laboratory

Independent clinical laboratory (ICL)

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Independent clinical laboratory (ICL)

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Health Care
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Health Care Providers
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
20% - 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
However, based on the financial data published by the listed companies in this industry, KingMed Diagnostics, Dian Diagnostics, and Daan Gene, the median of ROE in the last three years is 15.55%
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Good health and well-being (SDG 3)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Reduced Inequalities (SDG 10)

Business Model Description

Business-related to in vitro diagnosis (IVD) services include signing contracts with hospitals to offer IVD reagents and equipment and services including maintenance, technological consulting, supply chain management, and logistics integration; entering partnerships with hospitals to take responsibility for laboratory departments; establishing independent clinical laboratories.

Expected Impact

Provide patients with more efficient and accurate diagnoises.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

Disclaimer

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The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • China: Anhui
  • China: Jiangxi
  • China: Fujian
  • China: Yunnan
  • China: Guangdong
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Health Care

Development need
China’s health sector currently still faces many challenges, including weak capacity of grass-roots service providers, imbalanced development and resources distribution between rural and urban areas in health sector and accelerated aging trend.

The Action Plan for Promoting the Quality of Health Industry Development (2019-2022) focused on leveraging digital technology in the health care sector. On the back of COVID-19, the National Health Commission published a notice requiring the Health Commissions in all provinces to build Internet-based platforms for controlling and preventing COVID-19 as well as general healthcare

Gender inequalities and marginalization issues
(1) Medical Financial Assistance (MFA) scheme in China did not offer adequate financial protection for marginalized people. (2) Women may be at risk or at greater risk of infection due to occupational gender segregation.

Investment opportunities introduction
The tageted subregions have low economic input in the healthcare sector, yet policy focus in this area is relatively strong. This indicates that the demand for better healthcare services and the need for further investment is high.

Key bottlenecks introduction
The shortage of medical talents in quantity and poor quality structure is the bottleneck that restricts the development of China's healthcare industry.

Sub Sector

Health Care Providers

Development need
the rapid aging trend challenges healthcare delivery; access to nursing homes remains limited; there are significant regional disparities in the distribution of health resources; around 75% of older people suffer from noncommunicable chronic diseases; the demand gap of radiologists is increasing; the cure rate of early detection of cancer is low

Policy priority
China has made significant policy efforts to improve healthcare delivery. A national action plan (2018) was issued by the National Health and Family Planning Commission, planing to make diagnosis and treatment more convenient; gradually form a new system of medical services based on regional coordination, information sharing and service integration,.

Investment opportunities introduction
the 6 IOAs with the highest growth potential were shortlisted:internet healthcare, smart information systems in hospitals, Independent Clinical Laboratories (ICL),Medical imaging based on Artificial Intelligence technology, Smart home-use medical devices for chronic disease management,Senior care.

Industry

Health Care Delivery

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Independent clinical laboratory (ICL)

Business Model

Business-related to in vitro diagnosis (IVD) services include signing contracts with hospitals to offer IVD reagents and equipment and services including maintenance, technological consulting, supply chain management, and logistics integration; entering partnerships with hospitals to take responsibility for laboratory departments; establishing independent clinical laboratories.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

> 25%

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

The size of the market was USD 3 billion in 2019.

Source: Qianzhan Industry Research Institute

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

20% - 25%

The estimated potential rate of return given by the experts is 20 – 30%.

However, based on the financial data published by the listed companies in this industry, KingMed Diagnostics, Dian Diagnostics and Daan Gene, the median of ROE in the last three years is 15.55%, which is lower than the experts’ expectation.

"KingMed Diagnostics ROE in 2019: 19.23%; ROE in 2018: 12.95%; ROE in 2017: 14.52%; Dian Diagnostics ROE in 2019: 9.04%; ROE in 2018: 15.55%; ROE in 2017: 15.97% Daan Gene ROE in 2019: 5.10%; ROE in 2018: 5.77%; ROE in 2017: 5.29%"

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

7 experts estimated that it would take at least 3 years to see positive cash flow for investors.

