After the termination of normalized nucleic acid testing, a large number of testing institutions will fall into financial crisis

On the day when the normal nucleic acid testing site in Guangzhou was dismantled, a sanitation aunt still rode her bicycle to the familiar nucleic acid site as usual. Waiting for her were many people who were as confused as she was. , and the staff shouted: "No more nucleic acid tests are needed in the future."

In the past three years, there have been more nucleic acid testing points than public toilets. Making nucleic acids has become a need to "extend one's life." Behind this, listed companies in the nucleic acid testing business have disclosed revenue exceeding billions, and many companies have successfully IPO'd.

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But when everything suddenly ended, behind the huge profits that the outside world thought, the entire nucleic acid testing industry seemed to be left with only "feathers." An investment banker told a reporter from Jiemian News that although common sense in society is that companies with the nucleic acid testing concept have made "a lot of money" in the past three years. But there is a contrary consensus in the industry. In fact, the performance problems of nucleic acid testing companies, especially the high accounts receivable problem, will explode in 2023.

The outbreak of unpopular industries

The demand for new coronavirus nucleic acid testing was born overnight. Its original idea was simple - find every virus.

At the beginning of 2020, it was not easy to get a nucleic acid test - a person could only get a nucleic acid test if he had symptoms such as fever and went to a fever clinic. Due to insufficient supply, nucleic acid testing once became the initial "difficulty" in Wuhan's epidemic prevention and control.

But by the summer of 2021, nucleic acid testing has penetrated into people’s lives. From large-scale testing to regular testing of all employees, to the "15-minute nucleic acid circle". But people are vague about this sense of penetration. It suddenly appears in life and becomes a part of life as a matter of course.

According to data from the National New Coronavirus Nucleic Acid Testing Information Platform, as of May 11, 2022, there are 13,000 medical and health institutions and 153,000 technical personnel nationwide providing new coronavirus nucleic acid testing services. The testing capacity is nearly 57 million tubes per day.

Nucleic acid testing belongs to the in vitro diagnostic industry. IVD can be mainly divided into biochemical diagnosis, immunodiagnosis and molecular diagnosis from the technical route. Nucleic acid detection is one of the molecular diagnostic technologies. In fact, before the epidemic, molecular diagnosis was a complex and insignificant technology.

“Before the outbreak of the new coronavirus, the industry basically believed that molecular diagnosis was a technology that was too costly and difficult to promote. It had been unprofitable for a long time, and it was not clear what its prospects were. ." A person from a primary market investment company told Jiemian News.

However, after the sudden outbreak of the new coronavirus epidemic, molecular diagnostics ushered in unprecedented application development opportunities. Under the increasing demand for "all inspections should be carried out", the upstream and downstream markets of the entire industry have grown significantly.

The upstream of the nucleic acid detection industry chain mainly includes manufacturers of antigens, antibodies, enzymes and coenzymes, polymer plastic consumables, and diagnostic instruments; the midstream includes sample collection and preservation reagent manufacturers, nucleic acid extraction reagent manufacturers, and reagent production suppliers; downstream include hospital terminals, third-party testing institutions, third-party laboratories, etc. Among them, the upstream reagent raw materials and testing equipment are still dominated by overseas giants such as Roche, Siemens, Abbott, and Illumina. In the domestic camp, there are only a few companies such as Novizan, Feipeng Biologics, and MGI. Domestic nucleic acid testing companies mainly focus on midstream reagent production and downstream testing links.

According to the third quarter financial report of A-share listed companies in 2022. The 67 nucleic acid testing companies achieved revenue of 251.6 billion yuan and net profit of 72.8 billion yuan.

Among them, Dean Diagnostics and Jinyu Medical represent the current status of third-party laboratories of offline sampling and testing institutions. From 2019 to the first three quarters of 2022, Dean Diagnostics achieved revenue of 8.453 billion yuan, 10.649 billion yuan, 13.082 billion yuan and 15.629 billion yuan respectively; net profits were 347 million yuan, 803 million yuan, 1.163 billion yuan and 2.428 billion yuan respectively. billion. During the same period, Jinyu Medical achieved revenue of 5.269 billion yuan, 8.244 billion yuan, 11.943 billion yuan and 12.208 billion yuan respectively; net profits were 402 million yuan, 1.510 billion yuan, 2.220 billion yuan and 2.448 billion yuan respectively.

It can be seen that although nucleic acid testing has greatly increased the revenue of sampling and testing institutions, the actual profits are not high.

Compared with sampling and testing, the profits of midstream reagent manufacturers are obviously greater. For example, from 2019 to the first three quarters of 2022, Mingde Biotech achieved revenue of 181 million yuan, 959 million yuan, 2.830 billion yuan and 7.470 billion yuan respectively; its net profits were 41.5258 million yuan, 469 million yuan, 1.413 billion yuan and 7.413 billion yuan respectively. 3.838 billion yuan. Wondfo Biotech achieved revenue of 2.072 billion yuan, 2.810 billion yuan, 3.361 billion yuan and 4.696 billion yuan respectively; net profits were 387 million yuan, 634 million yuan, 634 million yuan and 1.240 billion yuan respectively. Kaipu Biotech achieved revenue of 729 million yuan, 1.354 billion yuan, 2.673 billion yuan and 4.259 billion yuan respectively; net profits were 147 million yuan, 363 million yuan, 852 million yuan and 1.488 billion yuan respectively.

