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Build molecular-testing-lab-toc
1. How to Build a Molecular
Testing Laboratory: Key Strategic
& Operational Considerations
The complete guide to developing
or expanding your lab
2. Includes step-by-step plans for basic
and full-service MDx labs
How to Build a Molecular Testing
Laboratory: Key Strategic
Operational Considerations
&
L. Eleanor J. Herriman, M.D., MBA, Director of Research and Analysis, G2 Intelligence
G2 Intelligence estimates that the market for molecular diagnostics laboratory testing
(MDx) will reach $7 billion in 2011—and that it is growing at 15% CAGR. The
opportunity is significant—and How to Build a Molecular Testing Laboratory
provides the intelligence you need to make smart decisions for building, optimizing or
expanding your own MDx lab. This comprehensive research, authored by G2 Director
of Research and Analysis, Eleanor Herriman, M.D., MBA, gives you valuable, practical
insights and step-by-step instructions for your lab—including the five-stage process for
developing an MDx strategy, and a real-world execution plan for building basic and full-
service MDx labs.
The field of molecular diagnostics testing is perhaps unlike any other in the history
of laboratory testing.
Molecular diagnostic testing (MDx), or assaying for nucleic acids, is at the center of a
wave that is transforming medicine and the health care industry. This bold assertion is
based on the following:
• MDx testing is a key enabler of personalized medicine
• MDx testing is redefining disease states, leading to “precision medicine”
• MDx testing is reconfiguring laboratory medicine’s position in the health
care industry
• Some health care industry opinion leaders predict that MDx will usurp
pharmaceuticals in terms of investment attractiveness
• PLUS, MDx tests are now used throughout the continuum of care
• AND, MDx has shown that it can advance clinical outcomes and produce
health care savings
Make sure your lab is ready to take the next step with Dr. Herriman’s actionable,
practical insights on:
• The five-stage process for developing your lab’s MDx strategy
• A real-world execution plan for building basic and full-service
MDx labs, covering:
-- Testing menus -- Laboratory operations
-- Instrument platforms -- Quality, proficiency testing
-- Facility and supplies and accreditation
-- Personnel -- Coding and billing
-- Developing the pro forma -- Sales and marketing
financials and business case
Order your copy today! Visit www.G2Intelligence.com or call 800-401-5937 x 2
3. Figure 1
Example MDx Lab Requirements According to Primary Strategic Objective
Strategic MDx
Type of MDx Lab Client Network Personnel Technology
Lab Objective
Meet clinicians’ service Basic, automated Start with baseline—if Director and techs, Automated, easy to
needs insufficient volume, need minimal expertise operate systems; FDA
to expand kits
Reduce send-out Start with basic, Start with baseline—if Director and techs, Automated, easy to
expenses automated lab insufficient volume, need minimal expertise operate systems; FDA
to expand kits
Grow lab revenues, Intermediate—move to Need to grow client Bring in MDx expertise Can start with closed
profits LDTs testing share and/or and sales, marketing and automated, move to
number of clients open for LDTs
Differentiate lab Stage—basic to full Need to grow client Bring in MDx expertise Multiple systems—some
competitively service base; network with other and sales, marketing; automated, FDA kits,
labs/start reference need IT expertise other open systems for
business LDTs
Establish Full service—LDT Develop relationships Experienced MDx PhD, Multiple systems—some
institutional leadership capabilities with specialty services med techs; clinical automated, FDA kits,
and clinical researchers; research and IT other open systems for
establish agreements capabilities LDTs
with pharmas, IVD cos.
for trial services
Source: G2 Intelligence
Summary
In Dr. Herriman’s new report, How to Build a Molecular Testing Laboratory, you’ll also
find helpful information on the molecular diagnostics testing market, including:
• The molecular diagnostics testing market, featuring key market trends driving
the rapid growth and adoption of MDx testing
• Molecular diagnostics tests and techniques
• Industry trends and best practices
• Evolving regulatory issues and obtaining reimbursement for new MDx tests
• Appendices on FDA-cleared/approved molecular diagnostics tests, and G2’s
compilation of molecular tests with evidence of health care savings
Multi-User/Multi-Location Pricing? Contact Jonathan Wentworth-Ping at 973-718-4703, or email jping@G2Intelligence.com
4. How to Build a Molecular Testing Laboratory: About the
Key Strategic & Operational Considerations Analyst
is organized as follows:
• The Molecular Diagnostics Testing Market—featuring an overview of key market
characteristics, trends and challenges
• Strategic Planning for the MDx Lab—the five-stage process for developing your
lab’s MDx strategy
• Molecular Diagnostic Tests—history, test menus and techniques
• MDx Instrument Platforms—overview and selecting the right instrumentation
for your lab
• Building a Basic MDx Lab—a real-world execution plan for building your MDx lab
• The Full Service MDx Lab—a comprehensive plan for taking your lab to the next L. Eleanor J.
