Third-party testing labs' profit surge expected to slow down in 2021: analyst
Third-party testing labs' profit surge may slow: analyst
Published: Jan 06, 2021 09:33 PM

A medical personnel takes swab samples from a woman during medical tests for domestic airline passengers at the Covid-19 coronavirus rapid diagnostic testing centre in central Yangon, Myanmar ahead of their scheduled travel on December 21. Photo: AFP

Stunning growth in the profitability of China's third-party testing labs, mostly as a result of the coronavirus outbreak, might slow this year if nothing unexpected happens, but the broad trend is set to continue as the market develops, experts told the Global Times. 

Financial reports from Chinese third-party testing labs showed rocketing revenues in 2020. Guangzhou-based Daan Gene, for example, reported revenue of 3.56 billion yuan ($ 551 million) in the first three quarters, up 363.6 percent on a yearly basis, while profits surged 1,817 percent to reach 1.537 billion yuan. 

The Shenzhen-based BGI Group reported revenue of 6.75 billion yuan in the first three quarters, up 225.8 percent, with profit of 2.71 billion yuan, up 901.7 percent. 

Chen Qiaoshan, an independent medical analyst, attributed these results to booming demand for nucleic acid tests amid the coronavirus pandemic. The development of third-party labs began to take off around 2015, but it was the coronavirus that led the market to explode.

"After the coronavirus broke out on a large scale, many hospitals had to outsource nucleic tests to third-party labs, and the huge volume of tests accelerated the companies' growth," Chen told the Global Times on Wednesday, adding that nucleic acid tests don't have a very high technological threshold, and therefore don't raise costs too much.

China experienced a severe wave of coronavirus in early 2020 but got it under control. However, there have been sporadic outbreaks recently, such as in Shijiazhuang of North China's Hebei Province. 

Chen said that unless there's another severe outbreak, the growth of the third-party medical testing market won't be as heated as last year, instead reverting to the solid and relatively fast rates seen from 2015 to 2018.

"Compared with countries like Japan, where the income of third-party testing labs accounts for about 67 percent of the overall medical testing income, China's third-party testing market only had a market share of about 5 percent, which leaves great scope for development," Chen said. 

But the industry still has some issues to resolve, such as staff shortages, and the equipment and service quality at some institutions are not up to standard yet. Also, the fact that medical checks at third-party labs are not covered by health insurance hinders their development, she noted.