Harry Glorikian for Cambridge Healthtech Publishing explores the industry of in vitro diagnostics (IVD) today.
The field of in vitro diagnostics is going through a period of rapid growth and innovation. Rising healthcare costs have led to a greater emphasis on evidence-based medicine and a focus on improved patient outcomes. An aging population along with the growing epidemic of chronic diseases and some infectious diseases are creating a demand for diagnostic devices for a variety of conditions. Development of these devices is challenging. Regulation of IVDs in the U.S. largely falls to the FDA, though other federal and state agencies play a role, and there are multiple development pathways to consider. And then commercialization strategies must evolve as IVDs become increasingly prescriptive. Harry Glorikian’s new book, Commercializing Novel IVDs: A Comprehensive Manual for Success, provides an overview of the major components to IVD development, from product conception through commercialization. –The Editor
The acronym “IVD” stands for in vitro diagnostics. The name comes from the Latin phrase in vitro—which literally means “in the glass.” This makes perfect sense, because in vitro diagnostics are tests that take place outside the human body or any other living organism (e.g., in a test tube, a Petri dish, or other, artificial controlled environment). In vitro diagnostics are the exact opposite of in vivo diagnostics, which happen inside a living organism (in vivo is Latin for “in the living”).
IVD tests can be done on a variety of specimens, including urine, spinal fluid, tissue, serum, and blood. They are typically non- or minimally-invasive and designed to screen for and diagnose infections, illnesses, diseases, and other medical conditions. IVD tests can be performed in a professional setting—like a lab, clinic, hospital, or doctor’s office—or in a private setting, like someone’s home. If you’ve ever had a blood test for a marriage license, submitted a urine specimen for a new employer, had your cholesterol checked at your annual physical, monitored your blood glucose with a glucometer, then you’ve already had first-hand experience with IVD. These tests can also be used to screen mass quantities of samples across very large populations quickly and efficiently—such as the IVDs used in commercial laboratories and hospitals.
IVDs occupy a unique niche in healthcare. They’re not medical instruments (like a scalpel, for example) that are used to perform actual procedures on patients. Nor do they provide a therapeutic or medicinal benefit, like an antibiotic does for someone who has an infection. What IVDs do provide is valuable information—and lots of it. In some cases, even specific answers that are directive. Healthcare professionals use IVDs to look for signs of disease or abnormalities in order to confirm (or rule out) a diagnosis. Armed with the data that IVDs provide, doctors can then make the appropriate clinical decisions that will inform and guide their patients’ treatments. Physicians also use IVDs to monitor patients’ conditions once a diagnosis is made. It’s not hard to see how IVDs will play a crucial role in the precision medicine initiative.
What do we mean by IVD?
When most laypeople hear the term “IVD,” they immediately think of test tubes, beakers, and microscopes. And while these items are certainly among the products that the IVD industry manufactures utilize, there are many more, including:
• IVD instruments, apparatus, and equipment (e.g. centrifuges, blood composition analyzers, coagulation test systems, DNA sequencers)
• Software for the above
• Control materials
• Specimen receptacles (e.g., test tubes, saliva collection tubes)
• Related accessories
Today’s IVDs are so incredibly powerful and precise that they can often detect an illness or condition long before patients ever exhibit signs or symptoms. And the test results themselves are available quickly, with turnaround times becoming increasingly shorter. All of this means obvious benefits for the patients, who can then receive the proper treatment at the earliest possible stage and, if all goes well, a better prognosis in the long run. A nice chain reaction takes place here, creating a further benefit for the healthcare system as a whole: diseases that are treated in their earlier stages tend to be less expensive. They also place a smaller burden on healthcare resources. IVDs may only represent 2% of healthcare costs, but that 2% accounts for about 70% of healthcare decisions.
It’s important to keep in mind that IVDs do not provide these benefits in and of themselves—the tests and the information they yield must be used and interpreted by highly trained professionals. This process of interpretation is also rapidly changing—from tests that are easier to interpret on their own, to integrated decision-support in electronic health records and technologies such as IBM Watson for Healthcare.
Current IVD Market and Segmentation
The global IVD market consists of four major segments:
• Professional diagnostics
• Self-monitoring blood glucose
• Molecular diagnostics
• Tissue diagnostics
Of these, the professional diagnostics segment is the largest, by far. According to data from Frost & Sullivan, professional diagnostics represented more than 60% of the world’s IVD revenue in 2013. Professional diagnostics can be broken down even further into sub-categories: immunology, clinical microbiology, hematology, and hematology (coagulation).
Self-monitoring blood glucose is the second-largest segment of the world’s IVD market, accounting for more than 17% of revenue in 2013. With diabetes reaching epidemic proportions in more and more countries, this segment will only continue to grow.
The third-largest segment of IVD, molecular diagnostics, represented more than 11% of the industry’s revenues in 2013. These diagnostics screen and test for DNA and RNA using methods that include sequencing, polymerase chain reaction (PCR), next-generation sequencing, and microarray. This is the fastest-growing segment of IVD, particularly in the areas of infectious disease testing, oncology testing, and non-invasive prenatal testing (NIPT) for inherited disorders. In fact, Frost & Sullivan predict that molecular diagnostics will grow at a compound annual growth rate of 12.7% between now and 2017. Compare this to IVD’s predicted overall growth rate of 7.3% for the same period. Tissue diagnostics is the smallest segment of IVD, with slightly more than 5% of the industry’s revenues.
Exactly how much revenue are we looking at here? A substantial amount. Allied Market Research reported that IVD’s worldwide revenue for 2013 totaled $53.3 billion. It also expects IVD market revenue to reach $74.6 billion by 2020. Although $53.3 billion may seem like an impressive amount, medical device revenue for 2013 was more than $364 billion, and pharmaceutical and biotechnology revenue added up to more than $982 billion. You’ll recall at the beginning of this manual, we explained how indispensable IVD has become in everyday medicine; as the world’s population gets older, patients need treatment for chronic conditions, more people gain access to coverage, and healthcare grapples with ever-mounting expenses. IVD clearly offers effective ways to address all of these issues.
In terms of revenue share, it should come as no surprise that North America and Europe are the two largest regions currently. In particular, according to Frost & Sullivan, the U.S. and Western Europe accounted for 62% of IVD revenue in 2013. But as more and more developing and emerging countries, especially in the Asia-Pacific area, expand and modernize their infrastructure, additional IVD opportunities will open up in these regions as well. For regions with a substantial infectious disease burden, such as African countries affected by occasional outbreaks of Ebola, eastern European countries where multi- drug resistant tuberculosis remains a concern, or in South America, where the Zika virus has recently emerged as a significant public health crisis, opportunities abound for manufacturers with innovative, cost-effective, and clinically useful IVDs.
The world’s IVD marketplace is extremely fragmented, with many companies vying for their piece of the IVD pie. Three of those companies—Roche Diagnostics, Siemens Healthcare, and Abbott Laboratories—control more than 26% of the market share.