Under the surface of the booming development of in vitro diagnostics (IVD) industry, the upstream raw material field is facing a dilemma. On one hand, there is strong price pressure from downstream customers and market competition, while on the other hand, production costs continue to rise. This contradiction seriously restricts the survival and development of IVD raw material enterprises. There are over 300 domestic raw material companies, but some foreign companies dominate the domestic and international markets. Domestic enterprises are mostly concentrated in the mid to low end market, with serious product homogenization. In order to compete for limited market share, companies have started price wars and continuously lowered product prices, resulting in a chaotic market price system and a significant compression of profit margins.

ALPS Powder

Downstream customers are aggressively lowering prices

Reagent production enterprises and equipment distributors downstream of the IVD industry chain are sensitive to the cost of raw material procurement. With the intensification of market competition, downstream enterprises, in order to reduce production costs and improve product competitiveness, exert huge price pressure on upstream raw material suppliers by relying on their own procurement scale advantages when purchasing raw materials. Large scale reagent production enterprises require raw material suppliers to provide lower prices through centralized procurement, bidding, and other methods, and even threaten to replace suppliers. This strong price cutting behavior puts raw material companies at a disadvantage in price negotiations, forcing them to sacrifice profits to maintain business cooperation.

Continuous increase in production costs

（1） Increased cost of raw material procurement

The production of IVD raw materials relies on various basic raw materials, such as bioactive substances, chemical reagents, and fine chemical raw materials. In recent years, the prices of these basic raw materials have been continuously rising due to factors such as fluctuations in domestic and international supply chains, capacity adjustments of raw material production enterprises, and policies. At the same time, due to trade frictions, exchange rate fluctuations, and other reasons, the procurement costs of some imported raw materials have significantly increased, further increasing the burden on IVD raw material enterprises.

（2） High demand for R&D investment

The IVD industry is undergoing rapid technological iteration, and the requirements for raw material performance are constantly increasing. To meet market demand, raw material enterprises need to continuously invest a large amount of funds in research and development innovation, develop new products, and improve the performance of existing products. The research and development process involves multiple high costs such as the purchase of scientific research equipment, the hiring of professional talents, and experiments. If a new type of highly sensitive antigen antibody raw material is developed, the research and development cycle may take several years, and the investment will be enormous. Moreover, there is uncertainty in research and development, and not all investments can be converted into successful products, which further increases the cost pressure on enterprises.

（3） Rising cost of quality control

To ensure product quality, raw material enterprises need to establish a strict quality control system, from raw material procurement inspection, production process monitoring, to finished product testing, each link requires a large amount of manpower, material resources, and financial resources. The use of advanced testing equipment, professional quality inspectors, and extensive quality stability testing have led to a continuous increase in quality control costs. If product recalls or customer complaints are caused by quality issues, the company will also face huge economic losses and reputation damage.

The impact of difficulties on the industry

（1） Enterprise profits decline, survival is difficult

Under the dual pressure of price reduction and cost, the profits of IVD raw material enterprises have significantly declined. Many enterprises are in a state of low profit or even loss, facing severe challenges to survival. Due to weak financial strength, some small and medium-sized enterprises are unable to bear cost pressures and have to reduce research and development investment, lower product quality standards, and fall into a vicious cycle of "low price and low quality", facing the risk of being eliminated by the market. Even some large enterprises need to maintain operations through layoffs, reducing business scale, and other means, which seriously affects the overall development vitality of the industry.

（2） Supply chain stability threatened

IVD raw material enterprises with meager profits may have weak response capabilities when facing external shocks such as fluctuations in raw material supply and changes in market demand, which may increase the risk of supply chain interruption, prevent timely delivery of products, affect the normal production of downstream reagent production enterprises, and ultimately affect the stable operation of the entire IVD industry chain.

enzyme preparation

The IVD raw material industry is currently in a critical period of transformation, and only through technological innovation, cost control, and industry collaboration can we break the dual dilemma of price suppression and cost, and achieve development. As an upstream IVD reagent manufacturer, Hubei Xindesheng faces the dual pressure of cost and price. The company improves its production process through independent research and development, reducing raw material consumption and production costs; Focusing on sub sectors such as biological buffering agents and chemiluminescence reagents on the product side, we aim to enhance technical barriers with high-purity products and gain market recognition through our product performance advantages. At the same time, establish deep cooperation with downstream enterprises to customize raw materials according to customer needs, ensuring stable orders and reducing the impact of price fluctuations. If you have any purchasing needs, please feel free to contact us at any time!