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Industry Overview Contents 2 Diagnostics Industry Overview Market & Products Segmentation Socio-economic Status Total APAC Diagnostics Market & Outlook Regional Diagnostics Market & Outlook Diagnostics Market Age Vs. CAGR Diagnostics Market Revenue by Segment & CAGR 1. 2. 3. 4. 5. 6.
The In Vitro Diagnostics (IVD) Market includes instruments, reagents and services that analyze human body fluids in order to evaluate diseases and other medical conditions under various stages
IVDs improve patient management and success rates by accurately diagnosing disease, monitoring treatments, and detecting predispositions to diseases and conditions and helps in nearly 80 per cent of clinical decisions.
The importance and clinical relevance of these diagnostic tests are important factors for the popularity of these tests amongst patients and healthcare providers that are driving the growth of the IVD market.
In-vitro Diagnostics Identification of a disease, disorder, or syndrome through a method of consistent analysis. Classification based on Application:
Point-of-care testing (POCT)
Market & Products Industry Overview
Socio-economic Status Industry Overview 4 CAGR : 6.2%
Global HC Expenditure = US$ 4,981 bil
APAC = 54% of the world population
One-third of the world’s GDP
High population growth
Auto - immune diseases, infectious diseases, neurological disorders
Chronic diseases, e.g. diabetes, cancers, obesity, cardiovascular diseases.
Increasing investment in healthcare infrastructure and expenditure
Strengthening of private sector healthcare.
Continued growth in outsourcing as the clinical research and manufacturing shift away from U.S. and Europe.
Source: Decision Support Database, Frost & Sullivan.
Socio-economic Status Industry Overview 5 China, South Korea and India have the highest growth rate in healthcare spending. Together with the large population, these 3 countries are the most attractive market in healthcare industry. Aging populations correlate to the increase in medical expenditure associated with old age.
Industry Overview Laboratory Automation Outlook Total Laboratory Automation (TLA) is increasingly being favored by large hospital clusters and pathology chains as a solution to rising diagnostic test costs. Home Care Monitoring Outlook Increased usage of home care monitoring devices in Asia Pacific for blood pressure and blood glucose monitoring as patients volume rises. Industry Outlook The fastest growth was recorded by the molecular biology segment followed by coagulation and point of care (POC). Increased adoption of nucleic acid testing-(NAT) based infectious diseases and viral assays (molecular diagnostics), blood glucose testing (POC), cardiac markers and glucose (clinical chemistry), coagulation self-monitoring and bacteriology culture (microbiology) supported a compound annual growth rate of almost 9% for the overall IVD market between 2007 and 2008. APAC Diagnostics Market & Outlook CAGR 8.5% Revenue US$ Billion Clinical Diagnostics Market Revenue ( APAC) 2007-2008 6
India ~US$ 340 M CAGR of 12.1% Stromg Performance in POC,Diabetes Molecular, Histopathology & Cytology China ~US$ 1.4 B CAGR of 14.5% Highest growth expected in POC, Diabetes, histology, molecular assay & rapid test. Korea ~ US$ 265 m CAGR of 13.5% Steadily increasing growth rate for Diabetes & Hemostatis. POC gaining market Taiwan ~US$ 178 M CAGR of 9.8% Growth dominated by Diabetes Malaysia ~US$ 45 m CAGR of 10.5% POC, Immunoassay & Molecular is driving the growth Indonesia ~ US$ 79 M CAGR of 11% POC, Immunoassay & Molecular is driving the growth Industry Overview Japan ~US$ 3.8 Bn CAGR of 4.0% Moderate growth of Hemostasis & POC segment Others ~US$150 m Including Thailand, Bangladesh, Cambodia, Pakistan, Sri Lanka, and Vietnam Philippines ~ US$ 45.5 M CAGR of 8% Focus on Hematology, Clinical Chemistry Regional Diagnostics Market & Outlook Singapore ~US$ 24 M CAGR of 5.5% Focus on Immuno-Assay, Histology, POC, Hematology 7
Strong Performance in POC,Diabetes Molecular, Histopathology & Cytology
Govt. focused budget on Disease prevention & care, Access to rural population and Expanding Insurance coverage
Increasing no. of healthcare providers targeting affluent middle class.
