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Michael Scholl, Karl-Hubertus Gruber and Michael Marquardt look to the future of the immunodiagnostics market and see more consolidation ahead.
The future of the clinical immunodiagnostics market
Dr. Michael Scholl, Karl-Hubertus Gruber and Dr. Michael Marquardt look to the future of theimmunodiagnostics market and see more consolidation ahead.
The global immunodiagnostics market with a volume of €8 to €9 billion (USD 10–11.2 billion) is growing since the introduction of immune processes as a diagnostics instrument around 1960.
The growth at 5 to 7 % (2013) is still high despite the emergence of new competing test procedures. Whilst developments of measuring techniques such as labelling techniques (e.g. enzyme-based in addition to radioactive labelling) or extending the measurement to additional liquids (urine in addition to blood and serum) have shaped market developments in the past, other trends are now gaining in importance.
In order to maintain or extend their market shares, it is essential for companies to base their product portfolios (e.g. immunodiagnostics tests, test platforms, service) and market approaches on the dominating trends. This article initially highlights the influence of the environmental conditions before it emphasises the trends with direct links to the most important market players (patients, laboratories, test system manufacturers).
Geographical differences. Today about 60% of the immunodiagnostics' market volume can be found in the developed industrial nations (United States, Europe and Japan) (2013: 2 to 7 % growth), an additional 15 to 20% is accounted for by the BRIC (Brazil, Russia, India and China) markets, which are rapidly gaining in importance (2013: 9 to 20% growth). Regional differences are generally linked to the developmental status of the respective economies. It can be assumed that these differences will be reduced in the future.
Brazil lags about 5 to 10 years behind the American market terms of its development. A lot of smaller international, but also local, manufacturers are active both in Brazil and also in China, in addition to the large international manufacturers. Based on Japan's example, a lot of the emerging countries have made market entry more difficult for foreign "me-too" products through state regulation. China and Brazil thus secure a share of the value creation of foreign manufacturers in their own country.
Political influences.On the one hand the governments in the developed countries adapt the reimbursement rates to the costs for the reimbursement and press ahead with these proactively, as can be seen in France. On the other hand the final customer market has been extended through provision of broad health insurance cover to the populations. In the United States more than 800,000 were insured in January 2014 as a result of government reforms. China is striving to ensure complete coverage of the population by means of the ongoing reform of the health system. Entry into some countries' markets is made even more difficult due to extended regulatory hurdles. China already has a system that resembles the American FDA system. An alignment can also be observed in France.
Additional types of application. The impacts of personalized medicine and companion diagnostics have been difficult to forecast. The same applies to the spread of self-testing (e.g. in the field of haematology), which has already for instance become commonplace in the form of pregnancy tests.
Competing technologies. Due to the higher precision of information or efficiency, testing is on the increase in the indication areas of oncology and infectious diseases by means of molecular diagnostics (11% growth) and other new technologies (e.g. mass spectrometer, 8% growth). The linking of these test technologies with the immunodiagnostics in integrated systems considerably increases the amount of information gained and helps to balance out the disadvantages of individual technologies.
Shifts in Demand
Aging society.The increasing global average age increases the demand for the testing of age-related diseases and physiological malfunctions. This applies in particular to the indication areas of oncology and osteology, organic malfunctions (e.g. chronic kidney disease, cerebral strokes or heart attacks) and their risk factors (e.g. high blood pressure, hardening of the arteries), and also fertility disorders.
Increasing prosperity. Increasing prosperity, particularly in emerging markets such as the BRICs, permits high hygiene standards and consequently reduces the need for the testing of "poverty parameters", for instance of standard infectious diseases such as hepatitis or typhus. At the same time the demand for "prosperity parameters" is assisted, such as the testing of allergies the emergence of which goes hand in hand with improved hygiene, non-lethal diseases or early preventive testing (e.g. dementia, vitamin or nutrient deficiency).
Emergence and disappearance of trend parameters. The demand for prosperity parameters is closely linked with the current standard of knowledge and is accelerated by the media's interest in it. For instance the increased interest in ADHS (attention deficit hyperactivity disorder) also ensures the focus on linked tests increases.
Fewer Providers, More Efficiency
Laboratory consolidation.As a reaction to increasing cost and competing pressures, the major test providers have increased their efficiency by taking over smaller providers. Medium-sized and smaller providers have merged together in associations.
Cross-border testing. Due to the increase in efficiency and consolidation an increasing number of international providers are forming with branches in different countries (e.g. Bioscentia, Sonic Healthcare).
Automation and system integration.A lot of countries are pressing ahead with laboratory automation. This is due to a lack of specialist personnel in addition to the reduction of costs this offers. The US can be seen as an example where an increasing number of hospitals have started to view their laboratories as profit centers and only just over half the number of laboratory specialists required are actually trained.
Consolidation. The leading manufacturers (e.g. Roche, Siemens, Abbott, Beckman Coulter) will continue to integrate smaller attractive companies with new concepts or have them incorporated through partnerships (e.g. Roche).
Because of the degree of development of immunodiagnostics technology that has already become greatly advanced, one can assume that fewer western manufacturers will enter the market. In the emerging countries, manufacturers have already established themselves that will soon force their way onto the international market and can break up the prevailing linking of systems and reagents of one manufacturer. Several small manufacturers with open systems have penetrated the market (e.g. Yantai Addcare), for whom other local manufacturers provide a broad portfolio of cheap reagents, in this way. However, the products still have to prove that they are of the required quality.
Strengthening of the reagent portfolios. A lot of other manufacturers are striving to create unique parameter portfolios (e.g. Thermo Fisher/Phadia: allergies and autoimmune diseases). This is to ensure they hold their own against the more efficient machines of the major competitors or extend these with the financially attractive "me-too" parameters of the major manufacturers (e.g. Diasorin). Small manufacturers mainly concentrate on new parameters with a lower test workload.
Diversification of technology portfolios. A lot of small to medium-sized manufacturers with sufficient resources copy the larger manufacturers to offset drops in revenue in the immunodiagnostics field and extend their system portfolio through the addition of further diagnosis technologies (e.g. Diasorin with molecular diagnostics).
The Road Ahead
The market of the future will be characterized by greater demand for welfare parameters where large laboratories will increasingly conduct the tests. A lot of the tests conducted with immunotechnology to date, especially in the indication areas of infectious diseases and oncology, will be replaced by a different technology, such as mass spectrometry or molecular diagnostics. Many smaller manufacturers are attempting to differentiate themselves from the broad "standard parameter portfolios" of the major manufacturers to ensure they can also hold their own in the market of the future. The majority of the manufacturers in the BRIC markets will expand to generate additional growth.
About the Authors
Dr. Michael Scholl is managing director at Homburg & Partner, an internationally operating management consultancy based in Mannheim, Germany; Karl-Hubertus Gruber is a client manager in the Competence Center for Health Care; and Dr. Michael Marquardt is consultant.
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