Table I. (click to enlarge) Companion diagnostics partnerships announced in 2008. Source: PricewaterhouseCoopers analysis using Windhover data.
Personalized medicine is becoming more fact than fiction as genetic testing technologies develop. PricewaterhouseCoopers (PwC) points to an emerging trend of increased alliances between diagnostic companies and pharmaceutical firms. In its report, “Diagnostics 2009: Moving Towards Personalized Medicine,” the advisory firm speaks to this trend and its implications.
During the past year, industry saw significant mergers and acquisitions in the diagnostics sector, says Doug Mowen. He is managing director, health industries advisory, pharmaceutical and life sciences at PwC. He believes that this signifies more partnerships between diagnostics and pharmaceutical firms. “Payers are interested, the pharmaceutical companies know they need it, and the government is driving a requirement to take cost out of the healthcare system. All these elements are motivating diagnostic alliances.”
The evolution has been coming for a while. “Five years ago, diagnostics was a supporting actor. Today, everyone is looking at it as a leading role.” Mowen says. “Every pharmaceutical executive I talk to is interested in building strategic relationships with in vitro diagnostic [IVD] companies. They know that such partnerships are key to getting products to market and funded, and that they will help drive proper use of their products—that is getting people to take the right medication at the right time.”
In particular, the PwC report discusses an important marker of the trend, companion diagnostics. These are products that evaluate an individual patient's likelihood of benefiting from a particular therapeutic or risk of suffering certain adverse events from a particular therapeutic. Companion diagnostics products represent a greater integration between diagnostics and therapeutics and are a key enabler of personalized medicine. Table I shows significant companion diagnostics mergers from the past year.
Mowen says that all types of diagnostics firms stand to benefit, particularly those that opt to innovate. “Companies may step out of just being an IVD company and look at something a little more broad, such as offering more complete services. If a company can innovate, it will certainly be an acquisition target or perhaps [will] introduce the next blockbuster technology.”
In addition, the report highlighted that new players are becoming more active. “Players in this sector will start to come from unexpected places,” says Art Karacsony, pharmaceutical and life sciences marketing director at PwC. For example, he says, the report points out that Siemens, traditionally thought of as an imaging company, is now in the second-largest IVD market position behind Roche, following three major acquisitions in 2006–2007.
The report says that the diagnostics sector is concentrated, with the 10 largest IVD players representing approximately 75% of the market in 2007. Roche is the largest IVD business with a 20% market share; Beckman Coulter, the largest pure play company, has a 6% market share; and Inverness Medical Innovations, the most acquisitive player in recent years, has a 3% market share. The full report is available at www.pwc.com.
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