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News

Kalorama reports on the changing nature of the IVD market

Kalorama Information : 27 August, 2008  (Company News)
A new report from Kalorama Information points out that IVD companies are no longer limiting themselves to selling testing kits to laboratories, but are now performing the test themselves and selling the service.
IVD companies have established cGMP- and CLIA-registered labs by which they offer their proprietary tests to physicians, hospitals and reference labs. The report, ‘Diagnostic Test Service Commercialisation in Multiplex and Esoteric Testing: A Roadmap to Diagnostics in the 21st Century’, details the reemergence of these company labs, boosting a $4.8 billion segment of the diagnostics market that is expected to grow 15 percent each year for the next five years.

“Test services are making a comeback,” noted Shara Rosen, Kalorama Information’s senior diagnostics analyst. “Many of these tests are outside the oversight of traditional FDA and CE Mark test commercialisation and so may seem to be coming to the market by the back door.”

According to the report, profit rather than regulation avoidance is driving test services. One of the fastest growth rates in diagnostics is in esoteric testing. Esoteric test service revenues reached approximately $4.8 billion in 2007, representing about 12 percent of the US lab service market. IVD companies with CLIA-registered company labs will compete for this growing business with reference labs and tertiary hospital labs offering test services.

But diagnostic companies should consider their ‘back door’ approach carefully. Kalorama notes a number of factors that are important to successfully commercialise test services. A test should be unique, fulfill a significant perceived need, be reimbursed by public and private payers, improve upon an inefficient incumbent test, use a technology that falls within the realm of current medical practice and be written up in a peer reviewed medical journal.

“Success in this new test commercialisation model may appear like serendipity - being in the right place at the right time,” Rosen said. “But it is more a question of successful product development.”

Kalorama Information’s ‘Diagnostic Test Service Commercialisation in Multiplex and Esoteric Testing: A Roadmap to Diagnostics in the 21st Century’ discusses what companies have done and what new entrants can do to assure the successful commercialisation of their test and looks at some of the known companies and products and the market forces that will shape the future of this business model.
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