In April 2022, as various listed companies released their 2021 annual reports, "How profitable is a free COVID-19 vaccine for all?" Kexing profit or more than 80 billion" once became a hot search.
The vaccine industry has all seen, so how big is the market for covid-19 antigen testing? There has been a lot of speculation in the industry.
For example, Southwest Securities pointed out in the research report that the main market for the new crown antigen home self-test kit in the future is expected to come from the United States, the European Union, Japan and China, according to the total population and the average number of tests, the global market potential is expected to exceed 50 billion US dollars (about 316.8 billion yuan), of which the US market occupies the majority, 79.2%, and the Chinese market is expected to account for 16.8%.
However, the unpredictability of the development of the epidemic and the uncertainty of the epidemic prevention policy make these hundreds of billions of markets look quite "hazy". How much profit can companies make from it? Is the industry overestimating the track? The crowd was suspicious.
Until April 12, Jiuan Medical released the first quarter of 2022 performance forecast, is expected to be a net profit of 14 billion yuan - 16 billion yuan in the first quarter, an increase of 36707.43% - 41965.63% year-on-year. In other words, it is equivalent to earning 156-178 million yuan per day. For a time, it shocked the industry and envied others.
In the announcement, Jiuan Medical attributed the reason for the increase in performance to: Due to the impact of the development of the epidemic in the United States, the local demand for new crown antigen test kit products has increased significantly.
In January 2022, Jiuan Medical received an order from the U.S. HHS (U.S. Department of Health and Human Services) represented by the U.S. ACC (U.S. Army Contract Management Command) to sell a total of 354 million copies of iHealth antigen home self-test kit products to it, with a total contract amount of $1.775 billion, which translates to a unit price of about $5.01 (about 32 yuan) per kit.
In this way, there are indeed "mines" overseas, and the US route seems to be more profitable than the European route.
On the other hand, enterprises focusing on the domestic antigen detection market are facing a different situation: from centralized approval to the fastest collection in history, the market has cooled down rapidly.
The first entrants have not yet eaten much dividend, and the price of household COVID-19 antigen test kits has fallen from 20 yuan to 30 yuan / person to no more than 10 yuan / person in just a few days. Cut out the cost, this price leaves little profit margin for the enterprise.
At the heart of the profit problem is the development of the epidemic
The story begins with a sphygmomanometer. In June 2010, Jiuan Medical was listed on the Shenzhen Stock Exchange, becoming the first listed company in the domestic sphygmomanometer industry.
After the listing, jiuan medical performance was flat. From 2013 to 2019, the company deducted non-net profit for 7 consecutive years of losses, and by 2019, it hit a new loss: a loss of 240 million yuan.
Until the epidemic came, with the forehead thermometer, oximeter, oxygen generator and other epidemic materials, in 2020, Jiuan Medical finally ushered in a turnaround, and turned losses into profits that year. Revenue was 2.008 billion yuan, up 18436%; net profit attributable to the mother was 242 million yuan, up 264.68%.
One day at the end of December 2020, Qi Yanling, head of biochemical basic technology at Jiuan Medical, received a WeChat message from Chairman Liu Yi about "a company in Xiamen has won an order for new crown test reagents in the UK", and the order amount is very large, which is very similar to the business of Jiuan Company.
Liu Yi said: "Exports to the European market are already 'Red Sea', and the United States is still blank because of the high threshold of the Food and Drug Administration (FDA)." At the time, real home kit testing in the United States had not yet begun.
After re-examining, the company made up its mind to start making kits and launched an impact on the US Food and Drug Administration. On January 12, 2021, Jiuan Medical held a project initiation meeting. According to the plan, Jiuan Medical has formulated a total of 3 programs, including fluorescent kits and machine identification schemes.
After many attempts, the original planned goals were not completed, and the teams at home and abroad encountered setbacks.
After daily team video communication at home and abroad, taking stock of progress, and nearly a year of hard work, on November 8, 2021, Jiuan Medical announced that the U.S. subsidiary's NEW CROWN Antigen Home Self-Test OTC Kit has obtained the Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA), becoming the first in the world to be approved by applying for a Chinese factory.
Since then, Jiuan Medical has been madly smashed by the US government and state governments, and since its approval, Jiuan Medical has received a total of 2.108 billion US dollars in the United States, equivalent to 13.428 billion yuan.
Jiuan Medical's stock price has risen all the way, winning 33 up and down boards in more than 3 months, and the market value has increased by 12 times in one go.
In the face of snowflake-like orders, Jiuan Medical, with Tianjin as the center, has cooperated with more than 30 outsourcing factories in 6 provinces and 14 cities such as Beijing, Tangshan, Henan Zhengzhou, Shandong Weifang, etc., from 1 million, 5 million and 10 million per day to more than 20 million...
