Chinese Covid-19 rapid test makers surge amid optimism about US$5.3 billion market
- Nanjing Vazyme Biotech soared by 13.6 per cent on the Star Market in Shanghai on Monday
- RAT use is expected to be expanded nationwide, say Minsheng Securities analysts
Stocks of Chinese companies that produce Covid-19 rapid antigen test (RAT) kits have surged after Beijing approved their products for public use.
Their rise was the brightest spot in the wider market, which slumped on Monday. Nanjing Vazyme Biotech soared by 13.6 per cent on the Star Market in Shanghai to 120.74 yuan (US$18.9) – the company was among the first batch of five companies approved on Saturday by the government to sell their RAT kits to individual consumers.
In Shenzhen, BGI Genomics, whose subsidiary BGI Yinyuan got an approval, jumped by the daily cap of 10 per cent, while Guangzhou Wondfo Biotech advanced 3.7 per cent.
RAT testing is “the best approach to identify those who are Covid-19 positive under the condition of gradually opening up” of China, Minsheng Securities analysts led by Zhou Chaoze said in a report dated Sunday. The approval of RAT kits for public use “is laying the foundation for gradual easing of measures to fight against the pandemic in the future”, they said. “RAT testing is expected to be expanded nationwide.”
Minsheng Securities, along with Pacific Securities, forecast that the size of the domestic RAT market could reach 33.6 billion yuan (US$5.3 billion) monthly.
As part of a new policy, mainland Chinese residents can use the kits without the help of health care professionals, as the country grapples with a surge in Covid-19 cases across 27 provinces that started early this month. The spread of the pandemic has triggered the lockdown of “China’s Silicon Valley”, Shenzhen, which has a population of 17 million.
The National Medical Products Administration (NMPA) announced a list of approved providers on Saturday, after the National Health Commission said the previous evening that RAT tests could be used by anybody for early detection, but particularly by those in central isolation or local medical clinics.
On Sunday, the NMPA authorised the public use of another five companies’ RAT products. The second batch of companies includes Beijing Hotgen Biotech, which was up 4.3 per cent, and Beijing Wantai Biological Pharmacy Enterprise, which was down 2.4 per cent after a 12.5 per cent rally for the year so far.
Some RAT kits were available for purchases on e-commerce platforms, most of them on a reservation basis for delivery ranging from within 24 hours to as long as 15 days. E-commerce operators including Tmall and Taobao, which are owned by South China Morning Post parent Alibaba Group Holding, JD.com, Meituan and Suning.com have opened channels for reservations.
Some drug stores have also started reservations for future deliveries, or with small amount of inventory in recent days.
China’s move to approve RAT kits comes after other countries, such as the United States, United Kingdom and Singapore, authorised their use. Hong Kong is also encouraging residents to use these kits amid a crunch in health care resources during its fifth wave outbreak of Covid-19.