Massive growth in private clinical laboratory due to increase in health awareness & demand for quality care.
approx 50% of total 26,000 labs are manual and in the process of replacing it with Semi-fully automated labs.
NIB/NICD evolving regulatory policies of Critical or Non-critical devices. T he critical ones are those used in HIV, HBsAg, HCV, Blood grouping reagents, Malaria tests. Other tests are considered to be non-critical. For critical devices product evaluation from NIB(National institute of biologicals) or NICD ( National institute of communicable diseases) is mandatory For non critical ones central evaluation not required. State drug offices can give the approval for non critical devices.
Promising market with an expected CAGR of 16% till 2012. Above 65% of total sales is imported and is expected to remain up to a level of 50% by 2012.
MOH projects in Drug discovery & Infectious diseases prevention. Allocation of US$ 440 m going to 25 activities. 6 of them is to develop advanced IVD.
1/5 th of total ageing population in world requiring more medical care.
More affluent middle class Chinese capable of out-of- pocket expenses.
Evolving SFDA regulatory policies. 3 classes of diagnostics devices & reagents. Class II and III products are required to have completed in-China clinical studies and reports prior to registration. In addition, these products must undergo type testing at SFDA authorized laboratories
The fastest growing market in APAC with 20-25% in 2007. Expected CAGR 14.5% by 2012. Around 40% sales comes form other than indigenous IVD companies making it potential import driven market.
Industry Overview Regional Diagnostics Market & Outlook Taiwan ~US$ 178 M CAGR of 9.8% Growth dominated by Diabetes, Point of care and Self testing devices. Reagents contribute approx 50% of total market. Back to the main 8
Industry Overview Regional Diagnostics Market & Outlook
100% import driven for instruments & 60% for the reagents
Diabetes a mature market, growing popularity for point of care
focus area would be molecular assays & histology
KFDA viewed as pragmatic though faced with limited resources.
Three processes required to get a device registered in Korea: 1. Product license (Valid permanently) 2. Korean Good Manufacturing Practice (KGMP) renewable after every 3 yrs and 3. Device Business License (Valid permanently)
Devices are divided into four classes
Class I being lowest risk - Class IV being highest risk.
Agency is evolving though still in phase of improving experience and expertise
Govt would be consolidating the healthcare industry by increasing private & public partnership model giving more focus on preventative tools rather than spending almost a third of total healthcare spending on pharmaceuticals
~US$ 3.8 Bn CAGR of 4.0%
Moderate growth of Hemostasis & POC segment
Old age population with highest life expectancy in Asia. Govt increasing Healthcare spending
Growing no. of smaller to mid size Healthcare facilities and private labs.
April 2005, implemented the Pharmaceutical Affairs Law. Three of the law’s main reforms that apply to IVD products
1. Adopting international standards such as good manufacturing practices (GMPs), 2. Allowing third-party certification instead of requiring direct MHLW (Ministry of health and labour welfare) approval, 3. Developing a market authorization holder (MAH) system – Distributors or a independent 3rd party or the company itself having a office in Japan
Today, application forms and certification processes for IVD products differ slightly from other medical devices
MHLW is considered an established agency
Growing clinical trials industry will positively impact the growth of diagnostics instruments & reagents.
POC, Immunoassay & Molecular is driving the growth
A sum of RM13.7 billion (USD 3.86 bil) is allocated for the provision of health facilities and equipments, to increase supply of medicines, develop human resources, intensify research and enforcement activities, as well as build more hospitals, clinics and quarters in 2009
Healthcare sector in Malaysia is growing at 2.7% in Feb 2009 compared to 2.2% in Feb 2008
Growing market with potential low cost R&D and manufacturing facilities. Halal Certification will bring noticeable advantage.
~US$ 79 M CAGR of 11%
POC, Immunoassay & Molecular is driving the growth
A huge population with more than 10 million above 65 years
Lower quality of healthcare & lab services getting notable attention from the ministry of health & private players.
Overcoming barriers to growth would be important for the country. Although self care diagnostics instruments and reagents for clinical diagnostics would have a remarkable growth.
