Originally Published IVD Technology January/February 2005
INDUSTRY NEWS
IVDs on the fast track to growth
Steve Halasey
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| Table I. Worldwide in vitro diagnostic reagent sales by country/region, 2003 (actual), 2008 (projected). Source: Kalorama Information (New York City) (click to enlarge). |
When it comes to estimating the size of the marketplace for IVD products, market researchers don’t always agree. But this year, analysts are in agreement about one thing: there’s big growth ahead for the IVD industry.
An October 2004 analysis of the European IVD reagent market by the London office of research firm Frost & Sullivan (San Antonio, TX) concluded that demand for IVD testing is likely to escalate over the next five years as its value becomes more apparent to decision makers. According to Frost & Sullivan program manager Alex Wong, “Healthcare providers are beginning to recognize that IVD tests play a central role in improving overall cost efficiency and patient outcomes, due to early and more-precise diagnosis and continuous patient monitoring.”
The Frost & Sullivan report, “Strategic Analysis of the European In Vitro Diagnostics Market,” estimates that reagent revenues in the European IVD market totaled $5.75 billion in 2003. The top three revenue contributors were Germany (27%), Italy (21%), and France (20%). The report projects that such revenues will reach $9.8 billion in 2010, at a compound annual growth rate (CAGR) of 7.9%.
Molecular biology, coagulation, and hematology rank as the disciplines in which manufacturers are most likely to benefit from future sales growth.
According to the report, the increasing European adoption of IVDs is partly the result of newly developed markers and assay technologies that offer greater sensitivity, higher specificity, faster turnaround time, and less cross-reactivity than previous products. Also contributing to European market growth is the gradual adoption of point-of-care testing in primary-care settings.
Nevertheless, manufacturers will still face challenges when seeking to tap into Europe’s growth areas. “Central laboratories are reluctant to invest in new, often premium-priced IVD tests that may require a complete restandardizing of practices,” says Wong. “Suppliers need to better demonstrate the cost benefits of using IVDs in view of the budgetary constraints.”
Impressive as Europe’s projected growth may be, other analysts see even greater opportunities for IVD manufacturers that are prepared to sell into less-established markets. According to a November 2004 report by Kalorama Information (New York City), The Worldwide Market for In Vitro Diagnostic Tests, double-digit increases in the emerging markets of China, India, and Latin America will significantly boost worldwide sales revenues for the IVD industry over the next five years.
The Kalorama report pegs the size of the worldwide market for IVDs (including all laboratory and hospital-based products, and over-the-counter product sales) at $27.7 billion in 2003. The market is expected to grow 7% annually to $39.3 billion by 2008 (see Table I).
According to Kalorama, 85% of worldwide IVD sales are currently in the established markets of North America (43%), the European Union (31%), and Japan (11%). By 2008, however, their share of the total market is expected to decrease to 80%.
Emerging economies in South America, Eastern Europe, and Southeast Asia are expected to pick up the slack, growing from 6% of the world market in 2003 to 10% in 2008. Overall, says the report, emerging markets will experience 10–20% annual growth while the developed world will see annual growth of 5–7%.
The Kalorama report highlights technological advances among the drivers of industry growth. “Technological advancements—specifically those in device miniaturization, data digitization, and the Internet—form a technical synergy that will permit IVD tests and devices to maintain a central role in disease management,” says the report. “By 2010 many IVD analyses, both lab-based and those designed for point-of-care testing, will use some variation of miniaturization and ‘chip’ techniques.”
Trends favorable to IVD market growth include the increased use of “data, data, and more data—accompanied by the inevitable use of data—to evaluate the medical usefulness and necessity of using a specific device,” says Kalorama. “Medical device usage will be based on performance data, contribution to patient outcome, and a cost-benefit analysis.”
But, like Frost & Sullivan, Kalorama also cautions that manufacturers will have to work at getting paid for their products. “Technology is far ahead of healthcare regulations and reimbursement plans,” says Kalorama. “The onus is therefore on manufacturers to prove that their new intervention is not only effective but also supplies a cost-effective treatment alternative.”
Copyright ©2005 IVD Technology
