Daily Stock Market Reports

The entrepreneurs riding the rapid test rollercoaster


Rapid antigen tests (RATs) have suddenly become big business amid the latest COVID-19 iteration, the fast-spreading omicron variant.

A report last year by Grand View Research estimated the market for COVID-19 RATs would grow to $US8.3 billion by 2027. This is out of a total global COVID-19 diagnostics market predicted to reach $104.7 billion at the same point.

Michael Photios is representing Hough Pharma.  Janie Barrett

Hough Pharma, which is importing rapid antigen tests manufactured by Chinese company Acon Biotech, supplies rapid testing kits in 13 countries.

Since omicron triggered panic buying of RATs in the lead up to Christmas, and as Australians sought informal testing before regional or interstate travel, there have been reports of retailers gouging customers with significant mark-ups, selling individual tests instead of in packs of five or more, and consumers reselling tests on social media.

The government has since made it illegal to sell RATs at a significant premium, while the Australian Competition and Consumer Commission has murmured about regulatory action.

While Labor leader Anthony Albanese has called on the government to make RATs free for all, the government has promised this for concession card holders only.

Mr Hough, who was in discussions with the federal government in late December about the supply constraints with rapid tests, said he preferred a Medicare-type rebate for the tests, rather than sending them out free to all households – something that would only worsen the supply crisis.

While importers of rapid tests, and the manufacturers themselves, are not the point-of-sale retailers ripping off desperate consumers, they are certainly enjoying large windfalls since the start of the pandemic.

Innovation Scientific, which manufactures the InnoScreen test, is the only Therapeutic Goods Administration-approved rapid test that is manufactured locally. However, its accuracy ranks among the lowest of the 18 tests that have gained regulatory approval for use in Australia.

Clinical sensitivity is ranked on a scale where “acceptable” is above 80 per cent accuracy, and “very high” is above 95 per cent. Just eight of 18 tests are rated “very high”, and none of these are manufactured in Australia.

Innovation Scientific was set up in 2014 by Hebei-born Qixin “Kevin” Gao, and it now counts among its shareholders an array of individuals based in Beijing, Hebei and Shanghai.

There are, however, some recognisable Australian names behind some of the country’s nose swab suppliers.

Pantonic Health was one of the first suppliers to gain approval to sell its CareStart tests, manufactured by US company Access Bio.

Julie Bishop with David Panton, who is a director at Pantonic Health. Louise Kennerley

Pantonic is run by David Panton and his daughers Sally and Laura. The property developer Mr Panton is perhaps more well known for being partnered with former foreign affairs minister Julie Bishop.

Pantonic, which helped supply tests for the government’s Howard Springs quarantine facility, Twiggy Forrest’s Fortescue Metals Group and Commonwealth Bank, has helped the fortunes of Access Bio investors.

When Access Bio’s tests gained emergency authorisation by the US government in mid-2020, the company’s shares, listed on the South Korean stock exchange, shot up 800 per cent. Although the rally was short-lived, shares in the KRW583 billion ($680 million) Access Bio are still more than 300 per cent higher than pre-pandemic.

While Pantonic has been in the pharmaceuticals industry for two decades, some suppliers appear to have been opportunistically set up specifically to fill the immediate market need for RATs.

Motion One was registered in February 2021 by Elizabeth Bay entrepreneur Austyn Campbell, whose day job is to lead US fitness fashion group Bala’s push into Australia and the surrounding region.

Fitness entrepreneur Austyn Campbell established Motion One, which supplies Orawell tests.  Janie Barrett

Motion One supplies Orawell tests manufactured by Jiangsu Well Biotech, a subsidiary of Chinese conglomerate Jinsheng Group, which is chaired by Xueping Pan, a member of China’s powerful National People’s Congress.

Jinsheng, which has more than 100 factories worldwide, manufacturers everything from metal cans to peanut oil. It has been accused of accepting forced Uyghur labour in China’s Xinjiang region for its separate textiles operations.

But Jinsheng is just one of a number of Chinese manufacturers filling the orders for Australian RAT consumers.

AM Diagnostics is the local supplier for tests made by Hangzhou Alltest Biotech Co, a RMB6.3 billion ($1.4 billion) company that listed on the STAR Market of the Shanghai Stock Exchange in late March last year.

Although shares in Alltest surged more than 30 per cent on debut, the stock pared back these gains over the year until November, from which point the stock has gained more than 20 per cent amid the resurgent omicron strain.

Although the company was founded in 2009, Alltest’s revenue has jumped almost 500 per cent since the coronavirus pandemic. The company naturally jumped at the opportunity presented by the outbreak in China at the start of 2020, and by the end of January had already invested RMB2 million to develop new COVID-19 antigen and antibody rapid tests.

Matthew Fry, who is importing the tests for his Perth-based AM Diagnostics, has also been diversifying his COVID-19 business. He has also brought to Australia air purifiers called PlasmaGuard, which claim to “virally inactivate” airborne COVID-19 in an hour.

Along with AM Diagnostics, another local supplier has also secured supply of tests manufactured by Hangzhou Alltest Biotech, under the JusChek brand. Compliance Management Solutions, led by Melburnian consultant George Loizou, offers his services to companies looking to import medical devices, cosmetics or therapeutics into Australia, as well as other Asian nations.

European-based medical supplies distributor 2San has gained approval to supply Lyher-branded tests made by rival Hanzhou-based manufacturer Hangzhou Laihe Biotech. 2San founder and managing director Simon Whiley is also the founder and chairman of Havwoods, a flooring company.

Abbott Rapid Diagnostics, listed on the New York Stock Exchange, imports its own Panbio-branded tests manufactured in Germany. In 2020, revenue in its diagnostic products operations rose 40 per cent, thanks to increased sales of rapid diagnostics from $US2 billion in 2019, to $US4.4 billion.

Ecotest branded RATs manufactured by another Hangzhou company, Assure Tech, are being sourced by local supplier Emergence Technology. Based in Melbourne, Emergence is controlled by sole director and shareholder Cun Liu, who was born in the Chinese city of Qindao.

The RMB8.8 billion ($1.9 billion) Assure Tech, which listed on the Shanghai stock exchange in November, has enjoyed a 65 per cent stock price rise in under three months.

While many importers and manufacturers are riding the fortunes of the coronavirus rollercoasters, it hasn’t been so easy for others.

Before it struck a deal to import Assure Tech RATs, Emergence had signed an introducer agreement with ASX-listed biotech firm Cellmid, which until March 2020 had spent 12 years predominantly in the anti-ageing and hair-loss prevention business.

When it bought 12,000 testing kits from Chinese manufacturer Wondfo, Cellmid was accused by the ASX of potentially breaching continuous disclosure rules.

Its chief executive had spruiked the tests in social media posts (later deleted) before the company told the market about its licensed distribution deal with the Chinese manufacturer.

Cellmid raised $6.3 million in May 2020 at 22 cents a share, ostensibly to buy COVID-19 antibody tests from Wondfo. The Doherty Institute, which reviews tests for TGA approval, found the sensitivity of Wondfo tests was far lower than the manufacturer claimed.

As of June 2020, Cellmid said it had sold 1500 tests. It’s latest annual report made no mention of its Wondfo tests.



Read More: The entrepreneurs riding the rapid test rollercoaster

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