Welcome to BioMarketing Insight's monthly newsletter. Last month I discussed systems biology and how this approach will benefit drug discovery by discovering better biomarkers and developing better companion diagnostics, thus leading to personalized medicine. This month I will cover the diagnostic industry.  

Please see the links on the right for more information and industry news. 

Feel free to email me if you have any questions, comments, or suggestions.

Sincerely,

Regina Au

Principal, Strategic Marketing Consultant

BioMarketing Insight 

The diagnostic market can be divided up into three main groups: 1) in vitro diagnostics (IVD) - testing of blood, tissue or body fluid, 2) in vivo diagnostics, testing organ function such as an ECG, and 3) medical imaging such as x-ray, CT or MRI. For the purpose of this newsletter, I will focus on in vitro diagnostics and medical imaging.

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The largest segments in the IVD market are clinical chemistry and immunoassays. Personal blood glucose monitoring systems and testing-strips aredriving the clinical chemistry segment. The incident of diabetes is rapidly growing in the US and worldwide to the point of being an epidemic. United Health Group Inc., the largest U.S. health insurer by sales, predicts that by 2020, the cost to treat diabetes will be $3.4 trillion. In 2010, it was reported that 285 million people, or 6.4% of the world's adult  population, have diabetes and is expected to grow to 438 million by 2030. For more information diabetes, please see my July newsletters.  

Many medical device companies are trying to develop better glucose monitoring systems that overcome compliance issues such as a needle-free glucose monitoring systems and closed loop (continuous) monitoring or artificial pancreas. Both systems have their challenges but closed loop monitoring has more challenges because artificial systems or computers tend to be much slower than the human body's amazing feedback system. If the system is too slow, then the patients could get into trouble very quickly. In addition, the FDA recently released their draft of a guidance on low glucose suspend (LGS) artificial pancreas systems. This has device companies protesting that implementing its recommendations would cost too much and complainingthat it would be too difficult to put into action to its essential impossibility.   

Immunoassays

The growth of immunoassays is due to pharma drug testing and infectious disease testing. Recently, MRSA -methicillin-resistant Staphylococcus aureus in the hospitals and the spill over into the community is driving this segment. Hospitals are actively testing patients and healthcare workers and implementing programs to train workers on sterile technique and hand washing. CMS has even gone so far as to deny reimbursement for patients that are readmitted within 24 hoursdue to infections acquired from the hospital. Many companies are and have developed rapids test to identify hospital acquired bacteria in as little as a couple of hours in order to treat the infection early rather than waiting for the lab results that used to take a day or two.

The use of hemostat tests for D-dimer, a fibrin degradation product (or FDP) has become an important test performed in patients suspected of thrombotic disorders since its introduction in the 1990s. It is used to help diagnose thrombosis such as deep vein thrombosis (DVT), pulmonary embolism (PE) or disseminated intravascular coagulation (DIC). It is also used to predict hemorrhage in surgery particularly in emergencies. It is particularly useful in cardiac surgery along with other cardiac tests in quantifying the risk of a heart attack and embolism prior to a cardiac emergency.

Molecular Diagnostics

Since the human genome project, molecular diagnostics or genetic testing has became very popular where one can obtain genetic information in identifying specific diseases or traits. This segment will become very profitable once the price becomes affordable not only in the medical field but in law enforcement in providing irrefutable evidence in identifying victims or perpetrators.

Companion Diagnostics (CDx) is a molecular diagnostic test but some may classify it as a separate category since it is customized biomarkers for drug development (D2) and diagnostics specific to that drug. It's a form of personalized medicine. The systems biology approach in research and discovery will uncover better biomarkers that benefit both CDx and D2. CDx is developed in parallel with D2 because one needs biomarkers for both paths and data from clinical drug trials will further develop and support the diagnostic test. Many large pharmaceutical and biotech companies have already adapted the companion diagnostic program in only moving forward with a drug program that has a biomarker.

Oncology is an area that can benefit the most with CDx due to the high complexity of the disease. Newer biotech companies are trying to develop various cancer diagnostic tests. The focus on rare diseases including rare diseases in children have opened up since congress, NIH and advocacy groups have supported these diseases through various incentives.