Industry Overview Philippines ~US$ 45.5 M CAGR of 8% Focus on Hematology, Clinical Chemistry, infectious diseases related test Influencers are High clinical test requirement from insurance companies, schools, companies (for the employees), as well as equipment replacements, Increasing number of population 65 and older (current count is 5.5 million) Cause of death : respiratory infection, ischemic heart disease, TB, hypertension heart disease creating demand for POCT Outlook One of the growing regional market with high potential of growth by replacement market & new products introduction Regional Diagnostics Market & Outlook
~US$ 24 M CAGR of 5.5%
Focus on Immuno-Assay, Histology, POC, Hematology
Need to improve the process automation of most of the labs
Increase in Healthcare budget to SG$ 3.7 b in 2009
Country focus on strengthening its biomedical niche
Increasing deaths by Heart failure, Heart failure, respiratory infection, cerebrovascular disease, lung cancer and diabetes bringing noticeable demand for preventative diagnostics tools & technologies.
Mature market but high acceptance of superior technologies. Expected CAGR growth around 4% by 2012.
Back to the main 10
Industry Overview Market Revenue by Products Segment & CAGR CAGR for IVD Segments (APAC), 2006-2010
Three of the segments make up to 68% of the total diagnostics market i.e. Immuno-Chemistry, Clinical Chemistry, and SMBG
Growing demand of SMBG devices is due to increasing old age population of most of the Asian countries and prevalence of diabetes.
The market growth of Molecular diagnostics is driven by the Majority of population with Sexually transmitted diseases, growing popularity of Thyroid & other Autoimmune diseases, Usage of molecular tests in drug discovery clinical trials and Need for quantitative, real-time monitoring of viral loads.
Technological advancement in whole blood analyzer would spur the growth in coagulation/Hemostasis market.
Most of the segments are expected to grow fairly due to emerging focus on preventative medicines in Asia.
In-Vitro Diagnostics Market Revenue by Segment, 2008 11
Though the IVD market is reaching maturity stage, the genomics revolution combined with developments in automation, integration and miniaturization technology have definitely set the pace in the market.
Today with well established segments in the IVD market moving towards maturity, advancements in the above two fields along with popularity for point-of-care testing (POCT) is balancing the growth in the IVD market.
Major participants in the IVD market are well adapted to these changes and are focusing on high growth potential areas to strengthen their position in the market.
Industry Overview Products Market Age Vs. CAGR Infancy Early Growth Late Growth Maturity Bubble size indicates the relative projected revenues of different segments in Yr 2010 Market Age Vs. CAGR of Diagnostics Market (Global), 2006-2010. 12
Market Dynamics Contents 13 Current Industry Challenge Market Dynamics Drivers & Restraints Competitive Structure Market Players & Positioning Mega trends & Paradigm Shift 1. 2. 3. 4. 5.
Mega trends & Paradigm Shift Rise of the Consumer New era of proactive medicine and empowerment of the consumer. Patients demand more information from healthcare providers Increase in evidence-based healthcare or the illustration (providing evidence) of the effectiveness of a test in order to justify its use, e.g. cardiac risk markers. In particular, advances in genomics, proteomics, pharmacogenetics and theranostics are anticipated to result in the optimization of diagnosis and therapy tailored to the individual Key role in improving patient outcomes and cost-savings due to earlier and more precise diagnoses and patient monitoring Evidence based Healthcare Personalized Medicines Upsurge in IVD Tests More educated ‘power patients’ seek info, want more control. Disease management programs Direct-to-consumer marketing of drugs, clinical diagnostics Adherence, compliance programs push + reward patients Employers becoming more aggressive in pushing preventative care Wellness movement Consumer directed health plans force consumers to pay more attention to HC choices More information resources available to patients Healthcare Vs. Sickcare From bench top instruments with innovative assays to larger systems, which are integrated with different software and automation components Integrated Solution By investing in R&D and Collaboration & partnership with smaller companies across the world to overcome the vast gap of different geographical differences Expanding capabilities- Alliances Figure below illustrate various dimensions and market trends shaping the direction of Healthcare industry form Therapeutic to Preventative medication era. This paradigm shift highlights equal contribution of patients together with clinicians & suppliers. The outlook based on this shift will bring noticeable changes to the way Healthcare providers deliver their services. Source: Frost & Sullivan Growth Consulting Practice Healthcare APAC Copyright @2009 Market Dynamics 14
