Vol. 12 •Issue 12 • Page 10
Diagnostics: A Focus on Personalized Medicine
Growth in the IVD market is highly differentiated by product segment; exceptional growth is predicted in this arena for the next five years.
Growth in the in vitro diagnostics (IVD) market has been sustained over the last few years by consumer-driven, diabetes-related whole blood glucose (WBG) testing, as well as new product introductions, particularly in the nucleic acid testing (NAT) market.
The general increase in the incidence and prevalence of diabetes, as well as more aggressive use of insulin and oral therapeutics necessitating WBG monitoring, contributed to the increased sales for WBG testing. Companies also had success with direct to consumer advertising for this product segment, increasing sales for branded products.
NAT growth was primarily driven by international sales of blood processing products; many governments mandated the use of NAT to protect the blood supply, thus escalating the acceptance rate for these new tests. New therapy introductions for hepatitis C (HCV) also helped drive sales of HCV viral load testing products, reiterating the IVD mantra: Therapy drives testing.
The 2002 worldwide IVD market grew +8 percent AD (+7 percent Local Currency (LC)) to $22.9 billion from $21.2 billion in 2001, according to BBC’s 2001-2002 IVD Market Review. IVD market LC growth worldwide was stable compared to 2001 (+7 percent LC), but continued to exceed growth in prior years; LC growth for 2000, 1999 and 1998 was +5 percent LC, +6 percent LC and +4 percent LC, respectively.
Geographically, the worldwide IVD market exhibited similar growth across geographic segments, except in Europe and rest of world (ROW) geographies. In Europe, weak economic conditions caused revenue growth to fall, while ROW experienced higher than average growth.
Worldwide IVD market growth varied widely among the three end-user segments. The patient self-testing (PST) end-user segment, which was primarily composed of WBG meters/strips, again drove revenue growth in 2002. The laboratory end-user segment came in at a distant second supporting growth, and the ambulatory segment revenue growth was the smallest growth driver for 2002.
The $1.7 billion in incremental revenue in the 2002 worldwide IVD market versus 2001 was primarily attributed to the following:
•The IVD diabetology test products market growth provided significant incremental revenue versus 2001.
•The IVD NAT products market drove growth within both the IVD infectious disease test product and IVD blood processing test product markets.
•The IVD cardiac test products market broadened on the strength of troponin and BNP testing.
•The IVD blood grouping and typing (BGT) test products market developed due to a shift toward gel-based testing and significant U.S. price increases.
•The IVD coagulation/hemostasis test products market increased as a result of a system repurchase cycle.
These five combined segments provided almost 80 percent of the incremental IVD revenue over 2001.
The laboratory systems IVD market growth was similar to 2001, with growth varying among its mature clinical segments:
•The worldwide IVD immunoassay system (IAS) market experienced similar growth to 2001. More than four companies exhibited double-digit revenue growth, including Beckman Coulter, DPC, Fujirebio and Roche Diagnostics.
•The worldwide IVD clinical chemistry laboratory segment (CCLS) market maintained growth on continued price stability and increased cash realization for instrument placements through capital sales and third party leases.
•Relative to 2001, the worldwide IVD laboratory hematology test products market grew slightly higher in 2002 on the strength of new high-volume system placements into existing accounts.
•The worldwide IVD laboratory coagulation/hemostasis test products market increased, driven by the replacement of older MLA coagulation systems in the United States.
With continued support provided from core IVD laboratory system market segments and incremental revenue achieved through high-growth clinical segment sales that included IVD diabetology test products and IVD NAT products, the 2002 worldwide IVD market continued to exhibit strong growth of +8 percent AD (+7 percent LC).
A Closer Look at Growth Drivers
Worldwide WBG meter and strip test product growth drivers in 2002 included a general increase in the incidence and prevalence of diabetes. More aggressive and earlier use of insulin and oral therapeutics also necessitated WBG monitoring.
Additionally, increased sales and marketing promotional activities by WBG meter and strip test product competitors to end-users, in combination with more attractive WBG meter and strip test products, increased WBG test utilization. Proactive diabetes disease management programs allocated to support these programs.
Developing economic and health care systems in emerging country markets, particularly in Eastern Europe and Latin/South America, also contributed to the growth in this segment. WBG test volume increases occurred because of these growth factors in all end-user segments, including the hospital end-user segment.
