Industry News
World IVD market growth boosted by developing countries
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Figure
1. Total IVD market revenue forecast. Source: Frost & Sullivan (San
Antonio, TX). (click to enlarge)
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Developing countries
offer the most promising growth in the world IVD market; and molecular diagnostics,
point-of-care (POC) technologies, and the dissemination of information to the
public will play a pivotal role in increasing worldwide IVD technology revenues,
according to reports issued by Frost & Sullivan (San Antonio, TX) and Kalorama
Information Inc. (New York City).
In 2000, world
market revenues for diagnostics were $19.9 billion, and they are projected to
reach $29.2 billion by 2007, according to Frost & Sullivan. Alternatively,
Kalorama reports that IVD world market revenues reached $22.47 billion in 2000
and will grow at a rate of 6% annually to $28.63 billion by 2005.
The U.S. market
is expected to experience modest growth compared with emerging economies such
as China, Japan, India, and Indonesia. These markets will experience 10–20%
annual growth, while developed segments are estimated to grow only 2–3%,
according to Shara Rosen, author of the Kalorama report.
U.S. companies
can benefit from overseas growth if they are willing to take some risks. "This
trend presents joint venture opportunities for the brave at heart," says
Rosen. "These countries cannot do it alone, nor do they want to."
Other areas of anticipated growth include the Pacific Rim and Latin America.
Asia, however,
stands to be the most promising area of growth according to the Kalorama report.
"Asia's rapid economic growth and the recent entry of China into the
World Trade Organization make the area the biggest future market for IVD products,"
says the report.
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Figure
2: The world market for diagnostics was estimated at $22.47 billion in
2000 and is expected to grow 6% annually to $28.63 billion by 2005. Currently,
North America, Japan, and Western Europe compose 85% of the world IVD
market. That total is expected to drop to 75% by 2005. Source: Kalorama
Information Inc. (New York City). (click to enlarge)
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Molecular diagnostics,
point-of-care testing, and diabetes testing are dominant segments of the IVD
market and will continue to grow. In both reports, molecular diagnostics is
slated to drive the future of the IVD market, but not without added effort from
industry. Public knowledge and information is key and, according to Kelly Westfall,
industry analyst for Frost & Sullivan's Discovery and Diagnostics Div.,
heightened marketing to physician office laboratories (POLs) and the general
public might just give the molecular segment the push it needs.
"The molecular
diagnostics companies need to penetrate the barriers to sales and get to the
POLs," says Westfall. "The main barrier is that they are geographically
scattered; there are 5200 in the United States alone."
Even when taking
the geographical barrier into account, Westfall is still unsure what is keeping
companies from taking a more aggressive role in marketing diagnostic technologies.
"Companies should really be aware that the climate of the industry is changing,
and public awareness is going to be a key issue," she says. "Overall,
the general public is developing an increased understanding of the applications
of in vitro diagnostics, which can only positively affect the market."
Rosen agrees that
public awareness could play a key role in developing not only the molecular
market, but also the IVD market in general. "Wide dissemination of medical
information in the media and on the Internet has spawned a more-informed population
that is prepared to seek out new technologies," she says. "Look at
how Digene has used the female lobby. They focused on women's groups and
women actually began asking their gynecologists for the products."
In addition to
molecular diagnostics, POC technology will be another driving market force,
and Westfall says the POC Connectivity Industry Consortium (CIC), which developed
a common POC connectivity standard, will act as a catalyst for market growth.
"POC is one area where you'll really see some changes. The standardized
protocols will improve the technology, especially from the end-user perspective,"
says Westfall. Biosite (San Diego), Careside (Culver City, CA), I-Stat Corp.
(East Windsor, NJ), and Quidel (San Diego) are among the companies that have
already begun making modifications to their instruments to meet the standards
developed by the CIC.
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Figure
3. IVD segment revenue forecast. Source: Frost & Sullivan (San Antonio,
TX). (click to enlarge)
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Although Rosen
acknowledges the market potential for POC technology, her forecast is not as
optimistic as Westfall's. "Back in the early 1990s, the mantra was anything
that was nonesoteric was going to go point-of-care," says Rosen. "But one can
see that point-of-care, in the physician's office and in the hospital, has not
quite taken off."
For POC technology
to reach its full market potential, there must be an increase in sensitivity
and specificity. Currently, rapid POC immunoassays account for $335 million
of the worldwide IVD marketplace. Rosen says the actual potential of the market
is $1.9 billion, but to reach this point, there must be changes in the infrastructure,
including perception, practice, and reimbursement.
"Reimbursement
is usually 10 years behind the technology. First, the technology must prove
that it's cost-efficient and reliable. If POC devices do not produce reliable
results, reimbursement will not happen. I just don't see the technology
really expanding until 2005," says Rosen.
Market share will
continue to be divided among fewer and fewer companies. In 1985, 60% of market
revenues were generated by the top 10 largest IVD companies; in 1995, it was
67%; and in 2000 it was 79%. Rosen says this trend will continue as long as
the mergers and acquisitions are win-win situations for companies.
In 2001, Abbott
Diagnostics (Abbott Park, IL) acquired Vysis; Roche (Basel, Switzerland) picked
up AVL and Amira Medical; and Johnson & Johnson (New Brunswick, NJ) acquired
Inverness Medical. "These are the types of situations in which everybody
wins. The platform gets out there and the company with the platform gets to
enhance its test menu," says Rosen.
However, small
players still have a chance for autonomy in the market, if they find a niche
for themselves. The key for any IVD company's survival is to keep moving
forward, according to Westfall. "Companies must acquire or develop new
technologies to maintain a foothold in the industry," she says.
"After being in the doldrums of economic growth, IVD companies have been revived by the genetic revolution," says Rosen. "The world diagnostics market is on its way up."
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