Drivers & Restraints APAC (2008-10) Market Dynamics Largest pool of Ageing population. Newer premium-priced assays replacing conventional tests. Government funded disease prevention programs. Strengthening IP law in Asia, Harmonizing the regulations across the region (among ASEAN region) Lack of health care facilities in rural areas. Low level of R&D from local manufacturers Lack of proper coverage under health care insurance in most developing countries. Lack of a universal connectivity standard lead to higher equipment and management costs at POC Industry consolidation suppress the future of small to medium participants in the value chain Lack of awareness by health care professionals of range and utility of sophisticated IVD tests. Public plays a passive role in health care - low expectations from providers. Fragmented information delivery to patients encumbers patient’s realization of overall importance of IVD testing Increasing expenditure on health care as total outgo. Increased private participation of Healthcare providers & Insurance companies Increasing affluence of the people who demand better medical services. Changing the profile of diseases – from therapeutic to preventative; from general profile to premium priced lifestyle tests Source: Frost & Sullivan analysis, mass media, market expert interviews, Drivers Restraints 16
Competitive Structure Market Dynamics INDUSTRY COMPETITORS Intensive Rivalry among existing firms ALTERNATIVE TECHNOLOGY POTENTIAL ENTRANTS BUYERS SUPPLIERS Threat Level: HIGH Asian market remains competitive with presence of global companies as well as local giants esp. in Japan, Korea & Taiwan. The distributors look for high quality products with reasonable margins. In those regions where products are supplied / distributed by the importers, distributors for local companies have a high margin and hence inclined to supply the products procured locally. Threat Level: MEDIUM Technological advanced companies would have advantage as trends are moving towards capital-intensive instruments & facilities. Strategic Alliances brings added capabilities to the market players to remain competitive. Threat Level: HIGH The recent acquisition activities, especially of Bayer diagnostics by Siemens indicates the potential growth & possibilities of Capitalized companies to have a grand entry to the diagnostics market. The consolidation by pharmaceutical companies into this market would bring the competition to a new height. Threat Level: Medium The Vast application of diagnostics products & frequent usage gives low to medium bargaining power to the buyers to substitute with. Cost & quality remains a sensitive issue for the buyers. 17
18 Market Players & Positioning Market Dynamics Low High Breadth of Current Applications Degree of Innovation Biotechnology Companies developing Diagnostics Tests Pharmaceutical Companies with Diagnostic Divisions Diagnostics Companies High Roche Abbott Siemens Medical Solutions Diagnostics Becton Dickinson Beckman Coulter Bio-Rad GE Healthcare Sysmex Bio-Merieux Gen-Probe AffyMetrix Qiagen OCD Medical Equipment Vendors with Diagnostic Divisions Characterised by many consolidation activities, current market reflects a very strong bonding with Life sciences players. As seen in the diagram, most of the global players believe in integration of Diagnostics products as a vital aspect to sustain their healthy growth. Market Share of Players –APAC 2008 Peculiar to Asian region only, indigenous market players hold a very substantial market share of close to 45% especially in China, Japan & India.
Market Outlook & Future Trend Contents 19 Transformation of Medical Device Industry Market Outlook & Future Trend Translating Technological Advancement Key Areas of Alliance and Partnership Key Opportunities Prioritized 1. 2. 3. 4.
Transformation of Medical Device Industry Market Outlook & Future Trend 20 Transformation of Medtech Device
Zero Defect Reliability
- Device failure death to patient
Failure Mode and Effects Analysis (FMEA)
Flexible circuits > rigid circuits
Process validatio and control
Pacemaker: size of pack of cards size of stopwatch
Printed circuits denser and thinner.
Infusion pump: single chip, micro-fluidic pumps?
Enhanced Performance and Feature
Networking ability: LAN
Wireless solution: Bluetooth, Wifi
Improved Power Sources
Rechargeable battery in neuro-stimulator extends its lifespan by 10 years.
Biothermal battery – using body heat to create a low current source of power.
