Put to the Test

In mid-January 2021, Covid-19 cases were detected in Beijing’s southern district of Daxing. In response, authorities in the capital’s central districts of Dongcheng and Xicheng began a two-day mass nucleic acid testing campaign that eventually covered 1.13 million people. On the night of January 24, Xicheng health authorities announced the results: one positive case. 　

Once considered medical jargon, nucleic acid testing is now an everyday term propelling an industry. 　

In 2020, third-party testing institutions and test kit manufacturers sprang up across the country, creating a number of listed companies and new opportunities. 　

In 1983, American scientist Kary Mullis invented the polymerase chain reaction (PCR) process, making it possible to replicate minuscule amounts of DNA into unlimited quantities. It is the most widely applied method for nucleic acid testing. 　

Xiao Yanqun, director of the Department of Molecular Pathology at the Shanghai Center for Clinical Laboratory, told NewsChina that more than 9,000 people at the center are certified to conduct PCR nucleic acid tests. Shanghai has more than 120 PCR laboratories, over 70 of which opened last year. 　

In April 2020, China’s National Health Commission (NHC) said that all disease control and prevention institutions above county level should be able to conduct nucleic acid tests. In August 2020, the State Council, China’s cabinet, announced that as of the end of September, each county should have at least one hospital able to conduct tests. 　

As a result, PCR labs opened nationwide. In Shanxi Province, 108 counties had PCR labs. The number of test-capable medical institutions reached 174 by late August 2020, compared to only 14 the previous year. 　

Liu Weiyong, a lab technician at Huazhong University of Science and Technology’s affiliated Tongji Hospital in Wuhan, told the reporter that before the outbreak, few major hospitals in the city had automatic nucleic acid extraction equipment. 　

From 2015 to 2019, Sansure Biotech, a major domestic PCR instrument manufacturer, produced nearly 1,000 kits. In 2020, the company sold more than 6,000. He Tenglong, managing director of Puhua Capital, which invested in medical enterprises working in coronavirus-related tech, said some PCR manufacturers received far more orders than they could fulfill. 　

At a press conference on January 13, 2021, Guo Yanhong, an official with the NHC’s Bureau of Medical Supervision, said that 8,437 medical institutions nationwide have a daily testing capacity of 12.55 million samples. 　

Nucleic acid testing, however, is not 100-percent accurate and can require several rounds. Between January 2 and 12, 2021, 610 people in northern China’s Hebei Province tested positive for the virus. One man had reportedly shown persistent symptoms for over a month. He tested positive on his 11th test. 　

Yang Qixian, CEO of Shenzhen-based Broadx Biotech, told the reporter there were many medical conferences in the past year which discussed how to improve testing accuracy. The consensus among experts is that misdetection rates are likely to remain as high as 20 to 50 percent regardless of developments in technology. 　

Wu Zunyou, chief epidemiologist with the Chinese Center for Disease Control and Prevention, told NewsChina that the test’s inaccuracy makes mass testing unnecessary. “Testing can give both the public and government officials a false sense of security,” he said. 　

During local outbreaks, test results are valid for shorter periods, requiring people to test more frequently. For example, people coming to the Chinese mainland from Hong Kong must provide test results received within 24 hours. On January 9, 2021, many residential communities closed in Beijing’s northern Shunyi District after new cases were reported. Those who wanted to leave had to provide negative test results, which were only valid for 48 hours. 　

The next day, 23 of the total 24 Chinese concept stocks involving nucleic acid tests went up. According to a report by Huaan Securities, 600 million nucleic acid tests would be needed during the 15-day Chinese New Year period, creating a domestic market of 15-30 billion yuan (US$2.3-4.6b). Testing institutions would have a market of 60 to 120 billion yuan (US$9.3 to 18.5b). 　

Medical equipment firms boomed during the 2020 pandemic. Listed companies that focus on coronavirus detection, such as Wuhan Easydiagnosis Biomedical Company, Daan Gene and Orient Gene, raked in a 1,000 to 2,000-fold increase in net profits, according to their respective financial reports. 　

After completing his postdoc research at Massachusetts Institute of Technology in 2008, Dai Lizhong worked for a major nucleic acid reagent company in the US before returning to China to start his own business, Sansure Biotech, in his home province of Hunan. In the early 2010s, the company’s annual sales volume reached millions of yuan. In 2020, sales surged. 　

Sansure Biotech’s main business includes diagnosis reagents, equipment and third-party detection services. The company saw profits increase 7,000-fold in 2020, hitting 2.6 billion yuan (US$400m). On August 28, 2020, Sansure Biotch went public and Dai’s personal wealth exceeded 15 billion yuan (US$2.3b). In 2019, the company’s net profits were 40 million yuan (US$6.2m). 　

He Tenglong told the reporter that in the late 1990s, the threshold of nucleic acid reagent technology was not high and laboratories with strong R&D could develop their own testing kits. Nowadays, domestic PCR technology is on par with overseas firms. 　

“At present, government approval is the main challenge. Pathogen detection reagents are considered category three in-vitro diagnostic reagents, the highest in terms of government approval,” he said. “It usually takes two to three years to get a green light from the government.” 　

Test prices have dropped since April 2020. In Anhui Province, it cost 60 yuan (US$9.3) in July, down from 400 yuan (US$61.8) in April. In June, Chongqing Municipality cut prices to 75 yuan (US$11.6). In late 2020, other cities including Beijing, Shanghai and Tianjin reduced prices to 120 yuan (US$18.5). 　

Dai Lizhong said that when the pandemic erupted in early 2020, nucleic acid reagent and detection firms made huge profits. Government group purchase programs, however, drove down prices. Major companies grabbed the largest market share. When Covid-19 vaccines became available to the public in late 2020, nucleic acid test prices fell further. State media CGTN reported that China had administered more than 70 million Covid-19 vaccines as of March 20. 　

“In an environment of shrinking margins, smaller enterprises found it increasingly difficult to stay above water,” Dai Lizhong said. “If these enterprises rely only on a few products and are not innovative, they’ll eventually be eliminated from the market.”