EYE ON IVD held its first “State of the IVD Industry 2024” webinar yesterday by introducing key topics like the IVD market opportunity, the ADLM convention, and the implications of the FDA’s final rule on LDTs. Our Bruce Carlson was joined by Frank Criscione (BroadBranch Advisors), Bob McGonnagle (Publisher of CAP Today), and Lawrence Worden (CEO of IVDLogix), all of whom shared their perspectives on the state of the in vitro diagnostics (IVD) industry.
Carlson provided an overview of the IVD market, estimating its size between $85 billion and $102 billion. He favored an estimate of $96 billion and predicted growth to $109 billion over the next five years but highlighted constraints: “Covid is restraining growth, consolidation, reimbursement challenges.” These are balanced by advancements in point-of-care (POC) testing and other innovations. He also excluded glucose testing from the estimate, categorizing it as a medical device. Growth areas identified by Carlson included respiratory infections, sexually transmitted infections, and neurology tests, particularly for Alzheimer’s.
CAP Today’s Bob McGonnagle highlighted the ongoing trend of consolidation within the laboratory industry, where major players like LabCorp and Quest Diagnostics continue to expand by acquiring smaller outpatient testing businesses. “We’re seeing LabCorp and Quest keep eating up outpatient testing businesses and other competitors,” McGonnagle noted, emphasizing how this trend is reshaping the landscape of diagnostic testing. As larger networks grow, they not only increase their market share but also standardize their equipment and processes, making it more difficult for smaller labs to compete. This consolidation poses challenges for IVD vendors, as they may find themselves negotiating with fewer but more powerful customers, which could lead to pricing pressures and reduced opportunities for smaller players to introduce innovative technologies.
IVD Logix’s Worden concurred, and noted the implications for IVD vendors, pointing out that as these larger networks expand, they increasingly standardize equipment: “You have very much, you know, kind of Siemens or Abbott or Roche accounts across the whole IDN, and you don’t see movement in that until a huge contract comes up periodically.”
Carlson speculated on the potential consequences of this consolidation, suggesting that vendors may find it harder to sell their products as large networks centralize their testing processes. “The more that the consolidation of laboratories continues…it can’t be good for the whole industry to have, you know, two customers and a few more,” he said, referring to the dominance of major lab chains like LabCorp and Quest.
BroadBranch’s Frank Criscione discussed innovations in syndromic panel testing and automation, noting a trend toward “simplification and streamlining of laboratory processes,” especially in sample handling and analysis. He emphasized the push for rapid results, citing the example of BioFire’s syndromic panel test: “They could do a syndromic panel test in around 15 minutes,” reducing hospital bed occupancy and improving patient outcomes. . Criscione also warned of challenges ahead, particularly the growing presence of offshore competitors: “In the near term, that’s not really an area of concern because most of these competitors don’t have FDA clearance.” However, he suggested they could become a substantial threat as they gain regulatory approvals, impacting larger North American players.
Turning to the FDA’s LDT ruling, Criscione called it the “800-pound gorilla” in the room, explaining how manufacturers must prepare for uncertainty. He laid out a three-part strategy: “First, identification…how much of your product portfolio as a manufacturer is actually going to be affected by the LDT ruling.” He stressed that evaluation and competitor analysis would be crucial in determining the overall impact.
CAP Today’s Bob McGonnagle addressed the FDA’s LDT ruling from the perspective of laboratory customers, saying, “Nobody who sells things to any customer can be gleeful when the customer is in a lot of pain.” He pointed out that laboratories relying heavily on LDTs, like Geisinger’s molecular tests, face significant challenges, with 90% of their molecular tests being LDTs.
IVD Logix’s Lawrence Worden emphasized the variation in LDTs across different types of tests, such as molecular and genetics, and highlighted the confusion among labs as they prioritize which LDTs to continue: “What we’re hearing right now is… confusion and apprehension, but the labs are starting to triage their test menus.”
The panel also explored Roche’s push into mass spectrometry (mass spec), a notable shift for a large IVD company. McGonnagle commented, “If anyone can do it, it’s probably Roche,” while cautioning about the challenges of replacing entrenched immunoassay technologies. Mass spec holds promise, especially in proteomics and multiomics, but the panel agreed it would be an uphill climb.
Point-of-care testing (POC) emerged as a critical trend, with companies striving to differentiate themselves through innovations in decentralized testing. Worden remarked, “If you could get a metabolic profile or a blood count while you’re seeing the doctor, that sounds like such an improvement,” highlighting the potential impact on patient care and efficiency.
The international IVD market was discussed as a mixed bag, with Carlson noting that China, once the leading growth market, has slowed down: “At best, you know, high single digits where it used to be double digits.” He explained that to succeed in China, companies must operate more like domestic manufacturers, citing examples like Roche and BioMérieux building local production facilities.
The panel touched on FDA enforcement of research-use-only (RUO) products. McGonnagle observed that companies were increasingly cautious in drawing clear distinctions between RUO and diagnostic use, noting, “I’m finding more companies interested in introducing IUO and RUO products, and drawing a very bright line in the claims.”
Self-testing was identified as a growing trend, particularly for sexually transmitted infections (STIs) and flu. However, Worden noted limitations: “It’s limited by reimbursement…the home is never going to be a CLIA lab.” He suggested that, unless policies change, self-testing will primarily be for health promotion or recreational purposes, rather than clinical diagnostics.
On the topic of workforce challenges, Criscione stressed the importance of simplification and automation in handling complex instruments like mass spectrometers, given the ongoing labor shortages: “Mass spec will work if you have the trained technicians to run that sort of instrumentation. Automation is going to be key there.”
McGonnagle closed the discussion by underscoring the widespread labor shortages across labs and the IVD industry, calling it an “enormous shortfall.” He noted that the problem extends to regulatory bodies like the FDA, where a lack of qualified personnel affects the implementation of new rules and the broader innovation landscape.
