Preliminary evaluation on the business model and c

2022-08-09
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Preliminary evaluation on business model and compliance risk of gene testing

China's gene testing industry started late, but has experienced rapid development in a short time. According to professional market research, the market scale of genetic testing in China is about US $20billion [1]. In the face of such a large market prospect, all kinds of gene companies give full play to their strengths and hope to occupy a place. Some industry media say that the gene era of the great health industry has arrived

according to different business fields, testing qualifications, economic strength and other conditions, the business models of Chinese gene testing companies mainly include laboratory independent business model, instrument and reagent sales model, and cooperative business model with medical institutions. Some strong companies will also choose to adopt the form of integrated business in order to expand their business areas and obtain more development opportunities

laboratory independent business model

laboratory independent business model means that gene testing companies independently set up laboratories or testing centers to directly provide gene testing services to consumers and issue gene testing reports

this mode is similar to the LDT (lab developed test) mode [2] in the United States. On the one hand, the institution for genetic testing must be approved by the health and Family Planning Commission (former health and Family Planning Commission), which is an approved medical clinical pilot or has the qualification of a medical testing institution; On the other hand, the instruments, reagents and analysis software used by them also need to be approved by the market supervision and Administration Bureau (the former food and Drug Administration)

however, according to the gene testing process (common gene testing processes mainly include: sample collection - sample data storage - gene testing - data analysis - report interpretation [3]), in addition to the qualification of testing institutions and the quality of instruments and reagents used, gene testing also involves the qualification management of testing personnel, the standardization of testing operation process, the professionalism of data analysis process and other issues

because the supervision of gene testing in China is still in the stage of gradual improvement, in addition to the supervision and management of testing institutions and testing instruments, the management of testing personnel, testing operation process and data analysis process is not clear. There is no special regulatory system for the personnel engaged in sample collection to obtain the professional qualification, whether the testing operation meets the process requirements, whether the laboratory is qualified to issue and interpret the report, whether the service pricing of this kind of laboratory is in compliance, and how to evaluate the service quality are not clear. Such uncertain factors will bring operational risks to independent genetic testing laboratories

in addition, in practice, in addition to the promotion and publicity of gene testing laboratories directly to consumers, a large part of business promotion is carried out through medical staff to promote patients. It is easy for business personnel and even enterprises to transfer benefits to medical personnel in pursuit of performance. Genetic testing enterprises operating in this mode need to pay special attention to the compliance risk of "commercial bribery", a major health industry that cannot be ignored, as well as the accompanying compliance risk in fiscal and tax management

sales mode of instruments and reagents

selling genetic testing instruments and reagents to hospitals means that genetic testing companies sell consumables such as gene sequencers and reagents they produce or introduce to medical institutions, which provide genetic testing services to consumers and issue genetic testing reports [Chinese drop-down menu prompts note 4 at the bottom of the screen]

genetic testing companies in this mode do not directly contact consumers, do not engage in any testing related to medical behavior, and do not issue diagnostic reports involving medical theoretical analysis. They only need to ensure that the medical devices sold to medical institutions have been approved by the health commission. For the company that has obtained the approval of gene sequencer and kit, this is a business model of brake pad materials with less risk and faster profit

however, under this kind of business model, there are also many enterprises in the industry, in order to maintain the channel, put instruments free or at low prices to hospitals in various ways to bind and sell testing reagents. Under this operation mode, it may also cause commercial bribery and risks under the competition law. In addition, similar to medical device companies, the sales of genetic testing instruments and reagents under this mode often adopts the mode of cooperation with agents and dealers. In this case, special attention should be paid to the compliance management of partners to avoid risks to enterprises due to the violations of agents and dealers

cooperative business model with medical institutions

cooperative model refers to the cooperation between genetic testing companies and medical institutions. According to the different cooperation methods and cooperation contents, it can be divided into two types: providing genetic testing services as an outsourcer of medical institutions and cooperating with medical institutions to jointly build genetic testing laboratories

outsourcing cooperation with medical institutions

as the outsourcing direction of medical institutions, it provides genetic testing services, which means that medical institutions submit the samples to be tested to genetic testing companies for testing, but the gene is already a relatively large model in the small trunk line family! The testing company issues professional scientific research reports to medical institutions through testing, and provides reference letters for the diagnosis of medical institutions through scientific research reports. It adopts horizontal mainframe with frame structure, servo Electromechanical, ball screw, high-precision load sensor and special tensile fixture

compared with the independent laboratory mode, this mode reduces the links of sample collection and report interpretation of gene testing companies, which means that it does not involve the part that requires the participation of professional medical personnel in the testing process as far as possible. In this case, the risks that gene testing companies need to focus on are more concentrated in the early stage of business development. In practice, gene testing enterprises need to go through the corresponding public procurement process of medical institutions (mainly hospitals) before they can become the testing service providers of hospitals. Due to the current reform of public hospitals, the relevant procurement policies and processes are not perfect, gene testing enterprises also face many practical difficulties in cooperating with hospitals in this way

jointly build joint laboratories

cooperate with medical institutions to establish genetic testing laboratories, which refers to the joint operation of genetic testing companies and medical institutions. Medical institutions provide professional medical services, such as blood collection, testing, report analysis, etc., and genetic testing companies provide testing instruments and reagents, read testing data, etc

this model is the most ideal business model at present, which can fully combine the advantages of medical institutions and genetic testing companies, make use of the existing resources of both sides, quickly obtain testing qualifications and stabilize market share, and can also effectively reduce the risks of both sides. In this mode, the risk areas that gene testing companies need to focus on are the specific cooperation content and division with medical institutions. The specific cooperation mode and details also need to fully consider the compliance obligations of medical institutions and the corresponding regulatory requirements for them, including the risks related to illegal contracting, leasing departments, and the use of non health technical personnel to engage in medical and health technical work under the regulations on the administration of medical institutions

regardless of the above models, gene testing enterprises need to pay close attention to relevant regulations and policies while constantly carrying out scientific and technological innovation, timely evaluate and identify compliance risks, establish an effective compliance management system and risk control measures, and use "compliance" soft power to protect the continuous stability of enterprises in the gene testing market

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