Orient Securities Company Limited (SSE: 600958) has released a research report indicating a positive outlook for the Chinese in-vitro diagnostics market, which is entering an operational efficiency phase after price restructuring. The firm sees structural opportunities for companies with strong product export and local service capabilities. Recommended areas of focus include: 1) firms with complete instrument and reagent platforms that can leverage installation volumes to drive reagent sales, buffering pressure on routine project prices; 2) companies with differentiated menus and high-value-added project layouts, enabling continuous product structure upgrades; 3) entities with robust overseas registration, channel development, and after-sales service systems, capable of transforming export growth into regional localized operations.
Global Market: Routine Projects Stable, Specialty Diagnostics Accelerate Divergence
In the first half of 2026, Roche's diagnostics business grew 3% year-on-year at constant exchange rates, with core laboratory, molecular diagnostics, and pathology diagnostics rising 4%, 3%, and 11% respectively, while near-patient testing declined 5%. Abbott's diagnostics business increased 2% year-on-year, with core laboratory growing 3% and oncology diagnostics rising 13%, while rapid and molecular diagnostics fell 9% due to a high base from respiratory testing. Danaher's diagnostics core revenue decreased 1% year-on-year, but grew 4% excluding respiratory testing. The firm believes the global IVD market is not entering a demand downturn cycle, with routine testing demand remaining in a normal growth range of about 3%-5%. However, growth momentum is shifting from mature projects like biochemistry and immunology to concentration in early cancer screening, pathology diagnostics, and high-value molecular testing.
Chinese Market: Price System Still Reforming, Marginal Improvement Modest
In the first half of 2026, Roche's diagnostics revenue in the Asia-Pacific region fell 5% year-on-year at constant exchange rates, primarily due to the impact of China's medical price reforms. Abbott also noted that its Chinese core laboratory business continues to face challenges from the market environment. Siemens Healthineers' diagnostics business saw a 7% revenue decline in Q2 (calendar year 26Q1), with the company explicitly attributing it to structural changes in the Chinese market, though the decline narrowed to 6% in Q3. The firm contends that the domestic IVD market is transitioning from a rapid downward adjustment driven by concentrated policy implementation to a low-level adaptation phase under a new pricing system. While centralized procurement and testing fee reforms are still expanding, and product prices have not yet fully stabilized, hospital procurement and testing demand are gradually recovering. Companies are also beginning to absorb the impact of price cuts through volume expansion, cost reduction, and product structure adjustments. Current marginal improvements are mainly reflected in narrowing revenue declines and recovering profitability, with price restructuring and demand recovery expected to continue in parallel.
Chinese IVD Companies: Domestic Efficiency Operations, Deepening Overseas Localization
As the transparency of the domestic testing price system continues to increase, companies need to improve their self-production ratios, optimize supply chains, and enhance the ability of instruments to drive reagent sales. This will help digest the downward pressure on routine project prices and improve product structures with high-value-added menus. In terms of overseas expansion, China's exports of IVD-related reagents and instruments reached $4.49 billion in 2025, a 6% year-on-year increase, accounting for 6% of global related trade exports. This indicates the scale of overseas supply of domestic products is still expanding. The firm believes the next phase of overseas expansion is no longer about simply expanding distribution coverage, but about building localized capabilities around registration access, clinical promotion, after-sales service, and reagent supply. Companies with strong cost control, differentiated menus, and overseas operational networks are expected to benefit from both domestic operational efficiency improvements and overseas market expansion.
Risk Factors
Risks include the magnitude of centralized procurement price cuts exceeding expectations; slower-than-expected recovery of hospital testing demand; slower-than-expected progress in high-end product registration and clinical promotion; and slower-than-expected overseas market expansion.