Industry Insights | The Chinese scientific research reagent market continues to grow, and domestic substitution is at an opportune time

Scientific research reagents mainly refer to those used in scientific research and analytical testing processes and hold an important position in technological innovation. According to the types of scientific research reagents, they can be divided into chemical reagents and biological reagents.

Chemical reagents, also known as chemical drugs or chemicals, refer to pure substances or mixtures of various elements and compounds with a certain purity standard. They are used for chemical reactions or analytical testing and serve the research and development processes of multiple downstream industries. There are many methods of classifying chemical reagents. According to the difficulty of manufacture and purpose, they can be divided into high-end reagents and general-purpose reagents; according to state, they can be divided into solid reagents and liquid reagents; according to category, they can be divided into inorganic reagents and organic reagents; according to performance, they can be divided into hazardous reagents and non-hazardous reagents, etc.

Biological reagents refer to biological materials or organic compounds related to life science research, as well as reagents used for clinical diagnosis and medical research. Biological reagents are classified according to their products, mainly into three categories: proteins, nucleic acids, and cells.

The upstream of the scientific research reagent industry includes biochemical product raw material manufacturers and equipment/material suppliers. The main raw materials are stearic acid, acetonitrile, trifluoroacetic acid, deuterium oxide, ethanol, etc. Equipment/material products mainly include flow cytometers, high-performance liquid chromatographs, biomolecular interaction instruments, balances, PCR tubes, petri dishes, etc. The midstream of the industrial chain consists of various scientific research reagent brands, mainly including MacLein, Sinopharm Chemical, Aladdin, and Titan in China, which are engaged in the research, development, manufacturing, and sales of scientific research reagents. The downstream of the industrial chain includes universities' laboratories, research institutes, government regulatory departments, as well as enterprises in high-tech industries and strategic emerging industries, with products covering fields such as biomedicine, new materials, new energy, aerospace, and energy conservation and environmental protection.

Scientific research reagents are used for scientific research, laboratory analysis, and biotechnology applications. The industry has a broad market space and is one of the important components of the science service sector. The enhancement of China's scientific research strength and increased investment in scientific research have driven rapid growth in the market scale of the upstream scientific research reagent industry. In recent years, the market scale of scientific research reagents in China has grown from about 25 billion yuan in 2018 to about 48 billion yuan in 2022, with an average annual compound growth rate of about 18.0% during this period, and it is expected to reach about 100 billion yuan by 2027.

The scientific research reagent market is mainly divided into two categories: biological reagents and chemical reagents. Among them, the scale of the chemical reagent market increased from about 13.5 billion yuan in 2018 to about 23 billion yuan in 2022, with a compound annual average growth rate of about 14.0% during this period. It is expected that it will grow to about 44 billion yuan by 2027. The scale of the biological reagent market increased from about 11.5 billion yuan in 2018 to about 25 billion yuan in 2022, with a compound annual average growth rate of about 22.0% during this period. The scale of the biological reagent market is expected to reach about 60 billion yuan by 2027 and is expected to maintain a compound annual average growth rate of about 20.0% between 2022 and 2027.

The Chinese government attaches great importance to technological innovation and scientific research development, and supports scientific research projects of research institutions and universities by increasing investment. This policy has effectively promoted the development of the scientific research reagent industry. The growth in funding has driven an increase in demand from research institutions and high-efficiency users, providing greater market space and opportunities for the research, development, and production of scientific research reagents. China's expenditure on research and experimental development funds has rapidly increased from less than 2 trillion yuan in 2018 to over 3 trillion yuan in 2022, with an average annual compound growth rate of nearly 12%, and is expected to maintain high-speed growth in the next five years, reaching over 5 trillion yuan by 2027.