According to the latest weekly epidemiological report on COVID-19 released by the World Health Organization, the number of new cases and deaths in the most recent week in all regions of the world has shown a downward trend. But the report also suggests that this downward trend should be viewed with caution, as some countries are gradually changing their prevention and control strategies, resulting in fewer virus tests.
Zheshang Securities pointed out that it is difficult to think that Omilon will become the last "super variant", and it is expected that the fight against the epidemic will become a "protracted battle". As the first line of defense of the anti-epidemic all-round system, the demand of NEW CROWN testing products is expected to be normalized, and the subsequent emergence of "super variants" will bring cyclicality to them.
Which vendors can benefit from this?
Zheshang Securities believes that it is necessary to grasp the "six major factors" of supply and demand.
From the demand side:
The first is the policy, such as the number of approved manufacturers, the government issuing large orders for free procurement, etc.;
The second is the severity of the epidemic, the market in the outbreak period of the epidemic is more prone to a run on medical resources, bringing a stronger demand for home self-testing;
The third is the ability to pay, players will spontaneously choose the most profitable market.
From the supply side:
The first is overseas channels, enterprises with overseas long-term partners or overseas subsidiaries can often enter the market faster and be approved in advance;
The second is production capacity, in the current situation of supply and demand gap, enterprises with large production capacity can give priority to seizing the market and enjoying the "dividend period";
The third is product quality, the severity of the epidemic will put forward higher and higher requirements for product sensitivity and specificity, and defective products are bound to leave the market early.
Europe: The competitive landscape is deteriorating
Since the outbreak of the epidemic in 2020, nucleic acid testing has been regarded as the "gold standard" for COVID-19 testing. Compared with nucleic acid detection, antigen detection has a slightly lower accuracy rate, but it is better than fast detection speed and low cost.
With the development of the epidemic, from 2021, the self-testing products of the new crown antigen began to be used in large quantities in major European countries. In February 2021, Germany took the lead in implementing the new crown antigen home testing and promulgated the corresponding self-test access qualifications. Subsequently, France, Belgium, the Netherlands and other countries have successively approved antigen self-test products.
China is one of the main suppliers of antigen detection reagents in Europe. According to the statistics of China Customs, in the whole year of 2021, the total export value of Antigen Kits in China will be about 71.4 billion yuan. Zhejiang, Fujian and Guangdong are the main exporting provinces, and the importing countries are mainly Germany and the United Kingdom. From January to February 2022, the export value of the mainland's new crown reagents reached 32.6 billion yuan, and the vast majority of the new crown reagents exported by the mainland are still antigen detection reagents.
The European market is not small, but how much cake can be shared when it falls on a single company?
According to statistics from Southwest Securities, there are currently 43 household self-testing NEW CROWN antigen products approved by the German Food and Drug Administration (BfArM), of which 34 are in China (30 enterprises).
According to GF Securities Research Report, after the third quarter of 2021, the Eu began to tighten the approval of antigen self-testing products, from the previous countries to authorize themselves, changed to European unified certification (CE), the current CE certification of antigen self-testing products a total of 616, of which 259 Chinese products, involving 147 domestic manufacturers.
There are many entrants, and the market competition is becoming increasingly fierce.
Judging from the recent 2021 performance reports released by domestic new crown testing companies, the enterprises that mainly attack the European new crown antigen testing market have different degrees of growth in performance in 2021, but at the same time, the phenomenon of profit differentiation is also obvious.
A few days ago, the Netherlands, France, Germany and other countries announced the further liberalization of new crown epidemic prevention measures, and the government generally no longer requires residents to do new coronavirus testing, and only requires mandatory testing for some public activities and social fields. The new crown antigen test is mainly self-testing and self-payment.
In addition, the price of the new crown antigen self-test product has dropped significantly compared with the initial stage of listing, and the terminal price is about 2-3 euros (equivalent to 14 to 21 yuan).
An industry source revealed that the antigen self-test products purchased by various channels in Europe in January had not been sold out as of March, and many goods were hoarded in the hands of agents.
Whether it is the demand side, the supply side, or the price side, the European antigen detection market has shown obvious signs of deterioration, and the prosperity of the early stage may be difficult to reproduce.
United States: Competition is not fierce, and there are more profit margins
In February 2021, the U.S. Food and Drug Administration approved the first home-based test for COVID-19 antigens, but it wasn't until the end of 2021 that the antigen self-test product was approved by the U.S. Centers for Disease Control and Prevention (CDC).
