Why Drug Discovery Is Being Outsourced

Drug development is a high-cost and risky business, since only a fraction of the therapeutic targets selected for study will actually yield products that obtain regulatory approval from the FDA. The average drug can take ten or more years to progress from the discovery phase to the clinic, with only one compound out of 10,000 evolving into a viable product.  Typically a majority of compounds do not proceed further than the pre-clinical stage, with only five in five-thousand advancing, before moving onto clinical (human) testing, which includes multiple phases, a plethora of regulations imposed by the FDA and the need for large batches of volunteers.

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Advances in molecular biology and the emergence of new-generation biological therapies has led to an increasing complex drug discovery since the 1990s. These advances, along with the emergence of new technologies, have made it unsustainable for companies to undertake all drug discovery functions in-house. Therefore, the industry has chosen to outsource core drug discovery functions more frequently.

Specifically, the need for clinical outsourcing is being driven by declining R&D budgets; overall expenditures on discovering and developing new drugs by PhRMA members increased nearly 10% in 2010 to reach $50.7 billion; the 2010 rise was short-lived as PhRMA estimates R&D spending dropped just over 2% to $49.5 billion in 2011.  In order to accommodate shrinking budgets and the demand for new market drugs, companies have turned to outsourcing to manage their core functions, which has  resulted in time and cost savings as well as financial and operational flexibility. 

For outsourced nations and pharmaceutical companies, it's a win-win for drug discovery, which requires technical expertise in the areas of molecular biology, ultra-high throughput screening, molecular and behavioral pharmacology, and combinatorial, medicinal, and analytical chemistry.  University and higher education programs throughout BRIC nations have focused heavily on developing a skilled workers in these and many other relative fields.  In addition, crossover and new advancements in chemistry, molecular biology, pharmacology, microbiology, and biochemistry has resulted in the evolution of new methodologies and their application in drug discovery. These new technologies come with the promise of generating greater numbers of more effective drugs, while maintaining or reducing current costs.

Fears of intellectual property protection have been outweighed by advantageous, low-cost of outsourcing drug discovery, in addition to allowing pharmaceutical companies the ability to leverage new technologies and scientific expertise.

Kalorama's report on Drug Discovery Outsourcing can be found at:  http://www.kaloramainformation.com/Outsourcing-Drug-Discovery-6948227/

Kalorama Publishes 8th Edition of Comprehensive IVD Market Research Report

Every two years, our lead diagnostic analyst Shara Rosen produces a complete, 1000+ page, 27 chapter survey of the market for in vitro diagnostics.  The report is large but is designed to provide a great value for market research report buyers who can benefit from having one 'go-to' book for their IVD needs.  This report includes every subsection of clinical diagnostics including Histology, Hematology, Immunoassays, Molecular Testing, Microbiology, Virology, Blood Testing, Point of Care and other.  This year, the 8th edition comes at a time of change in the industry.

"Diagnostic laboratory technology has changed dramatically in the past few years, due to the publication of the human genome project and advances in functional genomics, bioinformatics, miniaturization and microelectronics," says author Shara Rosen, R.T., M.B.A.  "Not three years ago it would have been almost inconceivable to see research technologies such as genome sequencing and mass spectroscopy play a pivotal role in improving lab medicine.  Their influence is felt in personalized medicine, inherited diseases, pathogen detection, antibiotic resistance testing, blood banking and much more to come."

In the 8th edition, which came in at 1400 pages Rosen has picked up on the trend of many new entrants to the IVD industry in the molecular, microbiology and point of care fields.  She profiled nearly 500 companies.    Careful attention was paid to big trends, such as the incorporation of test instruments to IT systems and

IVD is a worldwide business, and the purpose of The Worldwide Market for In Vitro Diagnostic Tests has always been to survey the entire world market and put it in a context.  While the US is a large healthcare market, much of the dynamism occurs in other areas. Many of the most interesting developments are occurring in emerging markets. As part of its coverage, the report breaks down the entire IVD market for the following regions.

