American Association for Clinical Chemistry
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Expo Issue 2011: A Record-Breaking 2011 Clinical Lab Expo Kicks Off Today

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Expo Issue 2011

A Record-Breaking 2011 Clinical Lab Expo Kicks Off Today 
Forecasts Show IVD Market Primed for Growth

By Bill Malone

This year, the AACC Clinical Lab Expo continues its record-breaking growth, with some 675 exhibitors and more than 2,000 booths filling the Georgia World Congress Center this week. The 2011 Expo showcases the full spectrum of tools that clinical lab scientists are looking for to meet new challenges and keep up with the changing demands of 21st century healthcare. A long list of first-time exhibitors have chosen this year’s Expo in Atlanta to make their debut and display their new products, in all representing more than 25 countries from every region of the world.

So what’s behind this impressive international display of technology and innovation? Even though analysts report that 2010 saw relatively tepid performance for the worldwide in vitro diagnostics (IVD) market, experts are optimistic that over the next few year, the $46 billion market will be able to climb back towards the 6–7% compound annual growth rate that it enjoyed before the global economic downturn. Strong growth in emerging markets like Latin America and Asia Pacific, as well as new high-value molecular diagnostics tests and continued innovation in point-of-care (POC) and physician office lab products will offer opportunities for the companies at this year’s Expo to find success.

Emerging Markets Lead the Way

In 2010, estimates for the growth of the IVD market as a whole ranged from 4–5.5%. However, analysts agree that emerging markets like Asia Pacific are reaching double-digit growth, a trend that’s expected to continue (See Box, p. 8), noted Gerard Conti, vice president at the healthcare market research and consultancy firm Enterprise Analysis Corporation (EAC). “I think that in the past, many analysts have tended to underestimate the growth that’s taking place in emerging markets, especially Asia Pacific,” he said. “Some companies are reporting growth rates of up to 20 percent in that region now.” Overall economic growth in emerging markets has lead to a bourgeoning middle class and greater demand for healthcare services, and governments in these regions are also investing heavily in healthcare.

However, emerging markets are not only consumers of healthcare, but are also steadily gaining ground in their capacity to produce the latest in medical technology. In fact, they may surpass developed countries in innovative healthcare delivery over the next decade, according to a new PricewaterhouseCoopers report, “Medical Technology Innovation Scorecard: The Race for Global Leadership.” Growth in emerging market economies is attracting the focus of the world’s innovation resources and activity, and they are taking the lead in developing a new generation of smaller, faster, more affordable medical devices.

The U.S. currently holds its position as the global leader in medical technology, and because of decades of dominance, it continues to show the greatest capacity for medical technology innovation. However, the report predicts that the U.S. will lose ground to other countries during the next decade. The Innovation Scorecard also projects relative declines for Japan, Israel, France, the U.K., and Germany. By contrast, China, India, and Brazil are likely to see gains during the coming decade. China, which has shown the largest improvement in its medical technology innovation capacity during the past 5 years, is expected to continue to outpace other countries and reach near parity with the developed nations of Europe by 2020.

“A confluence of social, demographic, economic, and technology changes is altering the dynamics of the medical technology field,” said Mike Swanick, U.S. pharmaceuticals, medical device, and life sciences industry leader at PricewaterhouseCoopers in a statement. “As a result, ecosystems that promote medical technology innovation—with supportive elements such as access to financing, scientific knowledge, and patient interaction—are being established around the world. These changes are creating opportunities for companies, and entire nations, that are able to adapt to a rapidly evolving environment.”

The nature of innovation is changing as developing nations become the leading markets for smaller, faster, more affordable devices that enable delivery of care anywhere at lower cost, the report emphasized. Medical technology companies increasingly are seeking clinical data, new-product registration, and first revenue in non-U.S. markets that are becoming more attractive and supportive of new innovation. Medical technology innovators already are going first to market in Europe and, by 2020, likely will move into emerging countries before entering the U.S.

This trend has been especially true for many IVD companies, where they’re able to introduce new assays in Europe before the U.S., noted Conti, notable in the case of novel assays that require a lengthier premarket approval process from the Food and Drug Administration (FDA).

Molecular Segment Remains Growth Powerhouse

Pushed ahead by tests for infectious diseases, molecular diagnostics was still able to grow 10% in 2010, despite it being yet another difficult year for the global economy. A recent major molecular growth driver has been testing for hospital-acquired infections (HAI), as well as new assays for respiratory viral panels, said Mark Hughes, vice president and senior consultant at EAC. “We also expect to see more genomic assays, particularly in the cancer area, as well as the continued development of companion diagnostic assays, as IVD companies form relationships with pharmaceutical companies,” he said. “These new high-value molecular tests carry much higher prices compared to traditional tests.”

Greg Stutman, a director and senior consultant at Boston Biomedical Consultants, issued a similar prediction. “The infectious diseases segment will be influenced as the emerging countries continue to adopt nucleic acid testing methods for HCV, HIV, and STD testing, with the developed markets growing in infection control screening, such as Methicillin-resistant Staphylococcus aureus (MRSA) testing, as new reimbursement guidelines will not pay for medical conditions that are deemed preventable,” he said. “Personalized medicine will attract clout and investment from IVD and pharmaceutical players in efforts to better tailor drug therapy by developing companion diagnostics, which could impact the long-term market. Unfortunately, both applications are starting as laboratory-developed tests, which do not add to diagnostic market sales until they are converted to FDA-approved kits.”

Volume and Price

Across the IVD market, EAC is forecasting a world-wide 6.6% compound annual growth rate for 2010–2015. Depending on the discipline, this growth will be a product of a mix of prices creeping higher, as well as organic growth in volumes. Importantly, as the sophistication of automation increases for a test, the price-per-test increases, inflating the dollar amount in the market, Hughes said. “Anatomic pathology is a good example of that, where we’re seeing organic growth in test volume in the single-digit range just from more cancer cases,” he said. “But then when you add on the value of some of the new assays that always seem to be emerging and the value of automation, the immunohistochemistry segment of anatomic pathology is growing about 15 percent a year.”

No Explosive Growth for POCT Just Yet

Even though point-of-care testing (POCT) and physician office lab testing grew about 10% in 2010, with a projection for continued double-digit growth for 2010–2015 according to EAC, analysts are still cautious about this segment due to wild speculation in prior years that it would take over much of lab-based testing.

“We remember a time when people were saying that point-of-care would replace many tests performed in the central lab, and that never happened,” said Conti. “However, there have been some solid success stories, such as cardiac markers like brain natriuretic peptide, or coagulation monitoring. I think there was a time when people were thinking of point-of-care consisting of taking a normal machine and making it smaller, which becomes difficult at some point in pricing and technology. Now there are many innovative companies that have developed new technologies for point-of-care that have nothing to do with central lab methods, such as biosensor or microfluidic technologies, and these may boost further growth by hitting the right price for hospitals and physician offices.”

Stutman of Boston Biomedical Consultants noted that 2010 witnessed continued investment in POCT, despite the major slowdown in POC influenza testing that followed 2009’s unprecedented volumes due to the H1N1 pandemic. He also noted that several key POCT business deals were announced in 2010, including Alere being granted worldwide distribution rights to Epocal’s epoc hand-held blood gas product line, and bioMerieux and Philips announcing that the two companies will jointly develop Philips’s proprietary Magnotech technology for hospital-based POCT applications.