Sanpower Group Acquires FindGene Biotech for RMB 680 Million Amid Surging Demand for Non-Invasive Prenatal Testing

Over the past two years or so, policies in China regarding prenatal genetic testing have evolved from a moratorium to gradual relaxation, leading to a growing enthusiasm among numerous hospitals and third-party clinical laboratories to offer such tests. In particular, following the implementation of the “two-child policy,” the rise in newborn numbers has further fueled the surge in demand for prenatal testing technologies.

On February 23, China’s private enterprise Sanpower Group Co., Ltd. acquired a controlling stake in Shanghai Fandi Biotechnology Co., Ltd. through a RMB 680 million healthcare M&A fund. The latter operates businesses such as non-invasive prenatal genetic testing and holds qualifications as a third-party independent clinical laboratory.

A representative of Sanpower Group Co., Ltd. stated that this is the highest-value acquisition in China’s genetic testing industry to date. If this momentum continues, the future potential market size of China’s genetic testing sector will exceed RMB 10 billion.

Li Zhi, Chief Physician of the Department of Obstetrics and Gynecology at Peking University International Hospital, believes that non-invasive prenatal genetic testing is one of the most classic applications of precision medicine in clinical practice. With its exceptionally high sensitivity and specificity, it will play a crucial role in clinical screening and in reducing the birth of infants with Down syndrome, thereby contributing significantly to eugenics and healthy childbirth.

A Potential Market Size of Billions

Modern medical research has demonstrated that, with the exception of traumatic injuries, most diseases are associated with genetic factors. Genetic testing refers to the analysis of DNA from blood, other bodily fluids, or cells to predict an individual’s risk of developing diseases and to assess their genetic profile. This enables individuals to understand their genetic information, thereby allowing them to modify their living environment and lifestyle habits to prevent or delay the onset of disease.

Prenatal genetic testing refers to the use of genetic testing technologies to identify the risk of disease occurrence before birth, enabling early prevention or the implementation of effective intervention measures.

Data provided by Sanpower Group Co., Ltd. indicates that China is one of the countries with a high incidence of birth defects, with an overall prevalence rate of approximately 5.6%. Since the implementation of the “universal two-child” policy, the annual number of newborns has increased by 4 million compared to previous years, and the proportion of advanced-age and high-risk pregnant women has risen significantly. The growing emphasis on eugenics and healthy childbearing has rapidly boosted the popularity of prenatal testing, making non-invasive prenatal testing (NIPT) a new lucrative market for capital investment.

NIPT refers to non-invasive prenatal genetic testing that does not require invasive sampling. “Currently, the market size for NIPT in China is still relatively small. In 2015, the Chinese NIPT market was valued at approximately RMB 2 billion, with a market penetration rate of less than 5%. The cost per NIPT test ranged from RMB 2,000 to 3,000. If the penetration rate were to increase to 30%, the potential market size would exceed RMB 10 billion,” said a representative from Sanpower Group Co., Ltd. At present, leading companies in this field have gradually emerged, including BGI Genomics, Berry Genomics, and Shanghai Fandi Biotechnology.

Sanpower Group’s acquisition of Shanghai Fandi Biology, with a transaction value of RMB 680 million, has become the largest acquisition in China’s genetic testing industry.

Experts Call for the Promotion of Prenatal Genetic Testing

In fact, the development of the domestic genetic testing market in China has not been smooth. In 2014, the China Food and Drug Administration (CFDA) and the National Health and Family Planning Commission suspended all gene sequencing operations to carry out a centralized rectification of the industry. This was because China's genetic industry was in the early stage of market emergence, with regulatory systems still highly imperfect, and enterprises or institutions engaged in such businesses were of mixed quality.

However, market demand persists. Dr. Li Zhi, Chief Physician of the Department of Obstetrics and Gynecology at Peking University International Hospital, believes that non-invasive prenatal genetic testing is one of the most classic applications of precision medicine in clinical practice. With its high sensitivity and specificity, it will play a crucial role in clinical screening and in reducing the birth of infants with Down syndrome, thereby contributing significantly to eugenics and healthy childbirth.

Li Jun, founder of Vandian Biotechnology, stated that birth defects are not solely associated with maternal age; even 20-year-old mothers may give birth to infants with genetic disorders. “Past experience and data indicate that pregnant women under the age of 30 identified as high-risk account for one-third of the total obstetric population.” “The current environment has increased this risk,” Li Jun remarked, emphasizing the growing necessity for the widespread application of genetic testing technologies.

At a recent group discussion session of the Guangdong Provincial Committee of the Chinese People’s Political Consultative Conference (CPPCC), Luo Songping, a provincial CPPCC member from the Department of Obstetrics and Gynecology at the First Affiliated Hospital of Guangzhou University of Chinese Medicine, called on the medical and health sectors to vigorously promote the precision medicine model and widely apply new technologies such as gene sequencing in prenatal screening for congenital fetal defects.

“The rising rate of birth defects not only jeopardizes children’s survival and quality of life, but also brings a series of problems to families and society,” said Luo Songping.

In response to practical needs, in October 2016, the National Health and Family Planning Commission issued the “Notice of the General Office of the National Health and Family Planning Commission on Regulating the Orderly Conduct of Prenatal Screening and Diagnosis Using Cell-Free Fetal DNA from Maternal Peripheral Blood,” thereby relaxing policy restrictions on prenatal genetic testing.

A representative of Sanpower Group Co., Ltd. stated that this will enhance the enthusiasm of hospitals and third-party clinical testing centers to offer NIPT, significantly increasing the penetration rate of NIPT technology among pregnant women in China.

(Translational Medicine Network 360zhyx.com)