ESE Bio's 'Dual Circulation' Strategy Seizes the Historic Window for Industry Consolidation to Boost Global Competitiveness of Chinese Life Science Tools

Driven by multiple factors, including the rapid development of the biopharmaceutical market over the past two years, the heightened prominence of upstream supply chain value during the pandemic, and the introduction of the HKEX Chapter 18A listing rules, the life sciences tools sector has transformed from an invisible “pick-and-shovel” provider into a sunrise industry in the spotlight, attracting hundreds of billions in capital inflows.

Lin Xiangqian, Chairman and CEO of Esco Bioscience, has firsthand experience of the transformative changes that have swept through China’s life sciences tools sector (including instruments, consumables, reagents, and more) in recent years. With over two decades of deep involvement in the life sciences market, Lin has witnessed the entire lifecycle of China’s life sciences tools industry, from its nascent stages to its current boom. “The market has entered a period of explosive growth, with its size multiplying,” he commented.

It is undeniable that life science tools represent a relatively certain segment in today’s volatile market, characterized by robust demand and stable cash flows. However, taking a longer-term perspective reveals a highly fragmented landscape with numerous niche subsectors. Many of these segments face limited growth ceilings, making it difficult for companies to expand their boundaries and resulting in insufficient long-term growth potential.It is foreseeable that resource integration and global expansion will be the future trends.

Yishike Biotechnology has established unique advantages across its three core business lines: life science tools, medical devices and consumables for assisted reproduction, and pharmaceutical manufacturing equipment and bioprocessing tools. The company’s footprint now spans more than 100 countries and regions, and it has completed an RMB 1 billion+ Series A financing round.The company was the first to recognize the opportunities in integrating life science tool resources and expanding its supply chain overseas, proposing a “dual circulation” strategy.The company is simultaneously increasing its investment in China, promoting localized production, and responding to the trend of import substitution, while actively seeking industry consolidation opportunities to foster collaborative development with Chinese enterprises and enhance their global influence.

Recently, VCBeat held a dialogue with Lin Xiangqian from Yishike Biotech to analyze the forward-looking nature of the company’s “dual circulation” strategy. The discussion explored how Yishike Biotech is constructing this strategy during a critical window of opportunity for global life science tools, leveraging its advantages as a “platform enterprise” to help China’s life science tools industry achieve overtaking on the bend.

At its meeting in May 2020, the Standing Committee of the Political Bureau of the Communist Party of China Central Committee first proposed building a “new development pattern in which domestic and international dual circulation reinforce each other,” emphasizing the need to accelerate the establishment of this new development pattern. On one hand, it called for strengthening internal capabilities, increasing import substitution, and stimulating domestic development; on the other hand, it urged greater opening-up and expansion into international markets.

In 2022, the report to the 20th National Congress of the Communist Party of China reiterated the need to “adhere to high-standard opening-up and accelerate the construction of a new development pattern in which the domestic big cycle plays the principal role and the domestic and international dual cycles reinforce each other.” “Dual circulation” has become a keyword in China’s economic development in recent years.

The Current Development Status of China’s Life Science Tools Industry Aligns Well with the National “Dual Circulation” Development Strategy.

First, the downstream markets for innovative drugs and vaccines are booming. Amid growing uncertainty in overseas supply chains, the import substitution process for low- to mid-end life science tools has become relatively mature, with rapidly rising competitiveness in certain niche segments. However, import-dependent monopolies still persist in areas such as high-end instruments, single-use consumables, and reagents. There is an urgent need in China for high-quality, advanced life science tools.

Secondly, the life sciences tools industry comprises numerous niche segments, with most companies focusing on specific niches and pursuing a “small but beautiful” development model. However, the growth ceilings in most of these niches are relatively low, making it difficult to support publicly listed companies. As a result, there is an urgent need for resource integration and overseas expansion among these enterprises.

In simple terms,In light of the Chinese life sciences tools industry’s dual imperatives—accelerating import substitution domestically and enhancing international influence abroad—there are significant opportunities for resource integration in the Chinese market. Resource consolidation and global expansion are essential pathways for enterprises to achieve scale and strength.Looking at the development paths of overseas life sciences tooling giants, Thermo Fisher Scientific and Danaher both achieved global dominance by frequently engaging in mergers and acquisitions, integrating resources, continuously expanding their product portfolios, and pursuing internationalization.

Regrettably, China’s life science tools industry is predominantly composed of small and medium-sized enterprises (SMEs), which currently lack the platform capabilities necessary for resource integration and global expansion.

VCBeat notes,Yishike Biotech, an overseas Chinese enterprise, boasts robust capabilities in domestic and international M&A integration, along with a business system aligned with global standards. Yishike Biotech is poised to lead Chinese enterprises, enabling companies that join its extensive ecosystem to grow together into global giants in the life sciences sector.