While no major new WBG meter and strip test products were launched by the “top four” WBG competitors in 2002 (Abbott, Lifescan, Bayer and Roche), Roche benefited from a full year of worldwide Accu-Chek® Active™/Compact™ availability. Similarly, LifeScan continued to benefit from the worldwide rollout of its ONE TOUCH® Ultra WBG meter.
There were, however, factors that negatively affected worldwide 2002 IVD WBG meter and strip test products market growth. The continued resistance of primary care physicians to use more aggressive treatment, intervention and patient education is one example. Another is the lack of reimbursement in many international country markets for WBG PST products.
Despite this, the five-year forecast still remains in the double digits CAGR, as diabetes testing is expected to sustain future IVD testing growth.
A major event in the U.S. blood processing market in 2002 was the FDA approval of the first NAT-based blood screening assay. In February 2002, Chiron/Gen-Probe’s Biologics License Application (BLA) for the Procleix™ HIV-1/HCV Assay and the Procleix™ Semi-Automated System was approved. Following this, Chiron implemented full commercial pricing in the United States.
On the same day as the Procleix approval, the FDA stated, “The use of the licensed test will allow blood banks that implement it to discontinue antigen testing (p24 Antigen).” The ability to “drop” a mandated donor screening test in the United States was almost unheard of, but the superiority of NAT in the detection of false negative p24 tests was evident.
It was expected that more than half of all blood banks in the United States would have dropped the HIV p24 test by year-end 2002. This was not the case, however, as the necessary standard operating procedure revisions, testing and protocol documenta.tion took longer than anticipated.
The NAT-based IVD infectious disease test products market experienced double-digit growth primarily with increases in HCV and STD testing. Roche’s COBAS® TaqMan™ analyzer obtained U.S. FDA 510(k) approval in February 2002, making it the first real-time PCR system cleared for clinical diagnostic use.
The IVD cardiac test products market was the fastest growing immunoassay test segment in 2002. Overall revenue growth was driven by test volume increases in troponin and BNP. In this country, troponin and BNP drove growth equally. Even in the absence of Medicare reimbursement, physician demand for BNP drove strong sales for Biosite, which had the only FDA-approved test kit through most of 2002. In Europe, greater acceptance of troponin (and to a lesser extent Hcy) stimulated the market.
Clinical research on the use of BNP reached more than 1,500 articles, most of which focused on diagnostic applications. A landmark study was published in the NEJM in July 2002 on the utility of BNP as an emerging marker of heart failure, setting the stage for broad physician acceptance in the future.
As mentioned, Biosite was the only company offering a nonRIA BNP test in the United States for its Triage® Meter. Roche also introduced an NT-proBNP assay for its automated analyzers in Europe, but it was not available in this country until December 2002.
The U.S. IVD BGT test products market revenue growth was attributed to conventional BGT product price increases made possible by the consolidation of the U.S. market, where only two competitors offered FDA-approved BGT reagents, Ortho-Clinical Diagnostics and Immucor.
The Europe IVD BGT test products market growth was driven by the ongoing shift to higher-priced gel technology and automation in all major countries. A regulatory decree in France that forced all blood banks to switch to automated BGT systems also drove growth.
Growth within the worldwide IVD coagulation/hemostasis test products market was driven by:
•the ongoing replacement of an installed base and growth in specialty assays;
•worldwide D-dimer revenue growth, driven by a shift away from manual testing and toward more sensitive automated testing with price premiums (demand for automated testing led to increased placements of newer analyzers with automated D-dimer capabilities, helping to propagate the replacement of older systems);
•decentralized test volume growth, including warfarin monitoring in free-standing coumadin clinics and other ambulatory settings; and
•the establishment of reimbursement guidelines for coagulation PST, which helped stimulate growth for ITC’s ProTime system.
Worldwide IVD coagulation/hemostasis test products market growth was constrained by the failure of the new recombinant Protein C drug for the treatment of sepsis from Eli Lilly (XIGRIS™) to drive IVD coagulation test product growth in 2002. Treatment is very costly (>$6,000) and utilization was controlled.
The five market segments described above drove growth for 2002 and are expected to continue to drive growth in 2003, as well as for the next five years.
