By Bruce Carlson
If 2013 and 2014 are any indication, being a team player is a better strategy for success in the molecular diagnostics market than showing a strong solo performance. As the molecular diagnostics market begins to approach maturity in terms of annual revenue growth rates and number of significant players, successful companies will move to niche areas and partner with those who do what they cannot in order to boost their portfolios.
The complexity of molecular testing encourages companies to augment their capabilities via collaboration and licensing agreements. Qiagen manufactures tests, for example, but seeks a partner with analysis software. Illumina, on the other hand, leads the market in sequencers, but needs to collaborate with a company to find new biomarkers to enhance their value. And bioMérieux wants to enter the rapid molecular market, but requires a partner who has already developed the technology to do so.
Molecular Diagnostics Market Outlook
Healthcare market research firm Kalorama Information estimated the global molecular IVD market at $5.5 billion in 2013, with five percent higher revenue than the previous year. This is solid growth, but it isn’t the kind of revenue growth that many forecasted last decade.
The financial crisis and economic downturn that began in 2008 have altered consumer behavior; many patients are forgoing physician consultations in the U.S. Further, state-supported Medicaid and Medicare health programs are struggling to maintain funding. A similar situation in Europe has led to cutbacks in government and employer-supported health plans as well.
And while emerging markets will provide some growth opportunities, they are not as evident in molecular medicine as in other IVD markets. Overall, clinical molecular testing remains a phenomenon of the developed world. In fact, at least 80% of the molecular assays performed are concentrated in North America and Western Europe. Recently, however, molecular testing companies and laboratories have established partnerships in the top seven emerging markets: Brazil, Russia, India, China, South Korea, Mexico, and Turkey.
All of these factors mean that companies will have to perform more efficiently to succeed. Those who pursue strategic partnerships, will ultimately be more successful than standalone competitors in this promising market.
Notable Collaborations and Partnerships
Exosome Diagnostics and Eli Lilly. Exosome Diagnostics, a developer of biofluid-based molecular diagnostics tests, announced last September that it had entered into a collaboration agreement with drug giant Eli Lilly and Co. Centered on cancer PGx biomarker discovery and validation using Exosome Diagnostic’s proprietary EXO50 nucleic acid extraction kit, the arrangement allows Lilly to gain early access to Exosome Diagnostics’ technology in order to aid in the identification of key gene mutations and expression levels in blood that may be correlated with drug response and disease recurrence.
Illumina and Global Genomics Group (G3). Sequencing and array technology specialist Illumina entered into a partnership last year with life sciences company G3 with the objective of “investigating novel biomarkers and biological pathways involved in the development and diagnosis of cardiovascular diseases.” The agreement states that Illumina will perform whole genome sequencing for the ongoing Genetic LOci and the Burden of Atherosclerotic Lesions (GLOBAL) clinical study, a large, prospective, international effort focusing on cardiovascular disease biomarkers and drug target discovery that organizers say has the potential to transform how clinicians look at heart disease.
Life Technologies/Thermo Fisher Scientific and Merck Serono. Last July, pharmaceutical company Merck Serono entered into a collaboration with biotech-focused Life Technologies—which has since been acquired by Thermo Fisher Scientific—to create new companion diagnostic products. “The nonexclusive agreement covers current and future companion diagnostics projects, with an initial oncology scheme providing the foundation for a long-term collaboration across a potentially broad range of Life [Technologies’] instrument platforms and therapeutic areas,” according to the press release.
Acquisitions in Molecular Diagnostics
When a collaboration is not possible or not desired by both parties, an outright buy is often the preferred tactic. A dynamic market also encourages players to bolster their offerings with acquisitions, collaborations, and licensing agreements. The following deals in molecular diagnostics are of particular interest, though scores of mergers have occurred in the past year.
Qiagen Netherlands and CLC bio. Last year, Qiagen purchased CLC bio, which specializes in bioinformatics analysis software. CLC bio’s primary products are CLC Genomics Workbench, which it describes as a comprehensive and user-friendly analysis package for analyzing, comparing, and visualizing next-generation sequencing (NGS) data, and CLC Genomics Server, a flexible enterprise-level infrastructure and analysis backbone for NGS data analysis. CLC bio provides bioinformatics solutions for NGS, which can analyze and visualize genomic, transcriptomic, and epigenomic data from all major NGS platforms.
More importantly, CLC’s IT solutions allow nonprogrammers to build resequencing workflows through a graphical user-interface, allowing biologists, clinicians, and other scientists to intuitively build workflows and visualize their datasets through all stages of the analysis at their desks.
Leica Biosystems and Kreatech Diagnostics. Leica Biosystems, which focuses on workflow solutions and automation for cancer diagnostics, added a maker of DNA fluorescent in-situ hybridization (FISH) probes to its portfolio with its 2013 acquisition of molecular diagnostics company Kreatech Diagnostics. The acquisition, according to Leica, will help support future development of personalized medicine by research and drug-development companies. A provider of probes and target labeling reagents for microarrays, Kreatech will be tasked with developing targeted biomarker menus for Leica’s instrument platforms.
bioMérieux and BioFire Diagnostics. French diagnostics powerhouse bioMérieux acquired privately held U.S. molecular diagnostics company BioFire Diagnostics Inc. last September for $450 million. Specializing in molecular diagnostics, BioFire is the inventor, manufacturer, and marketer of the multiplex PCR FilmArray system, a simple and rapid molecular biology solution designed for the diagnosis of infectious diseases.
Illumina and Advanced Liquid Logic. Last July, Illumina acquired Advanced Liquid Logic (ALL), a provider of liquid-handling solutions. ALL has developed a proprietary, electrowetting-based digital microfluidics technology that performs complex laboratory protocols by manipulating small droplets within a sealed disposable cartridge. Illumina hopes that this technology will enable the delivery of the simplest and most efficient sample-to-answer NGS workflow.
These collaborations and acquisitions, in each case, illustrate the trend of diagnostics companies looking to expand their footprint by obtaining access to technologies and capabilities they presently do not have in-house. No let down in such collaborations and acquisitions is anticipated any time soon. As a result of this investment and activity in the sector, we can expect to soon see a steady stream of molecular tests and technologies come to market.
Molecular testing has proven its worth in the area of infectious diseases, but the great promise of personalized medicine in oncology and some chronic diseases has yet to come to fruition. Throughout the developed world, healthcare payers have looked at these tests with great scrutiny and are cutting reimbursement rates.
This tenuous environment will continue for the foreseeable future into 2014 as companies learn to promote the value of their tests for improved patient care that will save the healthcare system money. Nevertheless, it is anticipated that companies will continue to develop new, more user-friendly tests and technologies that will bring accurate diagnosis to a broader population worldwide. This implies the development of rapid tests, and sample-to-result technologies that allow the automation of many molecular assays, especially for infectious diseases, which accounts for at least 50% of the world market for molecular tests.
Bruce Carlson is the publisher of Kalorama Information.
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