KingMed Diagnostics, 'Huawei of Third-Party Medical Testing,' Goes Public with Hard-to-Replicate Competitive Edge

VCBeat (WeChat ID: vcbeat) has learned that on September 8, 2017, KingMed Diagnostics Group Co., Ltd. (hereinafter referred to as “KingMed Diagnostics,” stock code: 603882), a pioneer and leading enterprise in the third-party medical testing industry, was officially listed on the Shanghai Stock Exchange. The company issued 68.68 million shares, with net proceeds of RMB 414 million and an issue price of RMB 6.93 per share.

As a benchmark enterprise in China’s third-party medical testing industry, KingMed Diagnostics has long been held in high esteem, even earning the moniker “the Huawei of the third-party medical testing sector.” In fact, as a prominent Chinese brand, KingMed Diagnostics shares many similarities with Huawei across multiple dimensions, including industry focus, quality control, innovation, network coverage, and talent development. Analysts suggest that, given the stringent requirements for testing quality and operational efficiency in third-party medical testing, KingMed Diagnostics’ comprehensive competitive advantages may be difficult to replicate.

According to VCBeat, KingMed Diagnostics is a third-party medical laboratory specializing in independent clinical testing and pathological diagnosis services. It provides outsourced testing and pathology diagnostic solutions to various healthcare institutions. The company has grown into the leading enterprise in China’s third-party clinical testing industry, boasting the largest scale, the highest number of laboratories, the most extensive market coverage, and the most comprehensive portfolio of test items and technological platforms.

Since outsourced medical laboratory testing and pathological diagnosis services are based on scientifically validated diagnostic methods, rigorous quality control processes are essential to effectively ensure the accuracy of test results. Quality management is often prioritized as the foremost concern for third-party medical laboratories.

As is well known, Huawei has complex business lines and a correspondingly intricate quality system; however, it has consistently maintained professional focus and established quality as its core strategy. Similarly, KingMed Diagnostics has remained dedicated to the third-party medical testing industry for many years, fostering a quality culture characterized by relentless pursuit of root causes.

Guided by this culture, KingMed Diagnostics has continuously adopted advanced international quality management standards and gained recognition from a series of external organizations. It is reported that KingMed Diagnostics strictly adheres to international standards and is the first third-party medical laboratory in China to achieve dual accreditation from CAP and ISO 15189. Its test reports are widely recognized in more than 50 countries and regions worldwide.

Huawei’s innovative mindset and approach have long served as a “model” worthy of reference and reflection for Chinese enterprises. Ren Zhengfei has publicly stated on various occasions that Huawei does not pursue independent innovation in isolation; rather, it embraces open, integrated innovation. Instead of closing its doors to engage in self-contained innovation, Huawei introduces the world’s most advanced achievements, absorbs and digests them, and then builds upon them through further innovation.

Strikingly similar to Huawei, China’s third-party medical testing industry started at least 30 years later than those in other developed countries. As a result, both laboratory testing technologies and the range of test offerings lag far behind those in Europe and the United States. Consequently, independent innovation and the introduction, digestion, absorption, and re-innovation of external technologies have become the primary pathways for innovation at KingMed Diagnostics.

Through this development pathway, KingMed Diagnostics now possesses comprehensive diagnostic testing technologies and corresponding technical platforms that cover nucleic acid testing, protein and metabolite detection, as well as histological and morphological analysis of tissues, pathogenic microorganisms, cells, and subcellular structures. Building upon these three major testing systems, KingMed Diagnostics has introduced internationally advanced medical laboratory technologies and service concepts tailored to the needs of clinicians and patients. Through independent innovation, the company has established numerous laboratory-based integrated diagnostic technology platforms oriented around clinical disease categories, thereby constructing its core technological system. Currently, it offers up to 2,400 testable items, far exceeding the capacity of a typical Grade A tertiary hospital.

Innovation-driven development hinges on talent. It is essential to cultivate, attract, and consolidate talent while maintaining an open global perspective, thereby ensuring more solid and steady progress. As a technology-intensive sector, the biopharmaceutical industry requires strategic planning from a high starting point to build globally influential industries and attract top-tier talent.

In recent years, KingMed Diagnostics has built a series of integrated industry-academia-research platforms to attract high-end talent, enhance the academic atmosphere, and strengthen the deep integration of industry, academia, and research. By offering dual positions in both scientific research and academia, the company has attracted more than 200 top-tier technical professionals from China and abroad. These experts have not only brought advanced technologies but also international perspectives and a portfolio of projects ready for commercialization.