The consultants’ five-year forecast to 2007 across all end-user segments averages +8 percent CAGR, with differential end-user and product segment growth. PST will continue to be the leader in CAGR growth, but contrary to the 2002 data, the consultants expect the ambulatory segment to outgrow the laboratory end-user segment over the next five years.
Growth will also be highly differentiated by product segment; exceptional growth in the next five years (>10 percent CAGR) is expected from:
These segments represented almost 40 percent of the overall 2002 IVD market.
All other segments are forecast to grow below the market growth rate of +8 percent CAGR through 2007. The only major market segments forecast to remain flat or decline through 2007 are:
•The IVD TDM market, completing migration to CCLS, will only show significant test volume gains in the transplant drug area.
•The IVD ambulatory cancer test products market is suffering from lower-priced generic test utilization.
•The IVD laboratory DAT market is losing test volume to onsite methods and will continue to see price declines. Even though this market is losing volume, laboratory systems sales for IAS and CCLS are expected to remain steady over the next five years.
Geographic Segments 2007 Outlook
Europe and the United States will maintain their industry average growth rates, while Japan will most likely grow below the market rate. ROW, as mentioned above, will vigorously develop, especially in the Pacific Rim, and will continue to outpace IVD market growth for the decade (11 percent CAGR versus 8 percent CAGR for the worldwide market).
In the laboratory products end of the market, ROW will see 9 percent CAGR versus 6 percent for the worldwide market, resulting in a $5.6 billion IVD market by 2007. The ROW market will grow from 15 percent of the worldwide IVD market on a dollar basis in 2002 to 17 percent of this market in 2007.
China deserves special mention in the ROW segment; year to date 2003, there has been growth of 8 percent GDP. Many IVD companies in early 2003 had one time product sales increases due to product supply directly related to the SARS crisis in China, underscoring the lack of modern equipment and medical information systems. Investment in China is still strong, despite the SARS threat. In 2002, China became the biggest recipient of foreign investment, for the first time surpassing the United States. Foreign investment jumped 13 percent in 2002 to $53 billion according to the June 17, 2003 Wall Street Journal and shows no sign of declining.
On the disease demographic front, diabetes is increasing everywhere, but the problem is most acute in China. With the Chinese becoming more affluent, sedentary and frequent consumers of meat, a greater prevalence of diabetes has emerged. There are predictions that by 2010, half of the world’s population with diabetes will be in Asia (“The Rising Burden of Diabetes and its Estimates and Projections to the Year 2010,” by Paul Zimmet of the International Diabetes Institute in Melbourne, Australia).
As China deserves special mention on the geographic front, HIV/AIDS deserves special mention on the disease demographic front. HIV/AIDS is a perfect example of the increased demand for tests due to the availability of new therapy. More tests are needed to qualify and monitor patients’ response to drugs.
At a recent international WHO-sponsored conference, findings were presented that stated that 10 percent of Europeans infected with HIV have drug-resistant strains, alerting health officials to a potential problem in Africa as drugs become available in the future. Public experts declared that the extent of resistance was not surprising, but it serves as a warning that the delivery of drugs in poor countries needs to be done carefully. When AIDS drugs are introduced into Africa in larger quantities, the use must be monitored carefully with IVD tests for drug resistance.
WHO guidelines were issued in April on the use of new drugs and how to prescribe them safely. Proper IVD tests are needed or else the nonjudicious use of drugs could become the seeds of disaster, spreading drug-resistant strains.
Currently, 250 infectious disease medicines are under development (according to a Roche presentation), many of which will require IVD tests as new infectious diseases, such as West Nile virus, SARS and HIV sub O, are constantly emerging.
Overall, the IVD market will continue to grow and evolve with new infectious diseases, test introductions and the promise of personalized medicine. 2003 has already brought about new threats for the blood supply and products for individualized drug metabolism testing such as Roche’s AmpliChip™ CYP450 and Tm Bioscience’s Tag-It™ Mutation Detection Kit for P450-2D6. The advent of microarrays will hasten the introduction of new therapies, opening the door for a host of new testing products.
Henry Weinert is president, Kerri Weinert is vice president, and Catherine Lavoie Long is a consultant, Boston Biomedical Consultants.