drop of blood can predict the future and predict life. Therefore, in the future, there will be any regulatory policies for genetic testing projects in the “health assessment” category, which is the risk of such projects.

Suggestions:

1 Introduce products that meet market demand, but pay attention to avoiding the Red Sea;

2 The products are similar to multinational giants in terms of specificity, sensitivity, detection range and analysis time;

3 Enterprises that have control over the sales channels have better sales models that use instrument-driven or service-driven reagent sales;

4 Enterprises with technical research and development capabilities, or companies that can complement each other with overseas companies. But more important is the experience of quickly getting the drug number;

5 For POCT companies, multiple indicators are often more important than accuracy;

6 cost control is appropriate, the price has an advantage in similar products, because the future must be unified bidding.

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