Strategic Analysis of the European In Vitro Diagnostics Market
Cost Efficiency and Innovation to Place IVD on Growth Track
Having been greatly underestimated in the past, in vitro diagnostics (IVD) are ready for a change in their value-proposition and positioning, as it moves from the realms of diagnostics towards treatment in the healthcare arena. Demand for IVD testing is likely to escalate over the next five years as its true value becomes more apparent to decision-makers.
Latest analysis from Frost & Sullivan revealed that revenues in the European IVD market were estimated at USD 5.75 billion in 2003 and are expected to reach USD 9.80 billion in 2010 at a compound annual growth rate (CAGR) of 7.9 per cent. Germany, Italy and France were the top three revenue contributors.
"Healthcare providers are beginning to recognise that IVD tests play a central role in improving the overall cost efficiency and patient outcomes due to early and more precise diagnosis and continuous patient monitoring," says Programme Manager Alex Wong from Frost & Sullivan
However, shaking off the misconception that IVD is a cost-centre and inconsequential to direct treatment remains a significant challenge, and there are still a few sceptics that doubt IVDs' capabilities in treating patients.
"Central laboratories are reluctant to invest in new, often premium-priced IVD tests that may require a complete re-standardising of practices," says Mr. Wong. "Suppliers need to better demonstrate the cost-benefits of using IVDs in view of the budgetary constraints."
Long-term health-economic studies can be used to illustrate that the benefits of IVD testing in terms of optimising patient management more than offset any concerns surrounding its costs. In fact, several case studies involving therapeutic drug monitoring have already shown that IVD-driven medication results in huge financial and therapeutic benefits.
Suppliers of IVDs could also integrate multiple tests such as immunoassays and clinical chemistry onto a single platform to save on costs and space in hospital laboratories.
Furthermore, IVD tests could also prove cost effective for patients by allowing them to take a more pro-active role in managing their own health. By relying on IVDs, patients are more likely to receive the appropriate treatment, and thereby avoid unnecessary and high-priced medical procedures.
While the IVD market is gaining in popularity, suppliers cannot afford to become complacent just yet. Post December 2003, participants need a compulsory Communauté Européene (CE) Mark/certification in compliance with the IVD Directive (originally approved in 1998). This could prove to be a potentially expensive and time-consuming task.
Moreover, with the addition of ten new states to the European Union in May 2004, keeping up with the labelling requirements as per the IVD Directive becomes all the more complex. Logistics involved with multilingual labelling and instruction documents will test the resolve of smaller firms.
However, there are ways to overcome these regulatory hurdles. IVD suppliers have been seen to save on time and costs for obtaining a CE mark by abandoning older generation devices or those products in low-volume regions that contribute very little to revenue growth.
High R&D and marketing costs also figure as a top industry challenge. Participants need to supplement their R&D efforts by forming strategic partnerships with universities, clinics and start-ups in order to increase innovative ideas and potential targets for clinical diagnosis.
"IVD suppliers can also collaborate with pharmaceutical companies for developing tests and identifying the potential patient-base," explains Mr. Wong. " Diagnostic tests may be used subsequently in conjunction with the appropriate therapeutics."
Despite the many challenges ahead, the future looks bright and IVD suppliers and investors have good reason to be optimistic. Molecular biology, coagulation and haematology rank as the most attractive markets where suppliers are likely to benefit from a host of new opportunities.
Improvements in new markers and assay technology, in terms of greater sensitivity, higher specificity, faster result turn-around time and minimised cross-reactivity are also increasing uptake of IVDs.
Growth in point of care testing (POCT) is another area of growth which will see IVD testing entering into primary care settings. The low-volume and medium-volume labs that accommodate testing requirements as de-centralised sites are likely to play a major role in capturing and retaining market share in the future.
It is evident that although cost is an important purchase parameter, suppliers cannot afford to sacrifice innovations that are key to improving competitive advantage in the IVD market.
"The healthcare arena is likely to remain cost-conscious and if IVD suppliers want to really succeed in the future, they need to look beyond cost and what they can do to fully understand the market and clinical requirements," concludes Mr. Wong.
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Topic world Diagnostics
Diagnostics is at the heart of modern medicine and forms a crucial interface between research and patient care in the biotech and pharmaceutical industries. It not only enables early detection and monitoring of disease, but also plays a central role in individualized medicine by enabling targeted therapies based on an individual's genetic and molecular signature.
Topic world Diagnostics
Diagnostics is at the heart of modern medicine and forms a crucial interface between research and patient care in the biotech and pharmaceutical industries. It not only enables early detection and monitoring of disease, but also plays a central role in individualized medicine by enabling targeted therapies based on an individual's genetic and molecular signature.
