China Aims to Tame Cancer Gene Test Pricing With Bulk-Buying Plan

By Cui Xiaotian

Following a similar move for noninvasive prenatal testing, China is now poised to apply its powerful volume-based procurement system to cancer gene testing for the first time in a move that could reshape the industry.

On Aug. 14, the Jiangsu Provincial health care Security Administration released a draft plan for the province’s eleventh round of bulk purchasing for medical supplies, this time specifically targeting cancer gene-testing services. The plan was open for public comment until Aug. 29.

Gene testing is a standard procedure for mid- and late-stage cancer patients before starting targeted drug therapies, helping to predict a treatment’s effectiveness. As patients develop resistance, further tests are often needed to adjust medication regimens.

The market for these tests is diverse. Two main technologies are used: PCR and next-generation sequencing, or NGS. While similar in accuracy, they differ in scope. PCR tests look at a small number of fixed genetic sites and cost several hundred to a thousand yuan. NGS can analyze anywhere from a few to hundreds of genes, offering more information to match patients with drugs, but at prices that can rise to tens of thousands of yuan. In recent years, more patients have opted for NGS testing.

Unlike pharmaceuticals, cancer gene testing is a medical service with unregulated pricing. Many tests are not included in official medical service fee schedules, allowing third-party labs and hospitals to set their own prices for patients paying out-of-pocket. For similar or even identical NGS tests, prices can vary dramatically between provinces, hospitals, and whether the test is done in-house or sent to an outside lab.

A sales manager in a northern provincial capital previously told Caixin that for one NGS test with a company base price of 3,000 yuan ($420), the price to patients at an outside lab would be 5,000 to 7,000 yuan ($695 to $970). Inside some hospitals, that price could jump to 8,000 or 9,000 yuan ($1,110 to $1,250). The more genes tested, the higher and more inflated the price. Another product that costs 9,800 yuan ($1,360) in a Henan hospital is priced at 17,000 yuan ($2,360) in Shandong.

Most of that high premium, however, flows to hospitals and doctors, not the testing companies. Numerous industry insiders told Caixin that exorbitant sales costs and unclear business models have made it difficult for NGS testing companies to break even. Compounded by intense regulatory pressure from recent anti-corruption campaigns in the medical sector, many firms are struggling to survive.

Now, as local-level bulk purchasing for these tests appears imminent, the question is whether it will be a turning point for the beleaguered companies.

How low can prices go?

According to the draft proposal, the procurement cycle will last two years. Hospitals that performed cancer gene testing last year must submit a purchase-demand forecast of at least 80% of their previous year’s volume.

Both third-party laboratories and provincial hospitals can participate in the competitive bidding. The rules, however, are more lenient for hospitals, which are allowed to charge more per test, have a higher chance of winning bids, and are given second-chance mechanisms to secure contracts.

The pricing rules differentiate between PCR and NGS tests, with bids based on the cost per genetic site or gene. For PCR tests, the maximum valid bid per site is 280 yuan ($39). For NGS tests, the maximum is 800 yuan ($111) per gene. The plan also includes tiered pricing: costs for additional genes are halved or cut by 95% after certain thresholds, with total costs capped. For an NGS test with more than 10 genes, the maximum price a third-party lab can charge is 7,500 yuan ($1,040), while a hospital can charge up to 10,000 yuan ($1,390).

The industry widely expects the move to standardize chaotic pricing and lead to significant cost reductions. An NGS test for fewer than 10 genes, which previously cost around 5,000 yuan ($695), would be capped at 3,900 yuan ($540) under the new procurement formula.

This has raised hopes among some patients. Tian Geng, founder and CEO of Gen-Mind, said it is appropriate to use bulk purchasing for mature products like PCR tests and small-panel NGS tests, calling it a benefit for patients.

However, Tian cautioned that the conditions are not yet ripe for procuring more complex NGS tests involving hundreds of genes or those used to detect residual disease or predict immunotherapy response. Such tests are technically complex, have high costs, and are offered by few certified companies.

Who qualifies to compete?

The Jiangsu procurement plan is limited to products that have received official regulatory approval. This means both hospitals and third-party labs can only purchase certified testing kits, narrowing the field of competitors. Historically, the more genes an NGS test covers, the harder it is to get certified. Many advanced tests, especially those analyzing over 100 genes, are currently offered as laboratory-developed tests, or LDTs, which are excluded from this procurement round.

An industry observer noted that 23 NGS tumor-testing products and 38 PCR products have been certified. The approved NGS tests are mostly for small panels covering common drug targets and are offered by companies including BGI Genomics, Geneplus, Amoy Diagnostics, and 3D Medicines. Only one large-panel test—a 425-gene lung cancer test from Jiangsu-based Shihe Gene—has been approved, a situation some insiders say lacks sufficient market competition to justify bulk purchasing.

A path to profitability?

Notably, the procurement plan does not mandate that hospitals meet their volume commitments. If a hospital fails to fill its reported testing demand, it will not be penalized.

This mirrors an earlier bulk-purchasing program for noninvasive prenatal testing, or NIPT, which Jiangsu pioneered in October 2024. That program slashed the price of NIPT, used to screen for fetal chromosomal abnormalities, by 50% to around 600 yuan ($83).

An official with the Jiangsu health care Security Administration explained at the time that the province targeted the testing *service* rather than the diagnostic *kit*. The kits often require proprietary sequencing machines that cost millions of yuan, and hospitals cannot afford to own every type. Procuring the service allows hospitals to participate regardless of which machine they own.

More than half a year after implementation, an industry insider told Caixin that the NIPT program has led most hospitals to purchase kits and conduct tests in-house rather than sending samples to outside labs. Despite falling birth rates, the person said his company’s sample volume in Jiangsu has still increased by about 15% since the program began.

Whether higher volume can offset lower per-test prices remains unclear. The most significant benefit, however, came after the program was launched: NIPT was added to the province’s list of official medical services and became eligible for partial insurance reimbursement.

This precedent has made many industry players optimistic about the cancer-test procurement. Tian said the program could help his company increase test volumes and capture market share.

Previously, companies operated on two models: selling equipment to hospitals for in-house testing, or having hospitals and doctors refer patients to outside labs. The latter has been severely curtailed by anti-corruption crackdowns.

“If samples are sent to third-party labs under bulk purchasing, it’s like the old referral model, just without the sales costs of maintaining relationships with doctors,” one industry insider said. “If it’s in-house testing, then whoever has more equipment installed in hospitals has the advantage. Either way, it’s good for companies.”

One provision in the draft proposal initially caused concern: a reference to a 2021 “negative list” for foreign investment that could have excluded U.S.-listed industry leaders like Genetron Holdings and Burning Rock Biotech. However, that clause was removed from the updated 2024 version of the list, according to a Caixin review.

Tian believes that standardizing cancer gene testing through procurement is not a bad thing for the industry. But unlike NIPT, the field of cancer genomics is varied and evolving rapidly. Applying a one-size-fits-all procurement model to services with vastly different gene panels, cancer types, and intended uses could hinder the industry’s development, he said. “It should be done step by step.”

Contact editor Lu Zhenhua (zhenhualu@caixin.com)

caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.

Image: angellodeco – stock.adobe.com