Trends in the U.S. IVD Market: Diseases and Testing Venues
My blog last week looked at a report released by Kalorama Information (New York) entitled, “The United States Market For In Vitro Diagnostic Tests.” This report examines the current state of the U.S. IVD market, analyzes the various emerging trends in the market, and discusses how these developments could affect IVD manufacturers. This week’s blog presents more of the report’s analyses.
The report found that the leading non-communicable or chronic diseases in the U.S. are cancer, heart disease, and diabetes. Among U.S. adults who are 18 years and older, 12% have been diagnosed with heart disease, 9% diabetes, and 8% cancer. In addition, hypertension, arthritis, and chronic joint symptoms were the most commonly diagnosed diseases and health conditions tracked by the Centers for Disease Control and Prevention’s (CDC) National Health Interview Survey. These findings reflect the high prevalence of such conditions among middle-aged and aging Americans.
According to the CDC, diabetes prevalence among U.S. adults has increased during the past decade, rising from 6.6% to 8.6% between 2002 and 2012. The percentage of U.S. adults who have been diagnosed with any form of cancer also rose from 7% to 8% between 2006 and 2012. The higher percentage of current and former cancer patients is a result of the aging U.S. population.
The report stated that sexually transmitted diseases (STD) account for four of the seven top infectious disease market opportunities in the U.S. IVD market. In the U.S., chlamydia and syphilis have two of the highest incidence rates among infectious diseases. Along with gonorrhea, HPV, HCV, and HIV, STDs are the leading infectious disease market opportunity in the U.S.
“Kalorama Information has determined that HIV and AIDS represent the leading infectious disease testing market in the U.S., based on a combination of the maturity of testing technology, the level of demand, potential market size, and intensive government support,” said the report.
The report also found that hospital-acquired infections (HAI) are a growing health challenge for U.S. hospitals and other intensive care and inpatient health institutions. The most studied HAIs, and therefore the ones most targeted for test development, are caused by C. difficile, methicillin-resistant staphylococcus aureus (MRSA), and vancomycin-resistant enterococci (VRE). Several state governments have mandated patient screening for MRSA, and more than 75% of healthcare facilities in the U.S. conduct active surveillance testing to detect patient MRSA infections.
“The U.S. HAI molecular testing market is expected to grow by low double-digits in the coming years as MRSA surveillance is further expanded and additional HAI pathogens are included in patient screening procedures,” said the report.
Clinical Testing Venues
According to the report, the U.S. IVD market has multiple testing channels or venues where IVDs are used. Hospitals represent the dominant IVD testing venue, followed by independent laboratories, physician office laboratories (POL), other near-patient testing sites, and consumer self-testing using over-the-counter (OTC) IVDs.
The report stated that hospital laboratories conduct 60% of clinical testing by value ($30 billion) and volume (eight billion tests) in the U.S. 8,900 labs are located at 5,700 hospitals in the U.S. Hospital market share of clinical testing is secured through inpatient flow and ancillary outpatient flow. The predominant U.S. hospital business strategy of acquiring physician practices and groups has also allowed hospital labs to increase testing volume at the expense of independent or private laboratories.
“In addition, growth-driven hospitals have deployed their labs as outreach businesses offering testing services similar to independent laboratories,” said the report. “By 2005, more than 90% of hospital labs had already begun outreach services, accounting for approximately 30% of testing volume.”
The report concluded that independent labs are projected to compete more effectively with hospital labs in the coming years as testing volume increases in the U.S. market and as greater attention is paid to lab test costs. The independent lab industry in the U.S. generates $20 billion in annual revenue. The 5,900 CLIA-certified independent labs in the U.S. manage an estimated annual volume of three billion tests. Large independent labs gained industry share through cost advantages and acquisitions, with a focus on buying smaller anatomic pathology and molecular testing labs.
“However, momentum in the independent lab industry space slowed substantially after 2008,” said the report. “Despite gains among individual players consistent with their industry acquisitions, the U.S. independent lab industry saw essentially zero year-over-year revenue growth in 2009 and revenue contraction during 2010-2012. Despite recent revenue stagnation, the U.S. independent lab sector is expected to recover both in terms of competitiveness against hospital labs and in terms of overall growth.”
The reported stated that the number of POLs nearly outnumbers all other certified clinical labs combined in the U.S., totaling approximately 120,000. Nonetheless, POLs account for less than 10% of the U.S. clinical testing volume, or 1.2 billion tests, and generate under $3 billion in revenue. The majority of POLs are certified to perform only CLIA-waived tests (low complexity testing with minimal risk of error) or provider-performed microscopy (PPM). However, trends suggest that more physician groups are obtaining moderate complexity lab certification.
“A 2007 survey by the American Academy of Family Physicians (AAFP) found that more than 80% of family physician office labs were CLIA-waived/PPM-certified, while a 2011 survey found 70% of family POLs similarly certified,” said the report. “This 2011 survey additionally found that 21% of family POLs were certified for moderate complexity and 7% for high complexity tests. Successive AAFP surveys in 2008 and 2011 found the percentage of U.S. family practices certified for moderate and high complexity testing increased from 24% to 29%. Specialists are also expected to increase adoption of moderate and high complexity POL testing as a means of supplementing revenue and cost saving against outsourcing.”
The report found that OTC sales of IVD tests to consumers represented a $4.8 billion market in 2013, with the vast majority (90%) of sales coming from blood glucose self-monitoring supplies. The introduction of additional CLIA-waived, OTC-eligible IVD test products is not expected to expand this market segment significantly. Outside of pregnancy, ovulation, and blood glucose testing, these OTC test products in the U.S. generated revenues of only $150 million in 2013.
The remaining venues for clinical testing account for less than 15% of the total U.S. clinical testing volume. Non-laboratory health institution testing sites, blood banks, health maintenance organizations (HMOs), and nursing facilities represent some of the non-traditional testing sites in the U.S. healthcare system.
During the coming weeks, I will continue to present more analyses from this report. Visit the Kalorama Information website for more information about the company and its IVD market reports.