China Lifts COVID-19 Restrictions... Will It Become a 'Land of Opportunity' for Domestic Bio Industry?

Impact of 'Zero COVID' Policy
China's Share in Domestic Diagnostic Kit Exports Last Year Only 1.35%
Surge in Confirmed Cases Boosts Demand for Cold Medicine and Kits
Growth Expected in Aesthetic Medical Services and Implants

On the afternoon of the 2nd, when mandatory COVID-19 testing for arrivals from China began, passengers from China were waiting to enter at Incheon Airport. From this day forward, all arrivals from China must undergo a polymerase chain reaction (PCR) test.
Yeongjongdo - Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Lee Gwan-ju] As China abandoned its 'Zero COVID' policy and COVID-19 cases surged, there is growing optimism that this could actually be a boon for the domestic pharmaceutical and bio industries. Demand for related products such as diagnostic kits and cold medicine is expected to skyrocket, and growth is also anticipated in the medical aesthetics sector, including botulinum toxin and fillers, due to eased quarantine measures.

According to export-import trade statistics from the Korea Customs Service on the 4th, COVID-19 diagnostic kits, a flagship export item of the pharmaceutical and bio industries, performed notably poorly in China compared to other major countries. Last year, exports of diagnostic kits (HS code 3822) totaled $3.243 billion (about 4.1 trillion KRW), but exports to China amounted to only $44 million (about 56 billion KRW), representing just 1.35%. This is less than two-thirds of exports to Vietnam ($74 million). By country, export amounts were highest to the United States ($558 million), Taiwan ($489 million), Japan ($373 million), and Canada ($344 million), in that order.

This phenomenon is analyzed to be due to China maintaining a Zero COVID policy with strict lockdown measures from the early stages of the pandemic. Because the number of confirmed cases was not large, demand for test kits was low. However, since early last month, China has effectively lifted these quarantine measures, causing COVID-19 cases to rapidly increase. Accordingly, demand for diagnostic equipment and cold medicine is expected to surge.

Domestic companies with established sales and production subsidiaries in China see this as an opportunity. Among diagnostic device companies, Boditech Med is notable. Boditech Med is expanding its sales network throughout China based on its Chinese production subsidiary Boditech Guangxi, the joint venture Chinmax Boditech with Chinmax, and the local sales agency Joinstar. It expects sales in China to grow by more than 20% compared to the previous year. Choi Eui-yeol, CEO of Boditech Med, said, “We expect greater growth than last year due to increased sales of diagnostic kits for treatment and diagnostic platforms.”

In October 2021, Bukgyeong Hanmi Pharm held a completion ceremony for the syrup production line and smart automated logistics warehouse at its factory located in Shunyi District, Beijing.

Beijing Hanmi Pharmaceutical, which is driving growth for Hanmi Pharmaceutical Group, is also expected to benefit. Beijing Hanmi offers cough and sputum medicines such as 'Itanjing' and 'Ianping' locally. In 2021, it expanded the syrup production line at its Beijing factory to produce up to 225 million bottles annually and completed a smart automated logistics warehouse, establishing a 'one-stop' system covering pharmaceutical production and distribution. It appears well-prepared to respond to the surge in demand for cold medicine. A Hanmi Pharmaceutical official said, “We expect related demand to increase,” adding, “We have secured capacity through the expansion of Beijing Hanmi’s syrup production line.”

There are also forecasts that the outbreak in China will peak within the next 2 to 3 weeks and that the spread will subside from late this month, leading to expectations that botulinum toxin, fillers, and implant products will have a smooth start to the new year. Representative companies include Hugel and Osstem Implant. Hugel is the first domestic company to enter both the Chinese botulinum toxin and hyaluronic acid (HA) filler markets. Osstem Implant has also actively expanded its sales activities in China, increasing its sales to China by about 36% as of the third quarter of last year. An industry insider said, “Although there is some confusion in China due to the sudden lifting of quarantine measures, stability will be restored over time,” and added, “For companies already established in the Chinese market, this COVID-19 surge could turn from a negative into a positive.”