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In-Vitro Diagnostics: Major Companies

This market research report is one of a multi-part series. This report covers the major players in the in-vitro diagnostics (IVD) market, an investment banking subsector of healthcare, medical and medical devices.

Overview

Due to the recent consolidation trend and a hot M&A market, the In Vitro Diagnostics (IVD) sector is now dominated by eight to ten major companies. They contributed to a 2016 market revenue of $61B[i] that grew at a 5% CAGR[ii] from 2011-2016. That growth is expected to accelerate to 5.9%[iii] from 2016-2022 in part due to the continued globalization of the IVD industry. The IVD market is highly concentrated, with nine companies generating 77% of the market revenue in 2016.[iv] The four-firm concentration ratio of the same year was 54%.[v] This number increased from 49% after Abbott’s 2017 acquisition of major competitor Alere.[vi] The market is expected to become less concentrated over the next five years but is still projected to have a four-firm concentration ratio of 50% in 2022.[vii]

Major Companies

The major players in the global IVD market can be divided into three tiers based on market share:

Tier 1: 10-20% Market Share

  • Roche Diagnostics – Founded in 1896, Roche is based in Basel, Switzerland and develops pharmaceutical and diagnostic products as well as performs medicinal research. It is the second largest independent biotech firm in the world by market cap. Roche had an estimated 2017 gross revenue of $57.9B while winning 19% of the IVD market share. In 2016, Roche received $180.3m of development (PIPE) capital from a group of 14 investors.[viii]
  • Abbott Laboratories – Founded in 1888, Abbott is based in Chicago, IL and develops and manufactures medical devices, pharmaceutical and healthcare products. It had a 2017 gross revenue of $27.4B and had 14% of the IVD market revenue. [ix]Abbott gained an additional 4% market share in 2017 through its $4.6B acquisition of major competitor Alere.
  • Siemens – Founded in 1847, Siemens is based in Munich, Germany. It provides electrical engineering services and competes in the medical imaging equipment and diagnostic device industries. With over 372,000 employees worldwide, Siemens had a 2017 gross revenue of $91.6B while capturing 9.9% of the IVD market.[x]
  • Danaher – Based in Washington, DC, Danaher was acquired by LLDF in January 2016. The company provides optimization tools, monitoring products and security services for medical, industrial and commercial customers. Its 2017 gross revenue was $17.8B and held a 10% IVD market share.[xi] In 2011, Danaher acquired IVD competitor Beckman Coulter for $6.8B and in 2016, Danaher bought Cepheid for $4.0B.


Tier 2: 3-9.9% Market Share

  • Thermo Fisher Scientific – Founded in 1902, Thermo Fisher provides biotechnology product development services as well as equipment and services for healthcare and research. Its 2016 market share was 6.3%. In 2011, it acquired Immunodiagnostics for $2.58B and then in 2017 it agreed to acquire pharmaceutical contract and manufacturing organization Patheon for a record $7.2B.
  • Becton, Dickinson & Co. – Founded in 1897, Becton Dickinson manufactures medical devices and instrument systems. Its 2017 revenue was $12.1B and its market share was 5.5%. It received $4.5B of development capital.[xii]
  • Sysmex – Based in Kobe, Japan, Sysmex manufactures and sells laboratory testing instruments and reagents to clinical labs and hospitals worldwide. It had a 2017 gross revenue of $2.36B and captured 4.3% of the IVD market.[xiii]
  • BioMerieux – Designs and manufactures in-vitro diagnostic systems. Based in Marcy l’Etoile, France, BioMerieux had a 2016 revenue of $2.3B and captured a market share of 3.8%. It sold a 2.1% equity stake in 2009 to Sofine.[xiv]
  • Ortho-Clinical Diagnostics – Originally the diagnostics division of Johnson & Johnson, Ortho- Clinical was bought out by The Carlyle Group in 2014 for $4.15B.[xv] Ortho-Clinical provides in-vitro diagnostic equipment, assays, and reagents. It currently holds 3.4% of the IVD market.



Tier 3: <2.9% Market Share

  • Illumina
  • Qiagen
  • Luminex
  • Diasorin
  • Myriad Genetics


Major Metrics

Above are the EV/Revenue and EV/EBITDA multiples for the companies previously mentioned (some data was not publicly available). Compare to the industry benchmarks below.

Major Trends/Events

The IVD market has continued to experience consolidation in the past 12 months. Because of the lack of product differentiation, one of the most effective ways to experience revenue growth is by acquiring books of sale. This is evidenced by the strong activity in the M&A market from the industry’s largest players. Not only were the industry’s top participants active, but they were acquiring other major industry competitors. Abbott acquired Alere – who held a 4% market share and Danaher acquired Cepheid along with its 2% market share. Thermo Fisher Scientific made a momentous move to jump in the top-tier of the industry by spending a record $7.2B for Patheon.

[i] 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).

Sources

[ii] 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).

[iii] Zacks Equity Research, Global In Vitro Diagnostic Market Booms: Stocks in Focus Zacks Investment Research (2018), https://www.zacks.com/stock/news/283747/global-in-vitro-diagnostic-market-booms-stocks-in-focus (last visited Jan 8, 2018).

[iv] Evaluate, Global top 10 companies based on in vitro diagnostics market share in 2016 and 2022, Statista, https://www.statista.com/statistics/331722/top-global-medtech-companies-by-in-vitro-diagnostics-market-share/ (last visited Jan. 23, 2018).

[v] Evaluate, Global top 10 companies based on in vitro diagnostics market share in 2016 and 2022, Statista, https://www.statista.com/statistics/331722/top-global-medtech-companies-by-in-vitro-diagnostics-market-share/ (last visited Jan. 23, 2018).

[vi] Staff Reporter, Abbott Completes Alere Acquisition GenomeWeb (2017), https://www.genomeweb.com/business-news/abbott-completes-alere-acquisition (last visited Jan 21, 2018).

[vii] Evaluate, Global top 10 companies based on in vitro diagnostics market share in 2016 and 2022, Statista, https://www.statista.com/statistics/331722/top-global-medtech-companies-by-in-vitro-diagnostics-market-share/ (last visited Jan. 23, 2018).

[viii] PitchBook, Roche, PitchBook.com, https://my.pitchbook.com/profile/53417-80/company/profile (last visited Jan 20, 2018).

[ix] PitchBook, Abbott, PitchBook.com, https://my.pitchbook.com/profile/11906-65/company/profile (last visited Jan 20, 2018).

[x] PitchBook, Siemens, PitchBook.com, https://my.pitchbook.com/profile/10464-31/company/profile (last visited Jan 20, 2018).

[xi] PitchBook, Danaher, PitchBook.com, https://my.pitchbook.com/profile/12469-33/company/profile (last visited Jan 20, 2018).

[xii] PitchBook, Becton, Dickinson & Co., PitchBook.com, https://my.pitchbook.com/profile/25348-33/company/profile (last visited Jan 20, 2018).

[xiii] PitchBook, Sysmex, PitchBook.com, https://my.pitchbook.com/profile/59608-72/company/profile (last visited Jan 20, 2018).

[xiv] PitchBook, Biomerieux, PitchBook.com, https://my.pitchbook.com/profile/53836-75/company/profile (last visited Jan 20, 2018).

[xv] PitchBook, Ortho-Clinical Diagnostics, PitchBook.com, https://my.pitchbook.com/profile/55434-79/company/profile (last visited Jan 20, 2018).

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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.