Among them, Daan Gene is one of the few companies involved in upstream equipment, midstream reagents and downstream testing. From 2019 to the first three quarters of 2022, Da'an Gene achieved revenue of 1.098 billion yuan, 5.341 billion yuan, 7.664 billion yuan, and 9.335 billion yuan respectively; its net profits were 92.1818 million yuan, 2.449 billion yuan, 3.618 billion yuan, and 4.911 billion yuan respectively. billion.

Testing institutions that cannot receive money

However, as normalized nucleic acid testing has come to an abrupt end, various places have announced that "non-essential nucleic acid testing" has been announced. Some investment bankers believe that some nucleic acid testing Testing companies will lose all the money they made in the previous two years due to overload operations in 2022.

She believes that from the perspective of the secondary market, performance growth gives nucleic acid testing concept companies the opportunity to speculate on their stock prices. Midstream and upstream manufacturers of antibodies, enzymes and coenzymes, polymer plastic consumables and diagnostic instruments, as well as sample collection and preservation reagents, nucleic acid extraction reagents and reagent production, have indeed made money, but the lives of downstream third-party testing laboratories may not be the same. Not that easy.

For example, Feipeng Biotechnology, which specializes in nucleic acid reagent raw materials in the upstream of the industry, has a main business gross profit margin of 92.81%, 94.02%, and 88.43% respectively from 2019 to 2021; among midstream companies, Daan Gene will be in 2021. The gross profit margin of the annual sales of new coronavirus nucleic acid detection kits is still 88%; however, among downstream companies, the gross profit margin of KingMed Medical’s third-party medical diagnostic services in 2021 is only 47.2%.

In fact, nucleic acid testing is an unprofitable and laborious business for some downstream third-party testing laboratory companies. In fact, downstream profitability is directly proportional to business scale. Because COVID-19 testing reagents have long been included in centralized procurement in China, profit margins are extremely limited. Only leading companies in the industry have the ability to make money.

The aforementioned investment bankers analyzed that the threshold for many third-party testing laboratory companies that perform nucleic acid testing is not high. As long as they can obtain qualifications, they can operate. However, it is difficult to break through the testing volume and cannot form a scale effect to make money.

More importantly, even large-scale third-party testing laboratory companies in the industry are now facing excessive growth in accounts receivable and may suffer the risk of large impairment provisions. Taking A-shares as an example, the proportion of accounts receivable of several listed companies in third-party testing laboratories has increased significantly.

As of the first three quarters of 2021, Jinyu Medical has achieved revenue of 12.208 billion yuan, of which accounts receivable are 7.433 billion yuan, accounting for 60.89% of operating revenue, a year-on-year increase of 66.65%; Dean Diagnostics has achieved revenue of 12.208 billion yuan. Collected 15.63 billion yuan, of which accounts receivable were 10.754 billion yuan, accounting for 68.8% of operating income, a year-on-year increase of 76.75%.

In contrast, midstream and upstream companies basically have no pressure to collect payment. They often only deliver goods to downstream companies after the accounts have reached them.

Under the pressure of repayment, nucleic acid testing companies have gone to court against the purchaser of services. The civil ruling issued by the Beijing Higher People's Court on November 29 showed that Beijing Main Medical Laboratory Co., Ltd. sued the People's Government of Yongding Town, Mentougou District, Beijing, and the Maternal and Child Health Hospital of Mentougou District, Beijing, demanding that the other parties should pay 180 yuan/ The testing fee shall be paid to Main Company based on the per-person price.

Smaller nucleic acid testing kiosks have also begun to be transferred at low prices. From platforms such as Baidu Aigou and Xianyu, it was found that some nucleic acid kiosk merchants even paid three to five thousand yuan, or even several thousand yuan. For resale at a "floor price" of 100 yuan,

Many listed companies with nucleic acid testing concepts said that they are not only facing the problem of price decline, but also the risk of business shrinkage, and will return their business to the normal state before the epidemic. change.

Rulanwei Medical said: "The business will not have a big impact. The company has done very well in other testing businesses during the epidemic, and will strengthen its business except nucleic acid testing." Da'an In an interview with The Paper, Gene said, "This year's business will not be affected. The impact will not be until next year, and it depends on specific policy adjustments." BGI said, "Nucleic acid testing is not the direction of our development. The business will return to the state before the epidemic, and adjustments have already begun this year, such as expanding overseas business."

In fact, some companies have already begun to plan their retreat. In November 2022, the prices of multiple detection reagents of Daan Gene were reduced by nearly 70%, starting a market price war in the post-COVID-19 era. Shengxiang Biotech made successive acquisitions and expanded its business in multiple directions.