Investment Logic of China's IVD Industry and Case Study: Ascletis Pharma (01672.HK)

I. Investment Opportunities in China’s IVD Sector

1. Expanding Market with High Growth Potential

• Underpenetrated Demand: China’s IVD market reached ￥118.5 billion ($16.3 billion) in 2023, with a 2016–2023 CAGR of 15.58%. However, penetration remains far below developed markets (e.g., the U.S., EU, Japan), leaving significant room for growth as healthcare access improves.
• High-Growth Subsegments: Key areas like chemiluminescence (projected to hit ￥103.4 billion by 2030), molecular diagnostics (CAGR >15%), and POCT (>20% annual growth) are outpacing the broader industry.

2. Policy Tailwinds and Technological Breakthroughs

• Regulatory Support: Policies such as the?Revised Medical Device Regulation?and the?"Healthy China 2030"?initiative prioritize domestic innovation and precision medicine. For example, centralized procurement in Anhui Province accelerated local players’ share in chemiluminescence.
• Localization of High-End Tech: Chinese firms are breaking foreign monopolies in areas like mass spectrometry and next-generation sequencing (NGS). BGI Group, for instance, has reduced sequencing costs by 90%, enabling global expansion.

3. Structural Demand Drivers

• Aging Population & Chronic Diseases: With over 14% of the population aged 65+, demand for early cancer screening, cardiovascular diagnostics, and metabolic disorder testing is surging.
• Primary Healthcare Expansion: POCT adoption in rural clinics is rising, with the market expected to reach ￥16.5 billion ($2.3 billion) by 2024.

4. Emerging Technologies with Explosive Potential

• Liquid Biopsy & Mass Spectrometry: Liquid biopsy for cancer early detection could hit?48.5billiongloballyby2030.Clinicalmassspectrometry,criticalforproteomics,mayexceed￥23.5billion(3.2 billion) in China by 2026.
• GLP-1-Driven Diagnostics: The obesity and MASH (metabolic dysfunction-associated steatohepatitis) epidemic is fueling demand for companion diagnostics. Ascletis’s oral/subcutaneous GLP-1 candidate ASC30 exemplifies this trend.

II. Ascletis Pharma: A Turnaround Case Study

1. Stock Surge: From Penny Stock to 750% Rally

• Pre-Rebound Lows: By August 2024, Ascletis’s stock hit HK0.76/share(marketcap<HK1 billion), weighed down by declining hepatitis C drug sales and ritonavir revenue.
• Catalyst: In September 2024, positive Phase Ib data for ASC30 showed 4.3%–6.3% weight loss in obese patients over 28 days, outperforming placebo.
• Valuation Recovery: Shares peaked at HK$6.52 by February 2025 (up 750%), reflecting renewed confidence in its metabolic disease pipeline.

2. Strategic Focus: Leading in Metabolic Disorders

• Pipeline Pruning: Exiting non-core areas (hepatitis C, HIV), Ascletis now prioritizes MASH and obesity. ASC40 (FASN inhibitor) received FDA Breakthrough Therapy designation, while ASC41 (THR-β agonist) aims to rival Madrigal’s Resmetirom.
• Differentiated GLP-1 Approach: ASC30’s dual oral/injectable formulation offers convenience advantages over Novo Nordisk’s Wegovy and Lilly’s Orforglipron, positioning it for combination therapies.

3. Risks and Opportunities

• Clinical Hurdles: Intense competition in GLP-1s (Novo, Lilly) demands robust Phase III data for ASC30.
• Market Potential: With 200 million obese individuals in China and a global GLP-1 market projected at $40.7 billion by 2030, Ascletis could capture a multi-billion-dollar niche.

III. Conclusion: Synergy Between IVD and Biotech Innovation

Investing in China’s IVD sector aligns with the trifecta of technological advancement, policy support, and unmet medical needs. Ascletis’s rebound exemplifies how biotechs can pivot to high-potential niches. Key focuses for investors include:

1. Localization Champions: Chemiluminescence and mass spectrometry leaders (e.g., Mindray, Snibe).
2. Precision Medicine Innovators: NGS and liquid biopsy firms (e.g., BGI, Berry Genomics).
3. Metabolic Disease Players: Companies bridging diagnostics and therapeutics (e.g., Ascletis).

Ascletis’s stock recovery underscores the sector’s resilience and the long-term value of China’s healthcare innovation. As domestic IVD products enter global markets, the industry’s growth trajectory will further accelerate.

The above content is generated by DeepSeek and Tencent platforms. Acknowledging the advancements of China's AI capabilities, our next article will profile another company – Byron Diagnostics (柏荣诊断) – using human-centric, down-to-earth narratives.