The term "Theranostics" is a more general term of personalized medicine where it tailors diagnostics and treatment to individual patients. This can also be applied to medical imaging tests and surgical treatment which will be discussed in further detail in the next section "Trends in the Medical Imaging Market."

Market Data

In 2010, the worldwide IVD market was estimated at $44 billion and predicted to be $52 billion by 2013 with a compound annual growth rate of about 5%, according to research from RNCOS.  Molecular diagnostics is forecasted to be $15 billion by 2014 at a compound annual growth rate of about 20% reports Renub Research. Infectious diseases account for more than a fifth of this segment, followed by oncology. By 2014 blood testing and genetic screening will represent over a quarter of the market, with the US representing $6 billion of the molecular diagnostics market.  

The US and the EU comprise about three quarters of the global IVD market. Developed countries due to their diet and lifestyles have diseases such as cancer, diabetes and cardiovascular disease, whereas developing countries are more concerned with the diagnosis of infection and infectious disease.

The US is the market leader in the IVD market and is forecasted to grow at an annual rate of 5.4% reaching $23 billion in 2013 according to Global Industry Analysts.   The US molecular diagnostics market will be over $6.35 billion by 2015.

The EU represents the second-largest market, with infectious-disease testing forecasted to reach $1.02 billion in 2012.  Oncology testing and pharmacogenomics are growth opportunities and are predicted to show a compound annual growth rate of 10.71% and 11.05%, respectively, between 2011 and 2015.

For more information on the IVD, feel free to contact us.

Medical imaging can be categorized into nine segments: 1) X-ray, 2) ultrasound, 3) computed tomography (CT), 4) positron emission tomography (PET), 5) single photon emission tomography (SPECT), 6) magnetic resonance imaging (MRI), 7) nuclear medicine (NM), 8) mammography and 9) fluoroscopy.

Globally, X-ray is most frequently used at about 108 million X-ray exams per year. MRI is ranked second with 26 million examinations per year. PET, SPECT, CT, and nuclear medicine rank third with 30 million examinations per year according to a release from Reportlinker in 2011.In 2009, the medical imaging market was US$5.73 billion and estimated to reach $6.55 billion in 2012 according to Frost & Sullivan's report.

Picture archiving and communication systems (PACS) and contrast agents are sub-segments of medical imaging that have gained significant growth in recent years due to technology advances in imaging. PACS is a way to store and access all types of images so that a physician can pull up any image no matter where the test was done (provided the institution has this capability) and hopefully the way of the future for all electronic medical records.

Medical imaging is not only used as a diagnostic tool for appropriate treatment, but for pre-planning of surgical procedure or guidance in real time diagnostic procedures such as cardiac catheterization with fluoroscopy and ultrasound.

In terms of technological advancements, this segment is the fastest growing segment. 3D has become particularly useful in the surgical world. Dr. John Xerogeanes, a surgeon from Emory Sports Medicine Center, and colleagues have developed 3-D MRI technology that allows surgeons to pre-operatively plan and perform anatomic anterior cruciate ligament (ACL) surgery. Prior 3-D MRI, only X-rays were used to guide the surgeon leaving too much to chance when working around growth plates. "The problem with doing surgery on a young child is that if you damage the growth plate, you can cause a growth disturbance," says Xerogeanes. 

Earlier this year, the FDA approved Hologic's 3D one-of-a-kind breast imaging platform, called Selenia, for performing mammograms.[3] This month GE submitted a PMA for their breast tomosynthesis system to be used as an add-on option for the Senographe Essential system in producing 3D images for screening and diagnosis of breast cancer.  

Point of Care (POC) imaging devices in terms of portable or hand- held ultrasound is becoming more in demand and will be the way of the future. In 2009, GE came out with a first generation hand- held ultrasound Vscan. These types of devices are particularly important in the critical setting such as the ER or bedside when results are critical in deciding the course of treatment.

Accessibility or remote access is essential in our world today. Recently the FDA gave Carestream  Health clearance to market a Web-based radiology image viewer called Vue Motion for non-diagnostic reads on iPads and other portable devices, so doctors can instantly access imaging data anywhere they are located. MRI scans or other images are viewed on designated websites so storage is not an issue on portable devices.

For more information on medical imaging, feel free to contact us.

