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In Vitro Diagnostics: Executive Summary

This is the first in a multi-part series outlining the industry growth, investment and various M&A (mergers and acquisitions) trends among key players in the in-vitro diagnostics industry.

Industry Definition

The In-Vitro Diagnostics (IVD) industry refers to the production, use, and/or sale of medical devices such as reagents, systems, techniques, instruments, or a combination of these that are used in vitro for the examination and research of specimens such as blood, urine or tissue with the goal of detecting disease, infection, or other anomalies from assays in a controlled environment outside a living organism. IVD distinguishes itself from other equipment and tests by being in vitro or in an artificial environment such as a test tube, as opposed to inside a living organism.

Segmentation

Major Techniques

IVD testing is used for a variety of functions including glucose testing, blood testing, infectious disease testing, and pregnancy testing to name a few. Research for epidemics, viruses (HIV and Cancer), and diseases all use in vitro diagnostics. The IVD industry can be broken down into several verticals based on testing technique. Below is a graphic showing the major verticals of the IVD market by growth rate and market share in 2016.

  • Point of Care: POC testing refers to medical diagnostic testing at or near the point of care, or at the time and place of patient care. Seen as more convenient and helpful in making quicker decisions, POC has grown quickly in the past years. Generating about $18B annually in revenue, POC represents about 30% of the IVD market.[i]
  • Immunoassay: A biochemical test that measures the presence or concentration of a macromolecule or a small molecule in a solution through the use of an antibody (usually) or an antigen (sometimes). Representing about 22% of the IVD market, Immunoassay testing and equipment produces about $13B in revenue.[2]
  • Molecular Diagnosis: Using techniques such as DNA (deoxyribonucleic acid) microarray analysis, mass spectrometry and nucleic acid amplification in order to make rapid diagnoses, Molecular Diagnostics is the fastest growing vertical of the IVD industry. Growing at a 3 year CAGR of 14%, Molecular Diagnostics generated $6B in market revenue in 2016.[3]

 

Other major techniques:

  • Clinical Chemistry
  • Homeostasis
  • Hematology
  • Flow Cytometry


Major Competitors

Overall the Global IVD market is dominated by 8-10 key players:

  • Roche Diagnostics
  • Abbott Diagnostics (including Alere)
  • Siemens
  • Sysmex
  • Johnson & Johnson Medical Devices and Diagnostics
  • BioMerieux
  • Danaher
  • Becton Dickinson

 

Smaller players tend to be highly specialized, whereas the largest players compete in multiple IVD verticals. Economies of scale are critical to effective competition due to the lack of product differentiation.[4]

Major Countries

The majority of the IVD market is concentrated in developed countries. The United States ($25B), Europe ($19B) and Japan ($ 5.5B) account for over 80% of global market sales.[5]

Growth Drivers & Outlook

With an estimated global market size of $61B as of 2016, the IVD industry is set to experience steady growth and continued consolidation.[6] Growing at a 5-year CAGR of 5%, some analysts expect IVD to top $80B by 2022.[7] The industry is expected to see growth in profits as industry consolidation and technological advancements lead to greater economies of scale. Growth drivers include an aging world population, increased technological innovation and involvement in healthcare by tech companies, rising living standards in developing nations, and industry consolidation.

Sources

[i] Chantal Morel, Overview of the diagnostics market Ensuring innovation in diagnostics for bacterial infection: Implications for policy [Internet]. (2016), https://www.ncbi.nlm.nih.gov/books/NBK447315/ (last visited Dec 18, 2017).

[2] Chantal Morel, Overview of the diagnostics market Ensuring innovation in diagnostics for bacterial infection: Implications for policy [Internet]. (2016), https://www.ncbi.nlm.nih.gov/books/NBK447315/ (last visited Dec 18, 2017).

[3] Chantal Morel, Overview of the diagnostics market Ensuring innovation in diagnostics for bacterial infection: Implications for policy [Internet]. (2016), https://www.ncbi.nlm.nih.gov/books/NBK447315/ (last visited Dec 18, 2017).

[4] Chantal Morel, Overview of the diagnostics market Ensuring innovation in diagnostics for bacterial infection: Implications for policy [Internet]. (2016), https://www.ncbi.nlm.nih.gov/books/NBK447315/ (last visited Dec 18, 2017).

[5] Chantal Morel, Overview of the diagnostics market Ensuring innovation in diagnostics for bacterial infection: Implications for policy [Internet]. (2016), https://www.ncbi.nlm.nih.gov/books/NBK447315/ (last visited Dec 18, 2017).

[6] Abha Thakur, IVD Market by Product Type (Reagents, Instruments and Software & Services), by Technique (Immunodiagnostics, Blood Testing, Molecular Diagnostics, Tissue Diagnostics, Clinical Chemistry, and Other IVD Techniques), by Application (Infectious Diseases, Cancer, Cardiac Diseases, Immune System Disorders, Nephrological Diseases, Gastrointestinal Diseases, and Other Indications), and by End Users (Standalone Laboratory, Hospitals, Academic and Medical Schools, Point of Care Testing, and Others) – Global Opportunity Analysis and Industry Forecast, 2017-2023 Allied Market Research, https://www.alliedmarketresearch.com/ivd-in-vitro-diagnostics-market (last visited Dec 18, 2017).

[7] Abha Thakur, IVD Market by Product Type (Reagents, Instruments and Software & Services), by Technique (Immunodiagnostics, Blood Testing, Molecular Diagnostics, Tissue Diagnostics, Clinical Chemistry, and Other IVD Techniques), by Application (Infectious Diseases, Cancer, Cardiac Diseases, Immune System Disorders, Nephrological Diseases, Gastrointestinal Diseases, and Other Indications), and by End Users (Standalone Laboratory, Hospitals, Academic and Medical Schools, Point of Care Testing, and Others) – Global Opportunity Analysis and Industry Forecast, 2017-2023 Allied Market Research, https://www.alliedmarketresearch.com/ivd-in-vitro-diagnostics-market (last visited Dec 18, 2017).

William Montgomery contributed to this report.

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.