EUROPEAN IVD MARKET
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bioMerieux produces its VIDAS reagents at its manufacturing facilities in Marcy l'Etoile, France.
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With the formation of the European Union (EU) and the emergence of the euro in 2002, the world began to see Europe as a single entity. In the IVD industry, that entity accounted for 30% of the world market in 2005, or approximately $9.7 billion. This is according to an April report from Kalorama Information, an independent market research firm, which also estimates that the market for IVDs in the EU will reach $11.7 billion by 2010.
But the report also asserts, and experts concur, that Europe really isn't a single market, but remains a collection of separate national healthcare services and regulatory environments. "It's really a mosaic, and not a united continent as far as health systems are concerned," says Thierry Bernard, corporate vice president of Europe, the Middle East, Africa, and customer service for bioMerieux (Marcy l'Etoile, France).
To succeed in this mosaic of a market, Bernard lists a few essentials that IVD companies can't ignore. The first, he says, is a serious and comprehensive distribution network. "Be close to the customers," he advises, "and really consider that each market should be addressed individually." As an example, he points to the Iberian Peninsula, Portugal and Spain, which many outsiders consider a single market. With their long history of cultural issues, the two countries don't appreciate being lumped together. Trying to handle Portugal from Spain, he says, is a mistake. The Nordic countries are also often addressed as a group, but not by bioMerieux. The company has four subsidiaries there to address each country individually even if some activities are centralized in Sweden.
Bernard's next requirement for success is a specialized team of experts and sales representatives. As in the United States, he points out, biology and diagnostics in the European markets are becoming more complex and customers are becoming more demanding. To offer the expertise that customers expect from their representatives, each member of the bioMerieux team specializes in a different area like bacteriology, immunoassays, and molecular biology. "You've got to go down to that level of precision," he says.
Third on Bernard's list is a marketing strategy that fits the big health issues. Infectious diseases and bacterial resistance are currently a big focus throughout Europe, he points out.
Close to the Customer
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bioMerieux's research laboratories in Marcy l'Etoile, France, are dedicated to immunoassay production.
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Founded in 1963, bioMerieux stays close to its customers with 18 subsidiaries and three production centers across Europe, according to Bernard. In 2005, the $1 billion–turnover company did 57% of its business in Europe, 26% in the United States, and the rest in Asia and Latin America. Bernard says there is no specific European approach to their R&D efforts. Rather, they take a global view when developing products with the input of all areas: Europe, North America, Asia-Pacific, Latin America, and developing countries. "Our focus in Europe is mainly infectious disease," he says, adding that this includes bacteriology—from culture to susceptibility testing, immunoassays, and molecular biology, primarily HIV viral load.
The company has manufacturing facilities in France, Italy, and The Netherlands, and tries to dedicate each location to one range of products, housing R&D and customer service along with manufacturing. This provides benefits from both an efficiency and a commercial standpoint. "Locally, it gives you a kind of critical mass," says Bernard.
Also a major player in Europe, Beckman Coulter (Fullerton, CA)—then Beckman Instruments—opened its first European facility in Germany in the early 1950s. Coulter, then an independent company, also started its European activities soon after World War II.
"As a global company, our clinical research is focused on outcomes, rather than geography; so our research focus, wherever that research is carried out, is on growth opportunities such as immunodiagnostics and molecular diagnostics," says Marcel van Kasteel, marketing director of diagnostics for the Middle East, Europe, and Africa. Similarly with product development and manufacturing, Beckman's focus is on the result, rather than on geography. "Our goal is to develop and manufacture the best products available, using our global resources to achieve that goal. We are fortunate in that we do have a network of global resources, so we are able to select the best location for any given activity, based on a variety of factors, such as local availability of expert knowledge, capacity, and cost," van Kasteel says.
Beckman Coulter has manufacturing facilities in Galway, Ireland; Krefeld, Germany; Marseilles, France; Salzburg, Austria; and Prague, Czech Republic. For Marseilles (RIA/immunology/ human antibodies), Prague (RIA/immunology), and Salzburg (ELISA readers), "we have specific technical expertise and experience in those particular technology segments," says van Kasteel. Galway was chosen in order to benefit from the favorable tax situation, and in Krefeld, the company produces high-volume/high-weight buffers and wash solutions, to minimize transportation costs around Europe. "For all those manufacturing sites, we are closer to our European customers and are able to respond to specific requirements of the European customer," says van Kasteel.
