Seize the moment

Covid-19 test kit maker Sansure eyes IPO


Sansure’s boss Dai Lizhong

From “containment” to “mitigation” – the US has lately shifted its rhetoric on the nature of its fight against the novel coronavirus, as some public health experts acknowledged that the tools for identifying potential ‘super spreaders’ have come too little, too late.

Over in China, a similar bottleneck also fatally frustrated its early efforts to curb the spread of Covid-19. However, that problem has been relieved more recently thanks to a slew of approvals since late January to greatly expand the number of test kit providers as well as third-party laboratories to examine collected samples. China is currently producing 1.7 million nucleic acid-based tests and 350,000 antibody tests daily for detecting the highly infectious disease.

A big contributor is Changsha-based Sansure Biotech, which had shipped over 4 million of its nucleic acid-based test kits to 30 provincial-level areas by the end of last month. Its product produces a result within just 30 minutes of testing. For comparison, Shenzhen-based BGI Group, which has built emergency test labs across 12 cities, has completed 360,000 tests, which are based on real-time polymerase chain reaction technology and can return results within three hours.

Sansure’s application to float shares on Shanghai’s STAR Market, a Nasdaq-style board, was quickly approved. In its prospectus, filed on March 4, Sansure says its brand has become better known during the outbreak, as its test kit was among the first six to have received approval from the Chinese authorities, and later in Europe. Its client base has expanded across the country, as has its molecule testing – a method that underpins much of its screening services.

Aside from producing test kits that help fight epidemics, Sansure has had success in areas such as viral hepatitis, human papillomavirus (HPV) as well as introducing nucleic acid blood screening and automated medical equipment. With 75 patents (of which three are from foreign authorities), it is planning to expand its offerings to cancer screening and precision medicine in the future.

Sansure was founded in 2008 on the back of Beijing’s strategy to turn China into a global leader in biotech. It has thus far been tasked with at least 30 state-led projects, including those linked to the so-called “863 Program”, a national-level initiative initiated in March 1986 to boost China’s capabilities in advanced technology.

Sansure’s founder and chairman Dai Lizhong was among the first batch of overseas Chinese scientists recruited under the Thousand Talents Plan, where generous cash grants and incentives get offered to lure talent back home (see WiC406). After completing his PhD at Princeton University and postdoctoral fellowship at the Massachusetts Institute of Technology, Dai had later spent eight years at Gen-Probe, a San Diego-based diagnostics company, before returning to China in 2008.

In 2018 US pharmaceutical giant Eli Lilly led a $77 million financing round for Sansure through its venture capital arm. The company now plans to raise at least Rmb5.6 billion ($810 million) in the IPO. It says 64% of the funds will be set aside for building a new production base for molecular di-agnostics in Shanghai, with the rest divided between facility upgrades at its research and development centre in Changsha, as well as work on a database for sales and marketing.

Having turned profitable in 2018, Sansure logged a fivefold increase in net income to Rmb39.5 million last year. The steady improvement in its gross profit margin suggests the company has reached an inflection point where its investment in research and development is starting to pay off. Guangzhou Kingmed, a leading medical laboratory listed in Shanghai, has been its biggest client, accounting for 5.7% of its revenue last year.

As of March 6 China’s National Medical Products Administration had approved 15 types of reagents for diagnosing Covid-19. Seven have received the CE mark, a certification that indicates the product conforms with standards within the European Economic Area.

As China’s war against Covid-19 has shifted from “containment” to “shielding itself from imported cases”, Chinese companies expect to export more of their test kits abroad.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.