• North America
• Europe (EU countries)
• Eastern Europe
• South America
• Asia (China and India)
• Rest of World

The author and the Publisher of Kalorama attended the American Association for Clinical Chemistry Meeting in Los Angeles, CA this year and was able to incorporate findings from that meeting into the report.  

For more information about the report or to order, please visit Kalorama Information's website at  http://www.kaloramainformation.com/Worldwide-Vitro-Diagnostic-6859416/

Information Week on Kalorama Patient Monitoring

We expect fast revenue growth in patient monitoring systems that have advanced features such as remote and wireless capability and in this interview with our analyst Melissa Elder in Information Week, in a story on remote patient monitoring the point was made clear.  These systems are growing as organizations seek to streamline operations, save money and comply with EMR requirements.

Patient-involved healthcare is on the rise and wireless technologies have catered to this trend," Elder said in an interview with InformationWeek Healthcare. "Some of the challenges [at healthcare delivery organizations] can be somewhat offset by implementing newer patient monitoring technologies capable of not only monitoring patients, but sorting data, and automatically updating patient records. This allows health staff to provide care more efficiently and also monitor patients in off-site locations."


Our full report on Patient Monitoring, including market sizes and forecasts and profiles of key companies, can be found here:

EMR: With Checks Come Checks

With the reimbursement for use of EMR systems comes some paperwork responsibility that will need to be performed by hospitals, group practices and individual physicians who received EMR incentive checks in the past years.  The hospitals and providers that received checks from the government for EMR services now must document their use of EMR, according to this Fierce Healthcare story.   Garden City, N.Y.-based accounting firm of firm of Figliozzi and Company has begun auditing recipients of EMR checks one behalf of the Centers for Medicare Services (CMS). 


 The audits have been conducted after the Government Accounting Office (GAO) indicated that CMS's use of automatic checks for meaningful use requirements was not satisfactory to meet the requirements of the original law.  At this time there hasn't been reaction from major associations but it's likely these compliance costs will add at least slightly to the burden of implementing EMR. 


Kalorama's report on this topic can be found here.

50 Billion-Dollar IVD Industry Goes to LA

This week the IVD industry is showcased at the Los Angeles Convention Center at the American Association for Clinical Chemistry (AACC).   As evident here, the clinical diagnostic industry is growing; Kalorama's estimate of this market is that it has grown to 50 billion dollars, an increase of 6 billion dollars from two years ago when we did our last edition.

The growth in the industry is reflected in the size of the show; with two full exhibit halls and over 500 exhibitor companies, 20,000 people total, were at the AACC meeting industry has outgrown some of the smaller city convention centers and can only be held in the larger convention centers such as LA, Houston, Chicago or Atlanta.

This year as in other years, we are noticing a few trends that we will end up highlighting in our reports

-Diagnostic systems, particularly glucose meters attached to cell phone technology are being launched by many companies.  The presence of a speaker who was a marathon runner using a continuous glucose meter, something that would be impossible for a diabetic with a standard treatment was noted.

-Big emphasis on IT systems.  Major companies are competing on better IT systems in their core lab products and smaller IT companies have gone from small booth to big presence at this meeting.

-Molecular testing particularly for infectious diseases and HAI testing continue to dominate.

-Service and consulting remain viable products and are part of the offerings at major companies.  OrthoClinical markets its instruments along with a ValueMetrix enhanced value consulting service to maximize productivity in lab operations.

-Continued increased presence from Chinese manufacturers competing with immunoanalyzers, hematology analyzers and other equipment.

-Beckman Coulter's large presence in the entrance of the meeting with video walls and several instruments on display indicates that it is continuing to dominate as a brand on its own despite the recent purchase by Danaher.  Astronaut Mike Kelley, husband of Congresswoman Gabby Giffords was a notable presence for floor traffic at this convention on Tuesday when he spoke about his experience with PSA testing.    

