October 1, 2012 (Vol. 32, No. 17)
Next-Generation Sequencing Will Soon Be Essential to Cancer Care Protocols
The molecular diagnostics market continues to be the fastest growing segment of the overall in vitro diagnostics market. However, the molecular tests that drove the highest growth rates less than five years ago—for example, for human papillomavirus (HPV) testing and methicillin-resistant Staphylococcus aureus (MRSA) screening—are beginning to stagnate.
To compete in these gradually saturating segments, vendors are forced to further broaden their molecular testing menus while offering competitive costs. The resulting pricing pressures further erode margins on what were once incredibly high-margin tests. In order to make up for the stabilizing infectious disease molecular diagnostic market, vendors are increasingly focusing their attention to the markets for oncology molecular diagnostics.
Global revenues from the sales of oncology molecular diagnostics are growing at more than 20% and currently account for approximately 10% of the roughly $5 billion molecular diagnostics market. While revenues from oncology molecular diagnostics currently make up less than 5% of total cancer testing revenue, this percentage is likely to reach 10% over the next five years. Molecular diagnostics for breast and colorectal cancer are likely to remain the two largest market segments. However, other oncology molecular diagnostics, including those for prostate cancer, lung cancer, bladder cancer, pancreatic cancer, and ovarian cancer, represent significant market growth opportunities.
Molecular tests for oncology enable extremely targeted cancer diagnosis as well as early detection through screening programs. Additionally, with highly sensitive and extremely specific protocols, oncology molecular diagnostics support accurate and appropriate therapy selection. Oncology molecular diagnostics have had the greatest impact on the diagnosis and treatment of breast and colorectal cancer, with multiple tests widely incorporated in clinical practice. More importantly, these novel oncology molecular diagnostics have reduced mortality due to cancer.
Oncology molecular diagnostic tests are reimbursed at very high levels—as much as several thousands of dollars—when compared to other in vitro diagnostics. Higher reimbursement is based on value and cost-savings that can be achieved through the provision of laboratory-developed tests (LDTs).
LDTs allow suppliers to skip the lengthy time for U.S. Food and Drug Administration regulatory review and instead operate as a Clinical Laboratory Improvement Amendments (CLIA)-regulated laboratory, performing tests in-house and marketing services to the medical community immediately. Moreover, suppliers can avoid Current Procedural Terminology (CPT) coding and negotiate with each payer to set prices individually, a long and enduring process to get coverage and market to all potential patients and physicians. Finally, the provision of LDTs allows for suppliers to continually support prognostic clinical trials and collect data for payers to examine.
The greatest driver of the oncology molecular diagnostics market is the growing demand for targeted clinical sequencing panels that necessitate next-generation sequencing technology. While the use of sequencing in clinical applications is at its nascent stage, it is expected to increase as the cost of sequencing further decreases toward the $1,000 genome milestone. The market price per genome for whole genome sequencing is expected to hover around $4,000 for the full year 2012. However, by next year, many of the CLIA-certified diagnostic laboratories that were previously barred from the technology due to its high costs are expected to incorporate next-generation sequencing clinical tests.
With next-generation sequencing, laboratories will be able to perform very sensitive oncology molecular diagnostic testing in an incredibly high-throughput fashion. The rapid evolution of clinical sequencing using next-generation technology will also lead to the very rapid development of many new clinical biomarkers and tests. Although challenges associated with data management and analytics are likely to remain a hurdle, these laboratories recognize that the incorporation of next-generation sequencing is essential to their cancer care protocols.
Next-generation sequencing will ultimately become an essential diagnostic platform among molecular pathologists. Fittingly, technology vendors are aggressively pursuing the market with expectations that as much as half of their next-generation sequencing related revenues will come from clinical applications by 2015.
Jonathan Witonsky is a principal analyst for the life sciences group at Frost & Sullivan. For more information contact Britni Myers ([email protected]).