An Investor's Guide to Hot In Vitro Diagnostics Market

How big’s the in vitro market and how fast is it growing?

• 
  Move to point-of-care (POC) testing: Patients would rather get tested in a doctor’s office or when they’re in a medical clinic than have to get tested in a hospital. The move of testing to the point of care is driving growth in the market


• 
  Need for speed: Medical diagnostics are getting pushed to deliver faster. This can be best seen in the explosion for raid and minimally—invasive diagnostic tools.


• 
  Emerging markets demand: Some emerging markets are now able to pay for diagnostic devices where they weren’t weren’t able to just a few years back. Beyond other in vitro tests, in India alone, there are 100 million malaria tests per year.


• 
  Aging population: Many countries are seeing a marked aging in their populations. As this occurs, new tests and diagnostic technologies are necessary to cope with the changes.

Who are the major players in the in vitro market?

• 
  Roche Diagnostics: A subsidiary of Swiss pharmaceutical company, Roche RHHBY, Roche Diagnostics the industry leader, with operating profit in 2012 of $18.3 billion (up from $15.9 billion in 2010). The company has a broad portfolio of diagnostics for diseases like HPV, HIV, hepatitis, and diabetes, as well as for medical conditions like fertility and blood coagulation.


• 
  Siemens Healthcare: Siemens Healthcare, a subsidiary of diversified conglomerate Siemens SI is expecting $4.3 billion of revenue in the 1st quarter of 2014. With its laboratory diagnostics, Siemens Healthcare produces immunoassay, chemistry, haematology, molecular, urinalysis, and blood gas testing systems. In recent developments, Siemens Healthcare has unveiled new products that will enable earlier detection — and thus, better treatment — of HIV.

Recent developments and trends in vitro diagnostic market

• 
  Hologic buys Gen-Probe: Gen-Probe, bought by Hologic HOLX for $3.7 billion in 2012, developed technology used for the diagnosis of infectious diseases, blood screening, analysing blood transfusions for immune response, and to test whether an organ transplant should be viable. The combined Gen-Probe/Hologic entity is a major competitor in the in vitro diagnostics market.


• 
  The so-called “medical device tax”: Within Obamacare is a tax that levies a 2.3% excise tax on revenues of medical device suppliers. Though there is a pretty fierce political debate surrounding the medical device tax, it does impact the revenues of in vitro diagnostic manufacturer and could lead to pass-through of the tax burden to consumers (who would pay higher prices).


• 
  Bionostics gets purchased by Techne: In February of last year, US based developer of in vitro diagnostic devices, Bionostics, was acquired for $104 million by Techne TECH, a manufacturer of biotech products. Bionostics products are used to monitor blood glucose and test blood gas.


• 
  Roche Diagnostics snaps up CMI: Roche Diagnostics purchased CMI, a company with an innovative design for haematology testing, for $220 million, which could grow much higher if the firm hits its targets.


• 
  Carlye buys J&J’s blood testing unit: Where there’s "blood" in the water, you’ll find smart investors and that’s what’s happening as global private equity firm, Carlyle Group is acquiring the blood testing unit of Johnson and Johnson JNJ. Said a spokesperson for the private equity investment group, “We have been focused on the diagnostics industry for many years given its attractive growth prospects, driven by the crucial role it plays in health care decision-making and influencing patient outcomes.”

Treating Malaria: Great opportunity for investors to make a difference

• 
  Malaria is the world’s most fatal infectious disease — over 1 million people still die every year from the disease.


• 
  In 2010, 90 million rapid diagnostic tests were sold globally  and that number is growing +50% year over year.


• 
  India conducts roughly half of the world’s annual global malarial tests or 175 million tests annually (105M are manual microscopy and 70M are rapid diagnostic tests)