Scientific research reagents are widely used in various industries at the enterprise level, including biomedicine, new energy, high-end manufacturing, and other rapidly growing sectors, which are all important downstream industries for scientific research reagents. For example, in the field of photovoltaics, reagents such as organic electronic materials, semiconductor materials, and light-absorbing materials play a key role in the photoelectric conversion and energy transformation processes of solar cells. The research and development of scientific research reagents support the improvement of the efficiency and stability of solar cells; in the field of lithium batteries, reagents such as organic solvents and lithium salts in electrolytes have a direct impact on battery performance and cycle life, and the optimization and improvement of scientific research reagents help to enhance the energy density, cycle stability, and safety performance of lithium-ion batteries. It is expected that multiple rapidly developing emerging industry downstream sectors will become important drivers for the growth in demand for scientific research reagents at the enterprise level in the future.

Against the backdrop that overseas enterprises occupy most of the market share in China's scientific research reagent industry, the Chinese scientific research reagent industry is actively promoting technology development and innovation. It has increased support for the independent production of key reagents and is enhancing the level of independent intellectual property technology through which it promotes the independent production and supply capabilities of reagents. At the same time, in order to achieve localization of the scientific research reagent industry, China has strengthened the integration of the industrial chain and collaborative innovation. By promoting the coordinated development of links such as reagent production, raw material supply, equipment manufacturing, and technical services, it has improved the degree of autonomy and controllability of the industrial chain.

In terms of industry standardization development, China has actively promoted the quality standardization and certification system construction in the scientific research reagent industry. Relevant reagent quality standards have been formulated and improved, and the quality management and certification requirements for reagent manufacturers have been strengthened to enhance the quality and reliability of domestic reagents. The localization process of China's scientific research reagent industry is continuously advancing. Through efforts in technology research and development, industrial chain integration, quality standard construction, and other aspects, it is expected that the localization rate will show an upward trend in the future, which will help improve the comprehensive competitiveness and market share of leading domestic scientific research reagent enterprises.

The Chinese government actively supports cost reduction through policies, such as reducing import tariffs on scientific research reagents and increasing the pre-tax deduction ratio for R&D expenses. This provides favorable conditions for the procurement costs of scientific research reagents and promotes market development. At the same time, the expansion of the scientific research reagent market scale and the increase in the number of suppliers have intensified market competition. In order to attract more customers and increase market share, reagent suppliers reduce production costs through economies of scale and technological progress, offering competitive prices. As a global scientific research powerhouse with huge demand, China creates opportunities for suppliers to achieve economies of scale, further reducing costs. Consumers generally pay attention to prices, and suppliers reduce costs and offer competitive prices to attract more consumers to choose their products, thereby promoting market cost reduction. Therefore, considering factors such as comprehensive policies, current situation, national conditions, and consumer psychology, one of the development trends of the Chinese scientific research reagent market is a gradual reduction in costs.

China is committed to promoting technological innovation and enhancing scientific research capabilities, which has stimulated the awareness of researchers towards technological innovation. More and more researchers and institutions recognize the importance of scientific research reagents in scientific research and actively participate in research projects, leading to an increase in the demand for these reagents. At the same time, academic competition drives researchers to pursue breakthrough results, which requires high-quality scientific research reagents to support their work. Researchers need scientific research reagents that meet international standards to ensure the reliability and reproducibility of research results and maintain contact with international scientific research fields. The scientific research reagent industry will continue to innovate and upgrade to meet the needs of scientific research. New analytical techniques, experimental methods, and materials will be applied to the research and development and production of reagents to improve product performance and quality. At the same time, technological innovation will also drive the reagent industry towards high-end customized products and solutions.

With the intensification of competition in the scientific research reagent market and the expansion of industry scale, the industrial concentration in the scientific research reagent industry is expected to further increase. Leading enterprises will stand out through technological strength, product quality, and brand advantages, occupying a larger market share. At the same time, some small enterprises may face pressure from mergers and acquisitions, cooperation, or market exits. It is expected that overseas leading enterprises will still occupy most of the market share in the medium to short term, but small and medium-sized enterprises lacking the ability to develop their own products are likely to exit the market due to the tightening competitive situation in the industry. Leading independent brand enterprises are expected to continue to increase their market share.

The scientific research reagent industry will increasingly focus on green environmental protection and sustainable development. Enterprises will adopt more environmentally friendly production processes and raw materials to reduce their impact on the environment. At the same time, promoting sustainable development will also become an important task for enterprises, including efforts in promoting recyclable packaging and reducing waste generation.