In our most recent analysis, global in vitro diagnostics (IVD) sales revenue including reagents, consumables, instrumentation, and services totaled $46 billion in 2012 and are expected to reach $65 billion in 2017. Annual revenue growth for IVD is steady at 7% and slightly rosier than that of the pharmaceutical market at 5% annually through 2015. The emerging theme in this research was the increasing globalization of the industry, not only as a factor in market leadership, but also as a critical organic growth strategy for most IVD companies to avoid being engulfed by industry consolidation.
In 2009, Roche Diagnostics, Siemens Healthcare, Abbott Laboratories, the Ortho Clinical Diagnostics division of Johnson & Johnson, and Beckman Coulter (now Danaher) had 60% of the market share. In 2012, their share grew to 63%. The second tier group containing Alere, Bayer Diabetes Care Division, bioMerieux, Sysmex, and Becton, Dickinson and Co. also expanded its market share in three years from 16% in 2009 to 18% in 2012. The remainder competes for a slice of the market that shrunk by 5% in the last three years.
The future holds challenges for both the market leaders and niche suppliers. Large global IVD companies will continue expansion through acquisition, but will struggle to deliver organic growth, which was already apparent in 2012. The competition will further intensify for niche suppliers as growing numbers of their customers, namely physician practices, are unable to remain profitable.
In an analysis of more than 40 companies with IVD sales, we found that the most competitive deployed one or all of three key strategies. The most successful companies first and foremost defended market share by supporting their current installed base. Existing customers and their loyalty are paramount in a business driven by recurring revenue from high-throughput analyzers. Second, competitive companies penetrated high-growth markets like specialty diagnostics and emerging markets. The third was investment in enabling technologies like next-generation sequencing and digital PCR. Out of the list, entering emerging markets is broadly applicable across all IVD companies no matter what size the company and, thus, important for all to consider.