The diagnostic market is growing but is still only 6 per cent the size of the pharmaceutical industry.
The ten largest diagnostic companies have a combined market share of around 80 per cent.
Molecular diagnostics make up about 16 per cent of the total.
Laboratory services are dominated by clinical chemistry and immunodiagnostic tests. Both types of tests are run on automated equipment in large and small laboratories all over the world. Roche is the largest player in the IVD market with a 20 per cent market share. It is followed by Abbott Labs and Siemens AG with 11 and 10 per cent of the market respectively.
While the growth in mature markets is predicted to slow down in the near future, the rest of the world market is bound to expand. The diagnostic imaging markets in Brazil, Russia, India and China (known as the BRIC markets) are expected to grow at a compound annual growth rate of 10.5 per cent. The Indian IVD market alone is expected to more than double to $5.5bn by 2020.
Roche is a $49bn corporation, with 20 per cent of that total derived from its diagnostic division.
The Diagnostic division also recorded a larger growth compared to the company as a whole - 7 per cent versus 5 per cent (4 per cent in the Pharmaceutical division).
Roche continues to strengthen its position by personalized medicine-related deals and acquisitions.
Roche's Diagnostic division is the undisputed leader in the field of in vitro diagnostics with a 20 per cent share of the market. Roche's Molecular Diagnostics division is even more successful with almost a third (32 per cent) of the market.
Genzyme is an innovative biotechnology company offering a premium laboratory service to doctors in the US, with a focus on high-quality service.
DxS was acquired by Qiagen in 2009 for a multiple of 20 times its revenue.
Why? Because of the company's future strategic importance in personalized medicine, as well as its multiple partnerships with pharmaceutical companies.
SysMex Sales by Destination
SysMex is an integrated Japanese diagnostic company with sales of over $1.5bn. About a fifth of its sales are made in Japan and it is increasingly becoming a global brand with EMEA sales exceeding those in Japan.
The diagnostic market is complex and fragmented.
All diagnostic tests begin life as the result of biomarker research that leads to research assays that will test patient samples. From that point, however, development possibilities diverge as the diagnostic reaches new stakeholders.
Range of development cost and development timelines.
Additional cost for Pharma (Multiplex test)
|Hands-on Use Study||5M||5M||10M|
|Total Additional Cost $||100K||1.56M||1.65M||6.85M||17.05M||27.21M|
The basic cost of developing a diagnostic test can range from $500,000 to $15m, depending on the status and complexity of the biomarker/platform combination.
However, it costs far more to ensure that a typical molecular or companion diagnostic test is successful, because of the need for significant investment in market-building and development.
Profitability is very important in the diagnostic value chain, with a complex flow of payments undercutting market efficiency.
In most markets, pricing pressure at the global level drives down the annual cost of diagnostic testing, forcing efficiencies at all other levels.
|Drug name||Launch year||Test name||Test manufacturer|
|Lynparza™ (olaparib)||2014||BRACAnalysis CDx™||Myriad Genetic Laboratories, Inc.|
|Mekinist (tramatenib); Tafinlar (dabrafenib)||2013||THxID™ BRAF Kit||bioMérieux Inc.|
|Gilotrif (afatinib)||2013||therascreen EGFR RGQ PCR Kit||Qiagen Manchester, Ltd.|
|Kadcyla (ado-trastuzumab emtansine)||2013|
|Perjeta (pertuzumab)||2012||HERCEPTEST||Dako Denmark A/S|
|Xalkori (crizotinib)||2011||VYSIS ALK Break Apart FISH Probe Kit||Abbott Molecular Inc.|
|Zelboraf (vemurafenib)||2011||COBAS 4800 BRAF V600 Mutation Test||Roche Molecular System|