February 15, 2009 (Vol. 29, No. 4)

Bruce Carlson Publisher Kalorama Information

Exponential Market Growth Depends on Ability to Overcome Utility and Reimbursement Issues

DNA testing represents a revolution postponed, perhaps, but one that is now clearly under way. After years of glowing predictions that didn’t immediately translate into change in clinical diagnostics, DNA testing has emerged fully from research into clinical practice, and is now one of the fastest growing segments of the diagnostics market.

Molecular tests are now used to diagnose disease and disease susceptibility, in prenatal genetic assessments, in tissue typing for organ transplantation, and to screen for inherited diseases.

Instrumentation now automates many of the sample-preparation and assay steps that were formerly labor-intensive. New tests are being launched all the time and many more are in development. The result is that molecular testing is now used in many areas of healthcare including: cardiology, oncology, infectious diseases, and inherited diseases and disorders.

The contribution that these tests can make to patient outcome, however, faces significant barriers including reimbursement issues, lack of standardization across test platforms, limited quality-control products and programs, and the inability to fully interpret test data.

Roche’s PCR technology has dominated molecular testing since the mid 1980s. As a matter of economics and, at other times, a matter of scientific pride and innovation, some scientists and companies have looked for ways to avoid paying PCR license fees to Roche. The result is that a myriad of other DNA amplification and molecular test platforms have been introduced, but none have managed to displace PCR.

Another driver for technological innovation in molecular testing is the need to design technologies that can be easily miniaturized and simplified for use in routine laboratories that have not yet invested in molecular methods.

The technologies that most comply with these testing requirements include bead arrays, electrochemical arrays, and microarrays. Many of these technologies are poised to overtake PCR sometime in the future and for some applications. But for now, Roche Diagnostics and PCR still account for the lion’s share of the molecular test market.

Increasing market penetration of molecular assays in the next few years is in part due to maturation of the technology itself and the development of appropriate diagnostic applications. The further success of these assays will, for the most part, result from the commercialization of rapid, user-friendly and economical high-quality testing systems and the discovery of molecular-based therapeutics that will allow for more individualization of disease management.

To date this promise has yet to be fulfilled. Although a range of companies have fairly user-friendly systems, the bulk of molecular testing is still performed with in-lab developed tests and test services. Rapid point-of-care devices for infectious diseases have already been commercialized, however, none are available for nucleic acid testing.

Molecular medicine will ultimately  transform the entire spectrum of disease management, from assuring the early detection of disease, to defining the prognosis of disease evolution and predicting a patient’s response to specific therapies.

The application of molecular technologies to clinical analyses has received widespread attention. These tests have already made their mark in diagnostic systems and will continue to make further inroads in the next five years. Key issues that will impact on the market success of molecular tests include:

  • Significant changes in healthcare delivery that will herald a new era in diagnostic testing needs. This new era requires sophisticated, sensitive assays that are user-friendly and cost effective. This bodes well for miniaturized molecular test platforms
  • Demand for faster test turnaround time from sample collection to results availability.
  • Customers also want a large menu of tests available on a single platform since molecular tests must account for variability in test targets. These tests must have high sensitivity for analytes in small concentrations, be quantitative, and must use small whole blood, urine, saliva, and CSF samples.
  • Finally test systems must also be easy to use. This is crucial for the growing use of diagnostic assays in point-of-care settings.

Growth Potential

The 2007 worldwide market for molecular assays was estimated at $3.7 billion by Kalorama. The market will grow 11% annually and should reach $6.2 billion in 2012. This segment includes routine areas such as blood screening and also newer areas of testing such as pharmacogenomics and inherited disease testing, which will experience far greater growth rates—35% and 25%, respectively, during this period.

The market estimate also covers market-authorized assays and reagents. In-lab developed tests, so called home-brew tests, which account for a large portion of this IVD segment, are not included. The increased market penetration of molecular assays should decrease the cost of commercialized kits, which, combined with the need for standardization, will make commercial kits more attractive, especially for small labs.

Microorganism testing continues to comprise a large part of the IVD market, and molecular testing accounts for most of the growth in this segment. In 2007, molecular tests were in the growth mode, however by 2012, because of advances in technology, these tests may begin to mature, and therefore, test prices will decrease.

For the major test segments—infectious diseases and oncology—where traditional immunoassays dominate, molecular assays have captured less than 20–30% of market share. It is expected that by 2015 molecular assays will have increased market penetration at the expense of incumbent techniques.

World Markets

Overall, clinical molecular testing remains a phenomenon of the developed world. Some industrialized second-tier countries such as Australia, Israel, Brazil, China, and India have strong molecular test industries. At least 80% of the molecular assays performed are concentrated in the developed world.

The European process of product regulation allows for easier entry of new technologies. Thus, in the short term—five years—more innovative molecular tests for cancer, cardiac disease, and pharmacogenomics and test platforms (arrays and biochips) come to the European market before North America.

Most of the research activity and innovation in molecular testing is focused on diagnosing, treating, and monitoring cancer. As more is known about disease processes, however, these tests are increasingly focused on chronic diseases such as neurological conditions, autoimmune diseases, diabetes, and cardiovascular diseases. A range of tests is now on the horizon.

The market for molecular tests is currently limited more by their utility than on the technology required to perform them. Almost daily, medical researchers announce their findings linking genes and gene sets to diseases, however, as yet these research findings have not been translated into many new useful diagnostic tests. Innovation is often stymied by utility and reimbursement, which go hand in hand.

Should this change, growth rates could eclipse what we’ve outlined. For the short term, however, growth of the market for molecular tests is driven by their potential in drug and medical research and the clinical market segment which will only increase as the value of nucleic acid diagnostic markers are developed. 

Bruce Carlson ([email protected]) is a publisher at Kalorama Information. Web: www.
kaloramainformation.com. This article is excerpted from Kalorama’s World Market for Molecular Diagnostics.

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