The US Food and Drug Administration has strictly approved the approval of the new crown antigen household self-test agent, and only 14 new crown antigen self-test emergency use authorization (EUA) document numbers have been approved, involving 13 enterprises, of which 3 domestic manufacturers: Icon Biological, Jiuan Medical, Oriental Biological (Siemens licensed brand owner, Oriental Biological is the manufacturer).
AVIC Securities believes that the application of the new crown antigen detection is conducive to the more timely detection of asymptomatic infected people, which is very much in line with the highly contagious characteristics of the current Omiljung strain and its variants, and the need for timely detection of asymptomatic infected people in epidemic prevention and control.
With the Opmi kerong pandemic, the demand for antigen self-testing products in the United States has ushered in a large-scale increase, and a large part of the procurement demand comes from government orders.
On January 4, 2022, the U.S. government announced that it would sign a contract for the purchase of 500 million COVID-19 tests; on January 13, the U.S. government announced that it would purchase an additional 500 million copies of COVID-19 tests.
For the first purchase, the U.S. government signed a total of 380 million contracts with Abbott, Roche and Jiuan Medical, and then Abbott and Jiuan Medical received a total of 176 million antigen testing reagent orders from the US government.
Siemens Healthcare also won a contract for 50 million coronavirus test kits from the U.S. government in January, which means that its manufacturer Dongfang Bio is expected to benefit from it.
Beginning Jan. 15, the U.S. government requires insurers to reimburse over-the-counter (OTC) COVID-19 test kits, allowing each person up to eight tests per month.
Dongxing Securities predicts that according to the 330 million people in the United States, the monthly demand for new crown antigen testing in the United States will exceed 2 billion people, and its market size is expected to exceed That of Europe, and it is expected that the follow-up US market will continue to add new orders.
Southwest Securities also believes that the current antigen self-test products in the US market in a state of short supply, the price system is better, and it is expected that a better price system will be maintained for a long time in the future.
At the same time, the reagent products of many domestic companies, including Meikang Biological, Botuo Biological, and Wanfu Biological, are queuing up to apply for emergency authorization from the US Food and Drug Administration. However, due to its strict approvals, the competition pattern in the US market is still not fierce in the short term.
Domestic: Under the impact of collection and procurement, the price is gradually rolled inward
Since mid-February 2022, the epidemic situation in the mainland has begun to show a multi-point sporadic trend. On March 11, the Joint Prevention and Control Group of the New Crown Epidemic of the State Council issued the Notice on Printing and Distributing the Application Plan for Antigen Detection of the New Coronavirus (Trial), officially proposing to add antigen testing as a supplement to nucleic acid testing.
On March 12, the State Food and Drug Administration issued a notice approving the application change of the self-test application of five new crown antigen products.
Subsequently, the new crown antigen detection reagent gradually entered the scope of collection in various provinces, and the National Medical Insurance Bureau also included the new crown antigen test into medical insurance.
As of April 13, the State Food and Drug Administration has approved 27 new coronavirus antigen detection reagent products. Some insiders said that dozens of companies are still queuing up to get permits.
But Jiuan Medical remained absent.
The initial average price of the new crown antigen test was between 20-30 yuan, but with the increase of production batches and the impact of collection, the price continued to decline.
In Guangdong Jicai, Wanfu Bio took the initiative to reduce the price from 16.8 yuan / person to 9.8 yuan / person; in Shandong Jicai, BGI Yinyuan won the bid at a price of 7.9 yuan / person; in Shaanxi Jicai, Aotai Bio adjusted the product price of 40 people / box to 6.5 yuan / person. At present, the lowest price of the new crown antigen detection kit is 5 yuan / person, from Shandong Brocade Diagnostics Co., Ltd.
Recently, the epidemic situation in Shanghai has developed rapidly, and under the pressure of nucleic acid testing, Shanghai has carried out antigen testing throughout the city for many times.
On April 12, Wu Qianyu, a first-level inspector of the Shanghai Municipal Health Commission, revealed at the press conference that since April 11, Shanghai has delineated the first list of sealing and control areas, control areas and prevention areas according to the results of nucleic acid screening, implemented differentiated prevention and control of zoning classification, and prevented personnel in the prevention zone from implementing antigen testing twice a week.
Not only in Shanghai, but also in the new round of the new crown epidemic in Hong Kong and Jilin, antigen testing has been used as a supplementary means of nucleic acid detection and has been applied to large-scale screening.
AVIC Securities believes that due to the low production threshold and the acceleration of approval, the future price of new crown antigen detection reagents may continue to decline, but due to the high frequency of consumption, even if the price falls, the performance contribution is still considerable.
"The core of the profit problem is subject to the development of the epidemic, and the detection box is an epidemic prevention material, which must rise and fall with the changes of the epidemic." Liu Yi, founder and chairman of Jiuan Medical, said bluntly in an interview with the media.
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