Busy ERs Driving Patient Monitoring Sales

In the United States alone there are over 35 million hospital admissions each year and nearly 120 million people visit hospital emergency departments each year. Additionally, outpatient visits to hospitals—including laboratory, imaging, and rehabilitation visits—has increased to about 481 million visits annually and more than 4 million babies are born each year.  These statistics require a significant number of hospital resources, namely staff and available beds.  However, a recent survey by the American Hospital Association has discovered capacity constraints, primarily at the emergency department level.  In addition to hospitals operating at capacity or over capacity, the concern for ED diversion (which sends patients in route by ambulance to nearby hospitals) has resulted in a number of facilities looking for ways to address the issue.  

 Portable monitoring devices may reduce some of the diversion.  Additionally, staff shortages are another cause of diversion which may be addressed with improved efficiency and workflow gained by using more efficient monitoring devices.

Our latest report indicated that remote and wireless patient monitoring systems more than doubled between 2007 and 2011.  The firm made the finding in its  recently published report, Remote and Wireless Patient Monitoring Markets.   Part of the reason they are growing so fast are the overcrowding at emergency rooms in the United States.   

 According to the report, advances in remote patient monitoring include new peripherals, real-time audio and video for “face-to-face” interaction between clinicians and patients, wireless communication, systems that “sort” the vast amount of data collected in order to put it into the context of a patient’s condition, portable and ambulatory monitors, web-based access to the patient record, systems that transfer data to an electronic medical record (EMR), and full-service outsourcing that includes a clinician to evaluate data and send a report to the attending physician.    


 The U.S. market for these advanced patient monitoring includes wireless and remote patient monitors (equipment and applications), applications and equipment for processing data, and applications and equipment for transferring patient monitoring data into an EMR.  The U.S. market had a value of $3.9 billion in 2007, increasing to $8.9 billion by 2011 . 

There are several factors driving double-digit growth in this market.  These include the aging of the population, increasing healthcare costs, dwindling healthcare resources which compel organizations to find devices that can help with staff shortages. 

More information about remote and wireless patient monitoring including models, companies competing in the market and future growth can be obtained in Kalorama Information’s report.  Remote and Wireless Patient Monitoring markets.   Information about the report can be obtained at http://www.kaloramainformation.com/Remote-Wireless-Patient-7043770/

High Income Pet Owners Driving Vet Diagnostics

Driven by high income US consumers spending on pets, the veterinary diagnostics market exceeded $1.5 billion in 2011, according to Kalorama Information. We estimated testing revenues for food animals as well testing performed on pets.  But it is those consumer animal sales that are driving growth, according to our  just-released report: World Market for Veterinary Diagnostics.

The report indicates that U.S. consumers spending the most generously on their pets’ health and wellness. Households in the United States with $70,000 or more in annual income have dramatically increased their share in the veterinary services market over the past decade.  The key driver of continued market growth for veterinary practices and suppliers of premium instruments and products is increasing standards for care of companion animals and the role of diagnostic analysis adapted from the field of medical diagnostics.  Consumers in Europe and the rest of the world generally spend less on companion animal healthcare.   According to the report,  the recession hurt companion animal spending broadly but high income families will increase their share of spending and this in turn drives testing reagent and instrument sales to veterinary laboratories. 

“Increasing standards for care of companion animals is driving growth,” said Emil Salazar, Kalorama analyst and the author of the report.  “Most notably, households in the United States with $70,000 or more in annual income have dramatically increased their share in the veterinary services market over the past decade.”  

Although expected to recover from low single-digit growth in veterinary analyzer sales and flat-lined immunoassay sales, future market growth through 2017 will be handicapped by the incomplete recovery of consumer markets in the United States and Europe and, later, the growing saturation of analyzers among veterinary clinics. Veterinary analyzer consumables will continue to lead growth in the companion animal diagnostics market, with minimal contributions from immunoassay and molecular test kits.  The report, World Market for Veterinary Diagnostics, provides more information including breakouts for various segments of veterinary diagnostics, and discussions of trends in the industry. Profiles of key competitors are also included.