Dian Diagnostics Founded in 2001 and listed on GEM in 2011" "When a new laboratory is set up, it usually takes about one year to establish and complete the project, and the profit cycle generally takes 2 to 3 years."

Daan Gene Founded in 1988 and listed on SME board in 2004 KingMed Diagnostics Founded in 2006 and listed on A board in 201

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

However, based on the financial data published by the listed companies in this industry, KingMed Diagnostics, Dian Diagnostics, and Daan Gene, the median of ROE in the last three years is 15.55%

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

In China, more than 80% of cancer cases are diagnosed as advanced stage, and 80% of them are incurable. At present, the cure rate of early detection of cancer in China can reach 60% - 75%, while in developed countries the rate is more than 90%.

Gender & Marginalisation

People in remote and poor areas do not have access to regular and in-depth physical tests.

Expected Development Outcome

Centralising the testing of samples and the procurement of equipment and reagents to dedicated laboratories can reduce expenditures as well as increase the quality of testing.

By taking advantage of economies of scale, ICLs can perform complex tests which cannot be carried out in most hospital laboratories.

It will aslo enhance the accessability of IVD for patients.

Gender & Marginalisation

ICL can provide a better environment and conditions for cancer research to improve the medical cure rate.

Primary SDGs addressed

Good health and well-being (SDG 3)
3 - Good Health and Well-Being

3.8.1 Coverage of essential health services

3.8.2 Proportion of population with large household expenditures on health as a share of total household expenditure or income

3.b.3 Proportion of health facilities that have a core set of relevant essential medicines available and affordable on a sustainable basis

Secondary SDGs addressed

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure
Reduced Inequalities (SDG 10)
10 - Reduced Inequalities

Directly impacted stakeholders

People

Patients will recieve more accessible medical services offered by ICLs and potentially with lower cost.

Indirectly impacted stakeholders

Public sector

Hospitals will be less crowded and meanwhile offer more focused and quality services for patients.

Outcome Risks

Strict regulation based on data privacy may limit the development of this investment opportunity to great extent.

Impact Risks

Inappropirate use of samples collected from genetic testing can lead to very serious harm to human and peace.

Impact Classification

B—Benefit Stakeholders

What

The outcome is very likely to be positive and important because more efficient IVD services will be given to patients.

Risk

Strict regulation based on data privacy may limit the development of this investment opportunity to great extent.

Impact Thesis

Provide patients with more efficient and accurate diagnoises.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

(Policy document): In September 2015, the State Council published a guidance document highlighting the need to establish independent regional IVD institutions and other types of third-party medical institutions for services such as pathological diagnosis, hemodialysis and medical imaging

(Policy document): In June 2018, the National Health Commission and National Administration of Traditional Chinese Medicine published a joint notice stating that medical institutions should delegate services to certified third-party agencies or other medical institutions where practical.

(Policy document): In December 2019, the Ministry of Health set out the basic standards for independent IVD laboratories and officially granted them access to medical institutions.

Financial Environment

Other incentives: In some provinces, local governments reimburse eligible ICL services through the public medical insurance system.

Regulatory Environment

(Regulation): Independent clinical laboratories are strictly regulated by the Ministry of Health. Specific requirements have been issued for the establishment of ICLs, personnel, building standards, facilities, equipment, and funding.

Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

leading industry players, private equity and venture capital firms; foreign investors and investment institutions may be limited by sample and data protection regulations; potential co-investors can be securities and hedge funds

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

China: Anhui

Provincial policies are aligned with the national policy: improving the level of healthcare delivery and trying to surpass the national average metrics in different subfields.

China: Jiangxi

Traditional Chinese Medicine (TCM) is a key focus area. The provincial government is trying to develop Zhangshu City into a TCM capital.

China: Fujian

Senior care is a key focus area. The provincial government has also invested into the construction of a big data centre for regional healthcare.

China: Yunnan

The provincial government is investing into physical infrastructure, such as constructing a regional medical centre for cardiovascular diseases.

China: Guangdong

The provincial government is focusing on the development of Internet healthcare and applications of big data.

References

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