As technology advances for earlier diagnosis of diseases, the cost of these diagnostic technologies are normally more expensive. Getting these advanced technology reimbursed is difficult and will become more difficult. Before one starts to develop newer technologies, one has to take into consideration whether the technology will be reimbursed in your market assessment. In order for a new technology to get reimbursed, one has to demonstrate that the technology is far superior to current technologies for early detection and outcomes that outweigh the cost of the test and build it into your product development plans.

The issue of coverage unfortunately does not stop there. The insurance company can limit coverage in terms of who is eligible for coverage and the type of diseased being diagnosed. For example, MRI's are not covered for breast cancer prevention even though it is a better diagnostic test because of the cost. Recently, a health insurance affiliate deemed Hologic's 3D mammography system as "investigational and not medically necessary." Even if the insurance company will reimburse a diagnostic test, it still does not necessarily mean that everyone will be covered. What do I mean? Read on.

Today, the insurance companies are passing more of the healthcare cost on to the employer which in turn is passed on to the employee, and to individuals with insurance coverage. Health insurance and the premiums that correspond to coverage are spiraling out of control and many people are opting for larger deductibles for medical and prescription coverage, higher co-pays and co-insurance simply because they can not afford health insurance. This is a trend that has been going on for a while.

In addition to the larger deductibles, the insurance companies are not covering items that used to be covered and are now subject to the deductible.  Once a patient's deductible has been met, then the insurance will cover the test. Most diagnostic tests are subject to the deductible and the patient has to pay out of pocket. The definition of diagnostic test is almost everything (immunoassays, molecular diagnostic) except for a few "routine tests" which are basic tests such as clinical chemistry (i.e. BUN, creatinine), glucose and cholesterol.

X-rays, MRI, CT, PET are considered diagnostic tests. For example, if your physician suspects that you have pneumonia and orders a chest X-ray, this is not covered by insurance and subject to your deductible. Every insurance company is a little different in terms of what they specifically cover but the principle is the same. If the patient has to pay for these diagnostic tests, which can be expensive, the patient may decide not to get the test simply because they can't afford it. This trend will have a negative impact not only on the patient's health because the patient will wait until the situation get dangerously bad, but the cost to treat the patient will be more than paying for the diagnostic test and treating the patient early.

This is very important for companies developing new technologies, because as one determines the market potential for a specific diagnostic test (includes medical imaging), it may be significantly less than what one may expect because reimbursement is not straight forward.  One has to understand the system and how it affects all stakeholders (i.e. insurance, physician, hospital, patient) and then develop strategies that satisfies all of them.

Closing thought: If prevention is the best way to avoid long-term healthcare cost, then why are insurance companies not covering what they term as diagnostic test? What can we do as an industry to change this?

For more information or inquires on developing a reimbursement strategy, feel free to contact to contact us.

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Tim Hemmes gives his girlfriend a high-five (Photo: UPMC) Medical News Today, October 10, 2011

A paralyzed adult male patient used a brain computer interface to move a prosthetic arm with only his thoughts. Tim Hemmes, had a motorcycle accident damaging his spinal cord leaving him paralyzed seven years ago. In the picture above Hemmes, 30 touches hand with his girlfriend.

Hemmes is the first patient participating in a new human study that will determine whether a paralyzed person's thoughts can be used to control an external device, such as a sophisticated prosthetic arm or a computer cursor according to researchers.

A series of electrodes were placed on the surface of the patient's brain, so that he could control the external arm device. The robotic arm and hand was designed by scientists at the Johns Hopkins University Applied Physics Laboratory and study conducted by scientists at the University of Pittsburgh School of Medicine and UPMC Rehabilitation Institute.

With pure brain power, Hemmes, the first patient with pure brain power moved the arm towards the palm of one of the researchers and then later to his girlfriend's hand.

Twenty-Five Medical Device and Twenty-Three Pharma/Biotech Funding Deals

Companies represented here are US and European companies for Medical Device and Pharma/Biotech. The financing are all types of funding. The amount of funding continues to be small and a significant amount came from grants and state or public institutions funding start-ups.

$0 = No financial terms disclosed. For more information, read more....

$0 = No financial terms disclosed. For more information, read more...     

$0 = No financial terms disclosed. For more information, read more....

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