Maria Shepherd, President and Founder, Medi-Vantage04.03.17
High-profile product launches, resounding clinical data, the U.S. government investment in the Precision Medicine program, and multiple billion-dollar acquisitions are hallmarks of the diagnostics industry. Equally notable was the surprising decision by Abbott Laboratories to retreat from its planned acquisition of Alere Inc., blaming the “substantial loss” in value of the diagnostics company since the Abbott/Alere deal was first announced in early 2016.1
Why This Is Important
The market for diagnostics is large. In fact, it quietly came from behind to become the largest medtech market in 20142 and will continue that growth through 2020 and beyond (Chart 1). This growth is important; note in Chart 1 how the diagnostic imaging and orthopedic markets are declining due to healthcare price pressure and other market forces.
Another growth indicator is the total value of 2016 deals in the diagnostic sector. Deal value increased from $4 billion in 2015 to $15 billion in 2016 (excluding the troubled Alere/Abbott merger, which is still in legal limbo). However, in recent reports,3,4 the pace of consolidation in this space was established by the acquisition activities of companies like Danaher Corporation and Thermo Fisher Scientific. Acquiring a new book of sales is a requirement for large life sciences companies to continue future revenue growth.
2016: Solid Development in Molecular Diagnostics and DNA Sequencing
DNA-sequence-based diagnostics have become an integral component of medical practice. For example, as diseases such as malaria, ebola, and dengue fever (commonly thought to affect only third world residents) emerge through international trade, travel, and climate change, they contribute to the emergence of disease in developed countries. Just in the nick of time, there has been a pronounced decline in the cost of DNA sequencing.5 Sequencing technology has seen several disruptive innovations with a net effect of driving the cost of sequencing down. In Chart 2, the expense decline is measured by the cost to have one person’s full genome sequenced, estimated at approximately $1,000 in 2015.
Other Developments: Point of Care
A high sensitivity test for cardiac troponin has just been launched by Roche Diagnostics—the Elecsys Troponin T hs (TnT-hs) assay. It is expected to be a significant advancement for the treatment of patients with suspected myocardial infarction. Cardiac troponin is the biomarker gold standard for myocardial tissue death. The new assay measures low levels of cardiac troponin in as few as nine minutes at the point of care. Its fast turnaround and high sensitivity will improve outcomes and reduce costs because it can measure very low levels of cardiac troponin. Roche Diagnostics estimates7 that patients experiencing chest pain and other acute myocardial infarction (AMI)-type symptoms are treated in approximately 8 million of all U.S. emergency department visits, however, only 5 to 20 percent of all 8 million patients actually suffer an acute myocardial infarction (Chart 3).
Conclusion and Recommendations
A diagnostics device designed and proven to quickly and accurately diagnose a disease or condition brings significant economic value that may warrant premium pricing. Hospitals continuously assess medtech to improve clinical outcomes and sustain their own financial health. As in the Roche Diagnostics example, explore products that address these issues. Now that the cardiac troponin biomarker can be so swiftly addressed, what can your device do that may not have been possible before?
References
Maria Shepherd has more than 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career, including her role as vice president of marketing for Oridion Medical—where she boosted the company valuation prior to its acquisition by Covidien/Medtronic—director of marketing for Philips Medical, and senior management roles at Boston Scientific Corp., she founded Medi-Vantage. Medi-Vantage provides marketing and business strategy and innovation research for the medical device industry. The firm quantitatively and qualitatively sizes and segments opportunities, evaluates new technologies, provides marketing services, and assesses prospective acquisitions. Shepherd has taught marketing and product development courses and is a member of the Aligo Medtech Investment Committee (www.msbiv.com). She can be reached at 855-343-3100 ext. 102 or at mshepherd@medi-vantage.com.
The market for diagnostics is large. In fact, it quietly came from behind to become the largest medtech market in 20142 and will continue that growth through 2020 and beyond (Chart 1). This growth is important; note in Chart 1 how the diagnostic imaging and orthopedic markets are declining due to healthcare price pressure and other market forces.
Another growth indicator is the total value of 2016 deals in the diagnostic sector. Deal value increased from $4 billion in 2015 to $15 billion in 2016 (excluding the troubled Alere/Abbott merger, which is still in legal limbo). However, in recent reports,3,4 the pace of consolidation in this space was established by the acquisition activities of companies like Danaher Corporation and Thermo Fisher Scientific. Acquiring a new book of sales is a requirement for large life sciences companies to continue future revenue growth.
2016: Solid Development in Molecular Diagnostics and DNA Sequencing
DNA-sequence-based diagnostics have become an integral component of medical practice. For example, as diseases such as malaria, ebola, and dengue fever (commonly thought to affect only third world residents) emerge through international trade, travel, and climate change, they contribute to the emergence of disease in developed countries. Just in the nick of time, there has been a pronounced decline in the cost of DNA sequencing.5 Sequencing technology has seen several disruptive innovations with a net effect of driving the cost of sequencing down. In Chart 2, the expense decline is measured by the cost to have one person’s full genome sequenced, estimated at approximately $1,000 in 2015.
Other Developments: Point of Care
A high sensitivity test for cardiac troponin has just been launched by Roche Diagnostics—the Elecsys Troponin T hs (TnT-hs) assay. It is expected to be a significant advancement for the treatment of patients with suspected myocardial infarction. Cardiac troponin is the biomarker gold standard for myocardial tissue death. The new assay measures low levels of cardiac troponin in as few as nine minutes at the point of care. Its fast turnaround and high sensitivity will improve outcomes and reduce costs because it can measure very low levels of cardiac troponin. Roche Diagnostics estimates7 that patients experiencing chest pain and other acute myocardial infarction (AMI)-type symptoms are treated in approximately 8 million of all U.S. emergency department visits, however, only 5 to 20 percent of all 8 million patients actually suffer an acute myocardial infarction (Chart 3).
Conclusion and Recommendations
A diagnostics device designed and proven to quickly and accurately diagnose a disease or condition brings significant economic value that may warrant premium pricing. Hospitals continuously assess medtech to improve clinical outcomes and sustain their own financial health. As in the Roche Diagnostics example, explore products that address these issues. Now that the cardiac troponin biomarker can be so swiftly addressed, what can your device do that may not have been possible before?
References
- http://bit.ly/mpo041701
- http://bit.ly/mpo041710
- Medtech Strategist Issue 1/31/17
- http://bit.ly/mpo041711
- http://bit.ly/mpo041712
- IMAP GLOBAL M&A Report Pharma/Biotech 2016
- http://bit.ly/mpo041713 (PDF)
Maria Shepherd has more than 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career, including her role as vice president of marketing for Oridion Medical—where she boosted the company valuation prior to its acquisition by Covidien/Medtronic—director of marketing for Philips Medical, and senior management roles at Boston Scientific Corp., she founded Medi-Vantage. Medi-Vantage provides marketing and business strategy and innovation research for the medical device industry. The firm quantitatively and qualitatively sizes and segments opportunities, evaluates new technologies, provides marketing services, and assesses prospective acquisitions. Shepherd has taught marketing and product development courses and is a member of the Aligo Medtech Investment Committee (www.msbiv.com). She can be reached at 855-343-3100 ext. 102 or at mshepherd@medi-vantage.com.
