Frost & Sullivan: Multi-disciplinary innovation impacting the Global Therapeutic Diagnostic Market
Despite economic and industry challenges, the global in vitro diagnostics (IVD) market continues robust growth. The United States and Europe are mature regions that collectively contribute almost 60% of the worldwide revenue. That stated, Asia-Pacific is being widely recognized as a fast-rising market with immense potential with 17% of percent of global sales in 2015. The increasingly ageing population, need for rapid diagnostic results, emergence and re-emergence of infectious diseases, and growing lifestyle disorders are expected to accelerates the global IVD market. At the same time, the IVD market is constantly evolving. Mega Trends such as consolidation, automation, and reimbursement policies affect every aspect of the market. The growing importance of diagnostics in patient care is expanding beyond hospitals and laboratories to homes, long term and chronic care, and other segments in healthcare. Apart from the major trends in IVD, there are other key trends like growing digitalization of healthcare to enable a more efficient patient care continuum.
Among IVD segments, Molecular diagnostics is a prominent one. Molecular diagnostics is an emerging segment in APAC, with companies facing stagnant growth in mature markets, the concept of pharmerging countries is the next landing space for companies. Significant rise in healthcare expenditure, universal coverage, ageing population and willingness to pay among consumers are key aspects for companies to focus on APAC region. Another key component of IVD, the Point-of-care testing (POCT) is gaining instant popularity due to the growing need for rapid tests in emergency rooms, operating theatres, recovery rooms, cath labs, and intensive care units. Most companies are strengthening their R&D focus for the development of highly sensitive and reliable platforms to address the overwhelming global needs for IVD diagnostics.
Key trends in the global market include regulatory changes, a shift to data-driven healthcare, unifying technology investments, lab consolidation combined with automation, and internal and external convergence.
Trend 1: Changing Reimbursement Models and Regulations
Government regulations impact IVD market growth, with most nations developing increasingly structured and stringent policies that influence product launches. China and India are among the IVD market hot spots. Regulatory leniency varies by country, Japan has the least lenient regulations; however, recent developments are motivating manufacturers to invest in the country. China has moderately lenient regulations favoring domestic companies. As a result, Tier 1 companies are using partnership approach with local vendors and distributors to expand their market share.
Trend 2: Investing in Unifying Technology
In the past, physician preferences dictated the type of tests and devices used in each market. The current market, however, is strongly influenced by changes in reimbursement and regulatory policies that pressure hospitals to contain costs and optimize patient outcomes. This is resulting in the restructuring of hospital business models, affecting the way IVD companies add value to their product portfolios. There is a clear shift from volume to value- based healthcare inspiring the IVD companies’ business models. For example Large and established companies are moving away from certain diagnostic fields, such as diabetes, to widespread diseases such as cancer and personalized solutions. There is also a push to integrate Big Data analysis in diagnostics practices. More IVD companies are shifting from creating new products to a more cost-efficient model of developing add-ons that increase the efficacy and accuracy of tests. This is becoming the prevalent model for established companies.
Trend 3: Automation and Digitalization of Labs
There are various factors influencing consolidation and automation of laboratories, such as increasing automation, budgets cuts, competitions from other technologies, escalating cost and so on. Increasing automation is likely to limit or eliminate human error during sample preparation, uploading tests, and analysis enabling laboratories to support the growing demand for IVD testing and produce better test results. While, reimbursement cuts are forcing hospitals and labs in the private and academic sectors to consolidate, higher instrument/reagent prices and maintenance fees are pushing labs to consolidate.
Trend 4: Shift to Data-Driven Healthcare
Patients are becoming more comfortable with digital devices and services as healthcare stakeholders invest in digital strategies to increase efficiency and improve cost-effectiveness. Integration of technology in labs and hospitals are driving clinicians, data analysts, and corporate leaders, among others, to extract meaningful information from data to deliver higher-quality, more coordinated healthcare services. Accountable care organizations and laboratories emphasize diagnostic testing integrated with hospital systems to harness data while monitoring individual patients.
Further, with big data revolution and emergence of concepts like real-word data in healthcare, Big Data analytics has become the central talking point in the Global Life Science Research Tools industry. Academic institutions, research organizations and commercial companies are increasingly looking to adopt big data analytics in genomic analysis to develop personalized and precision medicines. Companies such as IBM Watson, Phillips and Illumina have been front runners in such efforts and it is likely that by 2020, big data analytics will play a key role in genomics and bioinformatics markets.
Trend 5: Consumer Lab Testing
Innovations in technology are transforming the role of conventional lab testing, providing more options for consumers and changing the business models of manufacturers and service providers. An emerging trend in the US is movement of testing from conventional labs to retailers such as Walgreens. Consumers can look forward to ordering tests directly without having to visit a physician or hospital. Independent companies offer prices that are 50% to 90% less than Medicare costs by removing physicians from the equation, which is in direct competition with many larger lab service organizations. For example, the evolving consumer lab testing trend will lead to more efficient, accurate, and time-saving tests that would be cost-effective and would offer immediate access to diagnosis and transparency in results. Lab test manufacturers would need to market to a new consumer base, away from traditional physicians and clinicians.
Trend 6: Convergence of Life Science Research Services and Diagnostics Tools
A shift towards preventive healthcare from curative healthcare has resulted in a number of genomics companies focusing on the development of Next Generation Sequencing-based diagnostics tests. A number of industry leaders, including Illumina and Thermofisher, have already signed partnerships with consumer genomics companies to develop such products. Although a large number of such developments and partnerships are focused on oncology segment only, the trend is expected to expand towards cardiac and other disease segments as well in the near future as well.
Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? www.frost.com