As the cradle for internal talent development, KingMed University provides systematic training for various types of talents, such as continuously offering management and technical skills training programs for the management team, reserve forces, and technical teams.

Moreover, KingMed Diagnostics and Guangzhou Medical University have launched a new model of industry-academia-research collaboration. At the Provincial Innovation and Development Conference held on February 7, 2017, enterprises such as Huawei, Midea, KingMed, and Wens were highly recognized for engaging in cooperative education and jointly establishing technology development institutions with universities, with their practices praised as “experiences worth summarizing and promoting.”

Global expansion is the future direction for KingMed Diagnostics.

According to public data, KingMed Diagnostics has established 35 medical testing laboratories in mainland China and the Hong Kong Special Administrative Region, covering areas where more than 90% of the national population resides, and providing medical testing and pathological diagnosis services to over 21,000 medical institutions across China.

By establishing a four-tier laboratory network comprising headquarters-level laboratories, provincial regional center laboratories, provincial laboratories, and prefecture-level laboratories, KingMed Diagnostics has extended its home-service network to the township and community levels. Currently, KingMed Diagnostics offers over 2,400 testing items, far exceeding the capacity of large Grade A tertiary hospitals in China. The annual volume of test samples exceeds 40 million. In 2016, KingMed Diagnostics reported operating revenue of over RMB 3.2 billion, representing a year-on-year growth of nearly 35%. The compound annual growth rate (CAGR) of its core business over the past three years has exceeded 30%. 

KingMed Diagnostics also operates China’s first remote pathology collaboration network and has jointly established an international remote digital pathology consultation platform with the University of Pittsburgh Medical Center (UPMC) and Cleveland Clinic Foundation (CCF), enabling domestic patients to access high-quality diagnostic and therapeutic services from the United States without leaving their homes.

KingMed Diagnostics stated that, in terms of its service network, the company will accelerate the development of its four-tier laboratory network, continue to expand into underserved regional markets, and seize opportunities to enter overseas markets.

To date, KingMed Diagnostics has established a strategic layout of “leveraging the Chinese mainland, serving Hong Kong, and reaching Southeast Asia,” aiming to build a medical testing hub for the Belt and Road Initiative. By using Hong Kong as a bridgehead, it provides services with world-class diagnostic standards to countries and regions along the route, including Hong Kong. Currently, samples from Malaysia and Iran have already been sent to KingMed Diagnostics in Hong Kong for testing.

If one were to identify a “Huawei-like” characteristic in KingMed Diagnostics, it would be its focus. Huawei has grown into an industrial powerhouse by steering clear of finance and real estate speculation. Similarly, over the years, KingMed Diagnostics has remained steadfast in its professional commitment, resisting the temptations of market diversification and speculative profits, and staying dedicated to the healthcare sector.

Rigorous quality control, an extensive market service network, a high-end and comprehensive technical platform with testing items, a stable management team and a tiered pool of top-tier talent, and professional medical cold-chain logistics services with broad coverage... Today, KingMed Diagnostics’ strong comprehensive competitive advantages have secured its position as an industry leader.

KingMed Diagnostics’ initial public offering has once again thrust the third-party medical testing industry, already in its golden period of explosive growth, into the spotlight. At the listing ceremony, dignitaries including Li Ming, Deputy Mayor of Guangzhou; Liu Chuanzhi, Chairman of Legend Holdings Corporation; Zeng Yitao, Academician of the Chinese Academy of Engineering; Chen Xiaohua, District Head of Huangpu District, Guangzhou, and Executive Deputy Director of the Administrative Committee of Guangzhou Development District; and Ran Pixin, Party Secretary of Guangzhou Medical University, attended to offer congratulations and joined Liang Yaoming, Chairman and General Manager of KingMed Diagnostics Group Co., Ltd., in ringing the listing bell. Zhong Nanshan, Academician of the Chinese Academy of Engineering, sent a video message to congratulate the company on its listing celebration.

“This IPO marks a significant milestone for KingMed Diagnostics.” Following its listing on the capital market, Liang Yaoming, Chairman and General Manager of KingMed Diagnostics Group Co., Ltd., promptly issued a statement. He stated that KingMed Diagnostics will steadfastly advance along its core path as a third-party medical testing provider, continue to increase R&D investment, actively pursue innovation, enhance its core competitiveness and sustainable development capabilities, and upgrade its comprehensive testing platform to establish a strong reputation as a “national brand in inspection and testing.”

Finally, as a long-time friend of KingMed Diagnostics, VCBeat once again congratulates KingMed on its successful IPO and wishes it continued momentum in the core track of third-party medical testing!