For Bayer Diagnostics (Tarrytown, NJ), its business in Europe began with the acquisition of Miles/Ames in 1978. Europe contributes approximately 40% of the total diagnostics revenue and is a major focus area for the company, according to Ian Alexander, head of the Bayer Diagnostics European region. On June 29, it was announced that Bayer's diagnostics division is being acquired by Siemens Medical Solutions (Munich), allowing Siemens to expand its position in the molecular diagnostics market. The purchase price of the division, with reported sales of 1.4 billion euro in 2005, is roughly 4.2 billion euro. The acquisition is subject to regulatory approval.
The division's portfolio includes products for evaluating and monitoring the therapy of cardiovascular disorders, kidney diseases, infections, cancer, and diabetes. The division's business units include laboratory testing, with the Advia Centaur and Centaur CP, Advia Clinical Chemistry, Advia LabCell and WorkCell automation, Advia Hematology and Clinitek Atlas systems; near-patient testing, with its Rapidpoint, Rapidlab, RapidComm, and Clinitek brands; and molecular testing, with its Trugene and Versant lines of tests and systems.
Bayer has a research and development center in Leverkusen, Germany, and manufacturing sites in Dublin, Ireland, and Sudbury, England. Immunoassay, hematology, and central lab urinalysis instrumentation is manufactured in Dublin. Sudbury manufactures blood gas and point-of-care urinalysis products. The Sudbury facility also manufactures and distributes reagents and instruments for the company's laboratory business, including the Advia Centaur, which is manufactured in Dublin, and the recently launched Rapidlab 1200, which is manufactured in Sudbury. A third manufacturing plant is located in Walpole, MA. "Having manufacturing sites located in Europe keeps the supply chain close to our customers, enabling us to better meet our customers' requirements for product delivery," says Alexander.
Healthcare Infrastructure
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A technician tests the Advia 2120 hematology system by Bayer (Leverkusen, Germany).
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Having a presence in Europe has proven essential as IVD companies face the challenge of navigating the differing healthcare infrastructures in the European markets. "Cost pressure in the laboratories, reimbursement, and regulations differ across the region," says Alexander. "Each country is still unique in its healthcare system, and currently they are all evolving. This means that our customers' needs may vary from country to country." To help stay on top of local situations, Bayer is set up with local organizations in all of the major European countries. "Additionally, we maintain a European regional organization to look at the best way to approach the common elements of the European healthcare systems," says Alexander. "This approach allows us to view trends across Europe, leverage our knowledge across our branches, and respond quickly to local issues."
Increased healthcare costs throughout, coupled with the aging population, put pressure on healthcare providers across Europe, which translates into pricing pressure on the diagnostics industry, according to van Kasteel. The introduction of diagnosis-related groups (DRGs) has also affected total reimbursement. "Our response is to work harder in the industry to communicate the added value and show the savings that IVD testing brings to overall healthcare costs," says van Kasteel. The European Diagnostic Manufacturers Association (EDMA), the European organization that coordinates the efforts of national associations representing the industry in the major countries of Europe, is also working hard to support initiatives to communicate the added value of diagnostic testing, he adds.
Although the European countries all have different reimbursement structures—and some have no reimbursement at all, different pricing structures, and different lab organizations, there are some common trends, according to Bernard. The market as a whole features significant healthcare spending, healthy economies, and a maturity of labs similar to the United States, he says. He predicts that the integration of labs will accelerate in response to pricing pressure as a measure to improve productivity. With this, value will also be a common trend. "More and more, it comes down to the economic value of your products to the lab," he explains.
The race for productivity and volume is changing the face of the European laboratory environment, according to Bernard. "For many years, you couldn't find any pan-European labs in Europe," he says, but now smaller labs are merging and those pan-European laboratories are emerging. This has both advantages and disadvantages. "It can make life simple because you've got one manager to negotiate with," says Bernard. "Obviously, it does increase pricing pressure." Big, pan-European labs are also more comfortable dealing with companies that have a local presence throughout Europe, he adds. "The fact that they can see that we are present wherever they are present makes it very safe for them."
Professional Education
Reaching out to the labs can be essential for IVD companies that want to get the word out about the benefits of their tests. But this can be a challenge. "We offer our customers, primarily laboratory personnel, education through accredited workshops and training during the year," says van Kasteel. "We normally offer educational information to physicians through our laboratory customers. This is a challenging issue for the whole industry, since there are generally not enough people to carry out this education efficiently, and the outcome is that many doctors may not be aware of the benefits of new diagnostic tests."