level—one that performs both Food and Drug Administration (FDA)-clearned, In Herriman, M.D.,
Vitro Diagnostic (IVD) tests, as well as laboratory developed tests (LDTs). MBA, Director
• MDx Labs—Industry Trends and Best Practices—results of a G2 Intelligence 2011 of Research and
survey of 90 laboratories regarding their experiences with MDx testing, as well as a Analysis
compilation of best practice recommendations from MDx laboratorians. G2 Intelligence
L. Eleanor J. Herriman,
Order now to receive your copy for just $995 and your state’s sales tax by visiting M.D., MBA is a pathologist
executive with 15+ years
www.G2Intelligence.com. experience in the medical
Or, to place your order by phone, please contact G2 Customer Service at technology industry. She
has worked across sectors
800-401-5937 ext. 2 or via email customerservice@G2Intelligence.com. with both small ventures
If you wish to receive a pdf file of this report which can distributed to others within and corporations. Her
market experience spans
your organization or posted to an intranet for firm-wide use, please contact our
the clinical laboratory, in
Licensing & Permissions director, Jonathan Wentworth-Ping at vitro diagnostics, e-health,
jping@G2Intelligence.com or by phone at 973-718-4703. biotech, and strategy
consulting for Bain &
Company. She is the author
About G2 Intelligence of two G2 Intelligence
reports: Health Care Market
Advancing the Business of Diagnostic Medicine Reforms: Implications
and Prescriptions for
G2 Intelligence provides timely, accurate and trusted analysis of industry Laboratories; and How
and market trends, legal and regulatory developments, and technology to Build a Molecular
and innovation that directly affect the operations, financial performance, Testing Laboratory: Key
Strategic and Operational
and competitive position of diagnostic testing laboratories and related Considerations. Other key
medical services providers. accomplishments include
growing a venture with a
Formerly known as “Washington G-2 Reports”, the company has covered and reported CLIA lab and FDA PMA
on the diagnostic industry for over 30 years. G2 Intelligence delivers topical and approved computer-assisted
analytical periodicals, proprietary research studies, and custom advisory services, and cytology instrument from
through live and virtual events, facilitates industry meetings and information exchanges. start-up to publicly
traded company
Our mission is to deliver relevant, meaningful and actionable findings on diagnostic (IPO raised $100M).
industry markets, related regulatory change and lab operations. The organization strives
She earned an MD at Baylor
to exceed client expectations and develop mutually beneficial relationships with industry College of Medicine, did her
leaders and influencers. pathology training at UCSF,
and received an MBA from
G2 Intelligence is a division of Kennedy Information, LLC, a leading provider of Harvard Business School
professional market analysis. with highest honors
Information on other G2 Intelligence products and services can be found at (Baker Scholar).
www.G2Intelligence.com.
5. Table Of Contents
Table of Contents
CHAPTER 1: The Molecular Diagnostics Testing Market ..........................................7
Overview....................................................................................................................... 7
Market Characteristics.................................................................................................. 8
.
Market Trends—Drivers.................................................................................................10
Market Trends—Challenges..........................................................................................11
CHAPTER 2: Strategic Planning for the MDx Lab................................................... 13
CHAPTER 3: Molecular Diagnostic Tests . ............................................................... 19
Gel Electrophoresis Methods.......................................................................................19
Regulatory Categories of Tests ....................................................................................24
MDx Tests by Indication Class......................................................................................26
Coding of MDx Tests....................................................................................................38
Test Reimbursement....................................................................................................41
Test Regulation...........................................................................................................42
CHAPTER 4: MDx Instrument Platforms. ................................................................. 45
CHAPTER 5: Building a Basic MDx Lab.................................................................... 51
Planning the Testing Menu...........................................................................................51
Planning the Instrument Platforms..............................................................................53
.
Planning the Facility and Supplies...............................................................................58
Personnel Planning.....................................................................................................59
Personnel Training.......................................................................................................62
Developing the Pro Forma Financials and Business Case ...........................................63
Planning Laboratory Operations..................................................................................70
Quality, Proficiency Testing, and Accreditation..............................................................74
Coding and Billing......................................................................................................77
.
Sales and Marketing...................................................................................................79
Case Study: An Alternative Model for Starting a Basic MDx Lab...................................80
CHAPTER 6: The Full Service MDx Lab..................................................................... 85
Planning the Testing Menu...........................................................................................85
Planning the Instrument Platforms..............................................................................86
.
Planning the Facility and Supplies; Personnel Planning...............................................88
.
Developing the Pro Forma Financials and Business Case............................................88
Planning Laboratory Operations .................................................................................92
LDT Validation—Establishing Performance Specifications.............................................92
.
