Chinese firms are scrambling to meet the global demand for coronavirus testing kits even as domestic demand dries up, but its manufacturing juggernaut cannot make enough

Finbarr Bermingham, Sidney Leng and Echo Xie
As the horror of the coronavirus outbreak in China was unfolding over January’s Lunar New Year holiday, a group of technicians were holed up in a Nanjing facility with a supply of instant noodles and a brief to develop testing kits for diagnosing the virus. Already at that point, the coronavirus had ripped through the city of Wuhan and was spreading rapidly around China. A handful of diagnostic tests had been approved by central government, but hundreds of firms around the country were still scrambling to develop new ones.

We have so many orders now … are considering working 24 hours a day
ZHANG SHUWEN, NANJING LIMING BIO-PRODUCTS

“I did not think about applying for approvals in China,” said Zhang Shuwen, of Nanjing Liming Bio-Products. “The application takes too much time. When I finally get the approvals, the outbreak might already be finished.” Instead, Zhang and the company he founded are part of a legion of Chinese exporters selling test kits to the rest of the world as the pandemic spreads outside China, where the outbreak is now increasingly under control, leading to a fall in domestic demand. In February, he applied to sell four testing products in the European Union, receiving CE accreditation in March, meaning they complied with EU health, safety and environmental standards. Now, Zhang has an order book brimming with clients from Italy, Spain, Austria, Hungary, France, Iran, Saudi Arabia, Japan, and South Korea. “We have so many orders now that we are working until 9pm,
seven days a week. We are considering working 24 hours a day, asking workers to take three shifts every day,” Zhang said. It is estimated that more than 3 billion people are now on lock down across the world, with the global death toll from coronavirus surpassing 30,000. Infection hotbeds have exploded across Europe and the United States, with the epicentre shifting from Wuhan in central China to Italy, then Spain and now.

New York. The chronic shortage of testing equipment means that rather than being diagnosed, potential patients seen as “low risk” are being asked to stay home. “At the start of February, about half of our testing kits were being sold in China and half abroad. Now, there are almost none being sold domestically. The only ones we sell here now are for passengers arriving from outside [China] who need to be tested,” said a senior executive at the BGI Group, China’s largest genome sequencing company, who spoke under the condition of anonymity. At the start of February, BGI was making 200,000 kits a day out of its plant in Wuhan. The plant, with a “few hundred” workers, was kept running 24 hours a day while most of the city was closed. Now, he said the company was producing 600,000 kits per day and had just become the first Chinese firm to gain emergency approval to sell its fluorescent real time polymerase chain reaction (PCR) tests in the US. Chinese-made testing kits are becoming a more common presence throughout Europe and the rest of the world, adding a new dimension to the roaring debate over dependence on medical supplies from China. As of Thursday, 102 Chinese firms had been granted access to the European market, according to Song Haibo, chairman of the China Association of In-Vitro Diagnostics (CAIVD), compared with just one licensed in the US. Many of these companies, though, do not have the required National Medical Products Administration permission to sell in China. In fact, just 13 have been licensed to sell PCR testing kits in China, with eight selling the simpler antibody version. A manager at a biotechnology firm in Changsha, who wished not to be identified, said the company was only licensed to sell PCR testing kits for animals in China, but  was preparing to ramp up production of 30,000 new Covid-19 kits to sell in Europe, after “just receiving a CE certificate on March  17″.

Not all of these forays into the European market have been a success. China exported 550 million face masks, 5.5 million testing kits and 950 million ventilators to Spain at a cost of 432 million euros (US$480 million) earlier in March, but concerns were soon raised over the quality of the tests.

There have been cases in recent days of recipients of Chinese testing equipment reporting that it did not work as expected. Last week, Spanish newspaper El País reported antigen testing equipment from the Shenzhen-based firm Bioeasy Biotechnology only had a 30 per cent detection rate forCovid-19, when they were supposed to be 80 per cent accurate. Bioeasy, it emerged, was not included on an approved list of suppliers offered to Spain by China’s Ministry of Commerce. faulty, suggesting instead that the Spanish researchers had not correctly followed instructions. Authorities in the Philippines also said on Saturday they had discarded testing kits from China, claiming only a 40 per cent accuracy rate.tuation, maybe the focus is now on speed, and maybe the process has not been that thorough,”said a European Union source, who asked not be named. “But this should be a rude awakening not to give up on quality control, or we will be throwing precious scarce resources out of the window and bringing further weaknesses to the system, allowing the virus to expand further.”

The more complex PCR test tries to find genetic sequences of the virus by deploying primers – chemicals or reagents which are added to test if a reaction occurs – that attach to the targeted genetic sequences. The so-called “rapid testing” is also carried out with a nasal swab, and can be done without the subject leaving their car. The sample is then quickly analysed for antigens that would suggest the virus is present.