Currently, to address the needs for integrating life science tool resources in China and expanding into global markets, Yishike Biotech is implementing the “dual circulation” strategy.

It is essential to clarify that the integration of China’s life science tool resources and their expansion into global markets must be led by a core driving force. Why is Yishike Bio capable of serving as this central leader? There are three reasons.

First, robust channel capabilities, Yishike Biotech was established in 1978. Its services have covered more than 100 countries and regions, with nearly 30 subsidiaries set up to conduct global sales, marketing, and after-sales service.

Second, global customer recognition, Yishike Biotechnology has established close partnerships with multiple enterprises. According to an industry research report by Frost & Sullivan, Yishike Biotechnology ranked second globally in sales revenue from biological safety cabinets in 2021. Additionally, the company is one of the few global suppliers in the field of assisted reproductive technology instruments, with its time-lapse incubators ranking among the top three worldwide in sales revenue.

Third, global resource integration capabilities and deep-rooted presence in the Chinese market, Yishike Bio is a global enterprise with decades of experience in global business operations and mergers and acquisitions integration. China is one of Yishike Bio’s key strategic markets. Currently, Lin Xiangqian has relocated his entire family to China and resides long-term in Shanghai, enabling him to remain agile and closely attuned to the authentic demands of the Chinese market while maintaining a global perspective.

Guided by the “Dual Circulation” strategy, Yishike Bio is serving as a bridge between China and overseas markets, introducing cutting-edge international products into China while promoting competitive Chinese products to global markets.

Specifically,In the domestic circulation, Yishike Bio leverages global resources to continuously introduce overseas innovative technologies and products, achieving localization.The company has acquired Evidence Solution, a Danish software firm specializing in instruments for assisted reproduction, and integrated it into its product line of assisted reproductive medical devices. Evidence Solution’s software system enables comprehensive monitoring of the entire assisted reproduction treatment process. When integrated with Yishike Biotech’s existing products, it further optimizes workflow management and achieves intelligent witnessing throughout the full cycle of assisted reproduction treatment.

Meanwhile, Esco Biosciences is expanding its local team in China. It already operates a 20,000-square-meter production base in Taicang, Suzhou, and is further increasing its investment. This includes establishing its pharmaceutical tools division in China and constructing a new 9,500-square-meter facility in Suzhou, Jiangsu Province, to manufacture cell culture consumables, upstream and downstream bioprocessing equipment, and single-use bioprocess consumables. Through these initiatives, Esco Biosciences is accelerating the localization of life science tools, bringing high-quality products to the Chinese market and speeding up the domestic production of high-end products.

In terms of external circulation, Yishike Biotechnology has established an overseas expansion platform for upstream enterprises in China’s life sciences industry.For example, in 2021, the company completed a strategic investment of nearly $10 million in Dongyun Medical. By integrating resources from both parties, it accelerated its expansion into areas such as assisted reproductive technology (ART) instruments, culture media, and consumables, thereby establishing a comprehensive presence in the ART medical device sector and providing end-to-end product solutions for assisted reproduction.

Furthermore, Lin Xiangqian has also launched the “in vivo–ex vivo” circulation strategy. By spinning off an ex vivo biomedical incubation platform, he has successfully incubated multiple innovative drug companies, including Carmine, Carcell, Cargene, PairX Bio, and Nuevocor, thereby achieving upstream–downstream synergy. Leveraging the “dual circulation” and “in vivo–ex vivo” circulation strategies, China’s life sciences industry is enhancing its global influence.

China’s life sciences sector has undergone two distinct phases of development. The first was a period of relative obscurity, characterized by low industry attention, difficult fundraising conditions, and a shortage of talent. During this time, some companies diligently refined their operations and quietly emerged as leaders in their respective niches. This was followed by a phase marked by the booming development of China’s biotechnology industry and a vigorous wave of import substitution, which triggered a surge in customer demand and allowed life science tools to reap substantial growth dividends.

As the catalytic effect of COVID-19 wanes and the biopharma winter persists, the life sciences tools sector will enter its third phase. In this stage, growth ceilings in certain niche segments are becoming increasingly pronounced, constraining corporate development and necessitating consolidation for mutual survival.Resource integration and global expansion have become key differentiators in corporate competition.

China’s life science tools market is on the verge of a historic window of opportunity for resource integration. Moving forward, Yishike Bio will continue to implement its “dual circulation” strategy, foster extensive collaboration with domestic and international enterprises, cultivate an ecosystem for the life science tools industry, enhance the global competitiveness of China’s life science tools sector, and provide downstream customers with more comprehensive solutions.