Nuclear microbatteries is in development.
IVD Market: Key Technologies Evolution, 2006-2012
Major areas where the industry is currently focusing upon.
Identification of new biomarkers, Developing new diagnostic assays and detection technologies, Improvement in instrument capabilities, Analytical performance, Assay sensitivity, Connectivity and Software solutions
Most significant trends in clinical laboratory is workstation integration and consolidation. Most large IVD companies, like Siemens Medical Solutions Diagnostics and Beckman Coulter, are focusing to consolidate or integrate systems and data. 0 10 9 8 7 6 5 4 3 2 1 Established Development Future Microarray Chemiluminescence Miniaturisation Polymerase Chain Reaction (PCR) Genomics/Proteomics Information Technology Automation Non-Invasive Technology
21 Translating Technological Advancement Nanotechnology Molecular and Gene-based Diagnostics Information Technology Artificial Organs Tissue Engineering Advancement in Technology Translation into Clinical Applications
Benefits to the Patients Driving the Technology Advancement
Medtech device is a technologically inclined industry:
Short product life cycle
Heavy investment in R&D
Constant innovation to release new products
Manufacturers must have strong collaborations with different institutes to carry out the R&D:
Medical institutions, Academic institutions
Key concerns in R&D would be:
Leveraging core knowledge of technology
Lowering the costs
Market Outlook & Future Trend
22 Key Areas of Alliance and Partnership Partnerships within diagnostic companies expand menus along with increasing the sales of systems while combining expertise will allow the respective companies to make significant contributions to diagnostics and patient care Oncology Companies are joining together to move to the forefront of diagnostic technology and provide a full range of solutions between diagnostics and therapy. These novel oncology management tools are designated to cross over from cancer, screening, diagnosis, prognosis to monitoring Clinical reality, assisting physicians with a more holistic understanding of disease and treatment management
Companies are entering into alliances as a step forward to combine quality control products and data management solutions to ensure reliability and precision to customers.
Providing diagnostic customers with cost effective solutions like the need to generate the best and most reliable data while reducing capital costs
The segment includes
Stand-alone automation of Pre & Post Analytical process
Total Laboratory Automation
Molecular Diagnostics Diagnostic companies are able to join their cutting edge, life-saving technologies and superior customer service through alliances while complementing automated diagnostic solutions for hospitals to provide clinicians with quicker and more accurate results. IVD manufacturers are strengthening partnerships between themselves representing their combined dedication to add significant value to labs and becoming market leaders in the industry Key Areas of Alliances within Diagnostic Companies Market Outlook & Future Trend
Market Outlook & Future Trend Key Opportunities Prioritized The positioning of various product lines indicate the potential opportunity in products based on growth in Asian market & its penetration status. Choosing a mixed profile would depend on the company’s objective to grow in specific product line and country of interest as displayed on next slide. Penetration Rate ( High) Penetration Rate ( Low) Growth Rate ( High) Growth Rate (Low) Penetration rate is defined as the maturity of the product segment and its application. The lower penetration rate means higher untapped market potential for growth. Growth rate is considered as the future projected CAGR till year 2012. A high growth rate is any rate above 10% vis-à-vis industry average of 8.5%. 23 Clinical Chemistry Immunoassay Molecular Diagnostics SMBG POCT Hematology Coagulation Microbiology
Market Outlook & Future Trend Strong Med Weak High Med Low IVD Future Growth Opportunity Current Market Attractiveness The objective of this diagram is for illustrative purpose only which positions various Asian countries on two dimension i.e. Current & Future opportunities available in market. The notable argument of this diagram could be to highlight the markets depending on its maturity( in terms of current acceptance rate of IVD devices & reagents) and how the country is developing to bring growth for the same. The Current Attractiveness of Market is defined in terms of overall size, historical growth rates, competitive structure, legal & regulatory requirements and acceptance rate of various IVD technologies. The Future Growth Opportunity is defined as the overall future IVD market favourability on the same dimensions as explained above. In addition, factors which decide the growth potential are socio-economic drivers & restrains in that particular country, forecasted market size, and expected technological advancement in diagnostics industry. Key Opportunities Prioritized 24