Leo Poon, head of public health laboratory sciences at Hong Kong University, said PCR testing was “much preferable” to antibody or antigen testing, which could only detect coronavirus once the patient has been infected for at least 10 days.

However, PCR tests are far more complex to develop and manufacture, and with an acute global shortage, countries around the world are stocking up on the simpler versions.

Increasingly, governments are turning to China, which along with South Korea, is one of the few places in the world with testing kits still available.

It is potentially much more complicated than making protective equipment
BENJAMIN PINSKY, STANFORD UNIVERSITY

On Thursday, Irish airline Aer Lingus announced it would send five of its biggest planes to China each day to pick up equipment, including 100,000 test kits per week, joining a host of nations repurposing commercial aircraft as jumbo medical delivery vessels.

But it has been said that even with such a push, China could not meet the world’s demand for test kits, with one vendor describing total global demand as “infinite”.

Huaxi Securities, a Chinese investment firm, last week estimated global demand for test kits at up to 700,000 units per day, but given that the lack of tests has still resulted in almost half of the planet implementing draconian lockdowns, this figure seems conservative. And given the fear over virus carriers who do not show symptoms, in an ideal world, everyone would be tested, and probably more than once.

“Once the virus became uncontained, I’m not sure the world, even if fully organised, could have been tested at the levels people want to test at,” said Ryan Kemp, a director at Zymo Research, an American manufacturer of molecular biology research tools, which has pivoted “100 per cent to supporting the Covid-19 effort, literally mobilising the entire company to supporting it”.

Song, at CAIVD, estimated that if you combined the capacities of the firms licensed in China and the European Union, enough tests could be made each day to serve 3 million people with a mixture of PCR and antibody tests.

As of Thursday, the US had tested 552,000 people in total, the White House said. Stephen Sunderland, a partner focused on medical technology at Shanghaibased LEK Consulting, estimated that if the US and EU were to follow the same level of testing as South Korea, there would be a need for 4 million tests.

With this in mind, it is unlikely that all the manufacturing capacity in the world could meet demand, at least in the near term.

Testing equipment was “not like making masks”, said the source at BGI, who warned that it would be impossible for non-specialist firms like Ford, Xiaomi or Tesla to make test kits, given the complexity and barriers to entry.

From the company’s current capacity of 600,000 a day, “it is impossible to expand the factory” due to the procedural wrangling involved, said the BGI source. Diagnostic equipment production in China must meet tight clinical standards and so the approval process for a new facility takes between six and 12 months.

“It is more challenging to increase the output all of a sudden, or have to look for an alternative source, than in the case of masks,” said Poon. “The factory has to be accredited and must meet high standards. It takes time. to do so.”

Song said that for something as serious as coronavirus, having a test kit approved by China could  be even more arduous than usual. “The virus is highly contagious and the pecimen management is strict, it is difficult … to obtain samples to fully verify and evaluate the products,” headded.

The outbreak has also impacted availability of the raw materials used in the equipment, leading to shortages the world over.

For instance, a product made by Zymo to transport and store biological samples is available in ample supply – but the firm is seeing a shortage of the simple swabs needed to gather the samples.

Zymo’s solution is to use swabs from other companies. “However there are such limited supplies, that we have been providing reagent to organisations to pair with the swabs they have on hand”, said Kemp, adding that, in a quirk of the globalised medical supply chain, many of the world’s swabs were made by Italian firm Copan, in the virus-stricken Lombardy region.

Benjamin Pinsky, who runs the main reference laboratory for coronavirus for northern California out of Stanford University, said “there have been huge challenges with the supply of particular reagents and consumables”
used in PCR testing.

While Pinsky has devised a PCR test, he has had difficulty sourcing supplies, including swabs, viral transport media, PCR reagents and extraction kits. “Some of those are very difficult toget. There’s been delays from some of the companies that produce the primers and probes,” he added. “It is potentially much more complicated than making
personal protective equipment.”

Zhang in Nanjing has capacity to make 30,000 PCR testing kits per day, but plans to buy two more machines to boost it to 100,000. But export logistics are complex, he said. “No more than five companies in China can sell PCR test kits overseas because the transport needs an environment at minus 20 degrees Celsius (68 degrees Fahrenheit),” Zhang said. “If companies asked cold chain logistics to transport, the fee is even higher than the goods they can sell.”

European and American firms have generally dominated the world’s diagnostic equipment market, but now China has become a vital hub for supplies.

At a time of such shortages, however, the case in Spain confirms that amid the urgent scramble for medical commodities which have become as scarce and valuable as gold dust this year, the buyer should always beware.