BEIJING: Several of China’s largest medical testing companies have posted big increases in profit for the first three quarters of the year, as the country’s strict zero-COVID policy boosts spending in a minority of sectors while depressing the broader economy.
Over the past two weeks, at least six such companies have reported a soaring jump in earnings.
Shanghai Labway reported a 241 per cent year-on-year increase in net profit between January and September to 604 million yuan (US$82.70 million) while Guangdong Hybribio recorded a 130 per cent increase over that same period to 1.49 billion yuan, according to stock exchange statements.
Dian Diagnostics, Daan Gene, and Pony Testing all reported an over 90 per cent rise in their year-on-year profits between January and September, while Guangzhou Kingmed saw 46 per cent profit growth.
While China managed to keep domestic virus transmission extremely low in 2020 and 2021 due to measures such as strict border curbs, outbreaks and lockdowns have become more frequent this year due to the higher transmissibility of Omicron, fuelling demand for tests.
It is common for residents in China’s urban areas to take a free COVID-19 test once every two to three days. Local governments foot the bill, passing on the task of administering and processing hundreds of millions of tests on a daily basis to the private sector.
China defends its “zero-COVID” policy as crucial to saving lives and preventing its healthcare system from being overrun. It shows little sign of pulling back even as the economic toll mounts and the rest of the world has largely moved on from the pandemic.
Local governments, acting on Beijing’s directives, have expanded testing capacity this year and increased the number makeshift hospitals especially designed to receive patients that test positive for COVID-19.