LDT Reimbursement....................................................................................................95
Full Scale LDT Lab—Summary.....................................................................................99
CHAPTER 7: MDx Labs—Industry Trends and Best Practices.......................... 103
G2 Intelligence’s 2011 MDx Lab Survey....................................................................103
APPENDIX A: FDA-Cleared/ApprovedMolecular Diagnostics Tests..................... 117
APPENDIX B: G2 Intelligence Compilation of Molecular Tests With Evidence
of Health Care Savings.....................................................................................133
About the Analyst.....................................................................................................139
About G2 Intelligence ............................................................................................141
6. Table of Figures
Laboratory Objectives for Launching MDx .................................................................... 13
Example MDx Lab Requirements According to Primary Strategic Objective........................ 15
Various Methods With Different Resolutions Detect Different Sizes of
Genomic Changes................................................................................................ 22
Current Molecular Diagnostic Codes............................................................................ 39
MDx Instrument Platforms.......................................................................................... 47
Classification of 31 MDx Instrument Platforms by Function and Menu.............................. 49
Instrument Specialization of IVD Assays....................................................................... 49
Selected, Fully Automated Instrument Platforms for MDx Labs With Women’s Health IVD
Menus................................................................................................................ 54
Selected, Fully Automated Instrument Platforms for MDx Labs With Viral IVD Menus. ......... 55
Selected, Fully Automated Instrument Platforms for MDx Labs With Genetic,
Pharmacogenetic, and Hematology IVD Menus......................................................... 55
Financing Options for Acquiring MDx Instrument Platforms............................................. 57
Instrument Financing Decision Tree. ........................................................................... 57
Hypothetical Financial Calculation for Quantitative Viral Load Test. .................................. 65
Laboratory Respondent Profiles for G2 Intelligence 2011 MDx Survey ............................. 66
MDx Lab Survey First Year Budget Responses. .............................................................. 67
Volume of Mdx Testing Performed in Year One. .............................................................. 67
Cost Avoidance Savings from KRAS Testing in Colorectal Cancer...................................... 70
Standard Molecular Nomenclature Overview................................................................. 73
Profiles of Selected MDx Instruments Suitable for Full Service Labs................................. 87
MDx Instrument Platforms Categorized by Example Features........................................... 88
Project Plan for New LDT............................................................................................ 90
Hypothetical Distribution of Costs per Test for LDT ........................................................ 92
Lab Participants’ Profiles.......................................................................................... 103
Total Respondents, by Annual Test Volume (2010)....................................................... 104
Performing MDx Testing, by Test Volume...................................................................... 104
Performing MDx Testing, by Lab Type.......................................................................... 104
Reasons Not Performing MDx Testing, by Test Volume................................................... 105
Timeframe for Bringing MDx Testing In House, by Lab Type............................................ 105
Reasons for Bringing MDx Testing In House, by When Lab Started In House MDx. ............ 106
Reasons for Choosing MDx Test for In House, by Test Volume......................................... 106
First MDx Test for In House, by Test Type. .................................................................... 107
First Year MDx In House Budget, by Test Volume........................................................... 107
First Year MDx In House Budget, Average and Median. ................................................. 108
Types of Preparation in Building MDx In House Lab, by Test Volume................................ 108
Types of Preparation in Building MDx In House Lab, by Time Since Started
In House Testing................................................................................................. 108
Requirements for External Operational Expertise. ........................................................ 109
Reference Labs’ Views on Clients’ Missing MDx Capabilities.......................................... 109
MDx Testing Volumes, in First Year.............................................................................. 110
MDx Test Volume Growth Rates, Last Two Years, by Timeframe........................................ 110
MDx Test Volume Growth Rates, Last Two Years, by Test Volume. ..................................... 111
Profitability of MDx Outreach Services, by Test Volume. ................................................ 111
Profitability of MDx Outreach Services, by Lab Type...................................................... 111
MDx Menu Expansion Planned Going Forward, by Test Volume....................................... 112
MDx Menu Expansion Planned Going Forward, by Lab Type........................................... 112
7. MDx Test Utilization Programs Managed, by Lab Type.................................................... 112
MDx Test Utilization Programs Managed, by Test Volume. .............................................. 113
MDx Laboratorian Suggested “Best Practices”............................................................. 113
Abbreviations..........................................................................................................117
Infectious Disease Tests—Bacterial, Eukaryotic and Fungal.............................................117
Molecular Diagnostic Tests—Human........................................................................... 125
Molecular Diagnostic Controls, Reagents & Proficiency Panels...................................... 129
Molecular Diagnostic Systems.................................................................................. 131
G2 Intelligence Compilation of Molecular Tests With Evidence of
Health Care Savings. .......................................................................................... 134
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