Bayer uses a combination of seminars, customer training sessions, and support for the educational efforts of industry associations in its professional education efforts.
bioMerieux has a dedicated training center in France, and opportunities for customer training at all of their subsidiaries throughout Europe. They also reach out to clinicians to work with them about emerging issues. Such campaigns can require a pan-European effort. "In Europe, instead of trying to convince one clinician, you have to convince many different clinicians in many different countries," Bernard says. Their subsidiaries also undertake individual professional education campaigns based on the issues facing their market.
Regulatory Environment
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bioMerieux produces petri dishes at its manufacturing facilities in Craponne, France.
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The regulatory environment is one area where the European market appears to be moving away from the mosaic model. With the implementation of the IVD Directive in 2003, the market is moving from a pattern of varied national regulations toward harmonization. Thus, products for which an IVD manufacturer makes medical claims must now be CE marked.
"The introduction of the IVD Directive enabled us for the first time to truly coordinate regulatory affairs activities within the European region," says Alexander. "Of course, the different national languages and healthcare systems mean we continue to need local regulatory affairs personnel in the major markets. But we have centralized our approach to registration and vigilance within the region, which makes our internal communications much more effective than before." As a corporate member of EDMA, Bayer also makes full use of the organization's regulatory intelligence and contacts at the European Commission to set the agenda for their regulatory affairs representatives at the national industry associations, Alexander says.
Beckman Coulter's business groups maintain staff thoroughly trained in the regulatory requirements for individual countries. The company has a quality and regulatory representative in each country to cope with the "day-to-day business of communicating with the appropriate authorities and ensuring regulatory compliance," says van Kasteel. "In addition, we have a European regulatory affairs team, which is responsible for the registration of products in the countries where we do business, as well as for postmarket regulatory affairs activities."
This measure is essential as individual country rights are always protected within harmonization activities. Individual countries each have official regulating bodies, where product declarations must be made. These bodies function as the certified bodies that regulate CE marking. But the influence of the EU is strong even in countries that are not member states, according to Bernard. "More and more, in those non-European community members, the local authorities are going to demand that your products are CE marked," he says. In addition, products and package inserts might be required to be labeled in all languages of the countries where they will be sold.
European Growth
Overall, the European IVD market certainly holds plenty of promise, with the Kalorama report estimating 4% growth per year. Beckman Coulter is planning to accelerate growth in Europe, according to van Kasteel, launching some new products in Europe before they are released globally. "Also, our significant European presence means we can develop and launch new products aimed specifically at the European market, complementing our range of global platforms," he says.
According to van Kasteel, Beckman is committed to growing its leadership positions in the field of biomedical testing in Europe and the rest of the world. "In product terms, we see growth opportunities emerging on a global basis, as new diseases and new technologies pose new questions and provide new answers. In geographic terms, Europe remains a major focus for the company, with high growth potential for our growing portfolio of products."
The addition of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia, and Slovakia to the EU in 2004 has provided new territories for market growth. In other countries such as Romania and Ukraine, bioMerieux has long-standing relationships with distributors, but is open to moving to direct subsidiaries, according to Bernard. "These are becoming more and more credible markets, more and more important markets," he says.
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Christina Elston is a freelance writer in Altadena, CA.
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Former Eastern Bloc countries have an advantage over developing nations in other parts of the world in that the level of scientific knowledge was maintained. "The scientific level and knowledge was already extremely good," Bernard says. "It makes those countries very interesting because they have the basics. I know that China is very fashionable, but long term, I really strongly believe in the potential of those economies, including, above all, Russia." Heavy investment in those markets by the EU and global organizations such as WHO and the UN make these areas even more attractive.
Another way for IVD companies to grow opportunities within Europe is to act as distribution partners for companies new to the market. bioMerieux has been working to leverage its experience and expertise in Europe, meeting with outside companies interested in distributing their products in those markets. "They need to come to Europe, because it's the number two market," Bernard says, "but they are afraid." The company currently distributes for Gen-Probe Inc. (San Diego), among others, and will be ready to introduce companies to all European countries and former Eastern Bloc countries as their presence grows there as well. "It's quite a good deal for them," says Bernard. "It takes time to build up an efficient distribution network. bioMerieux is a kind of ready-to-use channel, any time it fits our strategic objectives."
