Kalorama Quoted in Forbes in BGI / Complete Genomics Article

Kalorama Information Justin Saeks, author of Next Generation Sequencing Trends, was recently interviewed in Forbes Asia magazine for a story about China's BGI.  The Chinese company, owned by private investors and employees, is making its acquisition of Complete Genomics.  According to the article, Wang Jian, co-founder and president of BGI Shenzhen said he made the acquisition as a defensive measure to head off Illumina's entry into the service market.

“If we did not buy [Complete Genomics], we’d be restricted. We had to make this acquisition. There was no other alternative. Iluminia was in machine manufacturing, but it has gone into services to compete with us. It has played a supporting role, but has now also become a player,” he said. 


Indeed.  BGI owned Illumina systems and still owns them and puts them to use. We suspect that might change.  Overall, Kalorama Information is not as intrigued with the "us-vs-them" element of the story.  Business is business and American firms are entering China and competing with their local markets.    Complete Genomics was not succeeding and sans the China investment in this whole genome service technology, it might have disappeared into the dustbin of history.  We suspect that long term, China is smart to invest in whole genome sequencing the way it is. 

 

Healthcare Reform Should Help IVD Industry, At Least Slightly

On the whole, Patient Protection and Affordable Care Act is expected to benefit the IVD and clinical lab test industry slightly, according to Kalorama Information. Sales are expected to rise an extra 1.3% more per year, in the next five years, than would have otherwise been seen without the law, according to a recent report from the firm. This finding was made in a recently published Kalorama Information report, The Impact of Healthcare Reform (PPACA) On the U.S. IVD Market.

The healthcare market research says the most significant IVD and clinical lab sales drivers resulting from the PPACA will be an expansion in the number of insured U.S. persons, increased utilization of tests related to nosocomial infections, and new coverage of wellness and prevention programs. Kalorama also notes the bill contains market restraints as well, and warns many questions about implementation and future effects remain.

"The reform taketh away from IVD but you could say it 'giveth' a little more," said Bruce Carlson, Publisher of Kalorama Information. "Several key provisions of the PPACA, in combination with favorable population demographics, will stimulate IVD product sales. It's an industry that lives or dies based on test procedure numbers and thus the growth in the number of persons with health care coverage is good news for IVD."

The Patient Protection and Affordable Care Act (H.R. 3590), passed in 2010 is complex legislation that affects virtually every aspect of healthcare, and many of its provisions are beginning to take effect now. The overall objective of the PPACA is to expand access to health care coverage for most U.S. citizens and legal residents by requiring individuals to have coverage and employers to either provide coverage or pay a penalty that would support coverage from a pool of public funds.
The report examines the proposed positive developments for the IVD industry resulting from PPACA such as an expansion in the number of insured U.S. persons, increased utilization of tests related to nosocomial infections, product innovation resulting from value-based pricing, and new coverage of wellness and prevention programs. The report also examines legislation components that might present challenges, such as the medical device excise tax and changes to Medicare reimbursement. Despite the known provisions, there are some unknown factors with healthcare reform implementation, also detailed in the report.

"Many issues have not yet been fully addressed," said Carlson. "These include the future of the medical device tax, Medicare payment rates reform, state expansion of Medicaid, and public confusion about the PPACA."

The report, The Impact of Healthcare Reform (PPACA) On the U.S. IVD Market, details the specific provisions of healthcare reform legislation and describes the current status. The report contains sales estimates for the historic 2012 period of the IVD market and forecasts are provided through 2022. The report also presents overall procedure volumes for IVD and laboratory tests. The report than analyzes the impact of various PPACA provisions on the IVD market. The report can be found at: http://www.kaloramainformation.com/Impact-Healthcare-Reform-7728373/

Hematology On the Move at AACC Convention

By Emil Salazar

At the AACC expo, as in the lab, space is limited. Core lab automation, pre/post analytical add-ons, new molecular and immunochemistry analyzers and instruments crowd a mainstay of clinical diagnostics in hematology. Spearheaded by molecular diagnostics, immunodiagnostics and other facets of clinical testing feature increasing sophistication and new applications. Pressures such as a declining medical technician (medtech) workforce and tightening budgets have also come to bear on clinical labs. In such an environment,

hematology vendors have emphasized automation, other process cost savings, and integration. Pre- and post-analytical hematology work, including slide making and staining, manual differentials and cell morphology, have undergone automation and integration – similar to most clinical diagnostics segments.

Evident at the recent AACC expo was a push by hematology vendors to increase the value of their propositions in a relatively established lab market and to provide a comprehensive suite of hematology testing options with a smaller footprint and lower personnel demands. Hematology processes from complete blood count (CBC), differentials, slide making and staining, post-analytical differentials and cell morphology are increasingly automated and integrated. Most major vendors supplement their core hematology analyzers with pre-analytical instruments, in-house or partner slide makers/strainers, and third-party digital morphology and cell imaging solutions. Post-analytical image-based differentials and cell morphology have seen greater acceptance among larger clinical labs in the past few years, as rule making allows for client customization and greater comfort with the automation of sensitive differentials used to monitor acutely ill patients during treatment. 

The comprehensive hematology set-up represents a key boost to otherwise static markets, but can be hampered by the high cost and other demands of the system. In some cases, in-lab hematology costs could more than double with higher slide making and additional imaging. Some systems, depending on vendor and partnering instruments, cannot be integrated ideally and do not replicate the modularity of one party-sourced configurations. Lack of lab space and low demand for post-analytical differentials also represent deterrents to the upgrade to more comprehensive systems. To overcome these challenges, Constitution Medical, recently acquired by Roche, has pioneered a promising synthesis of hematology solutions with its Bloodhound platform. 

A Bloodhound system prints a single layer of sampled blood cells onto a slide to complete an image-based CBC and 5-part differential, including reticulocytes, reticulocyte hemoglobin, and nucleated red blood cells. Catalogued cells are also viewable individually. The system provides all the capabilities of a hematology lab set-up including analyzer, slide maker/stainer and digital imaging system within one unit (42” wide and 56” tall). Image-based analysis and counting significantly reduces reagent usage, provides faster results, and further decreases demand on personnel. Eagerly awaited, the Bloodhound system still has yet to be approved by the FDA or become available internationally; its cost and timeline for introduction remain unknowns for the market. For now, hematology maintains with its critical, established role in the lab with only slow expansion in parameters and greater utilization of automation. Bloodhound, though radical in its reimagining of lab hematology, represents only another response to client demands – footprint, automation, integration.

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Emil Salazar is the author of the upcoming Kalorama Information title "Hematology Markets"

AACC Meeting Provides Industry Glance

The very size of the American Association of Clinical Chemistry is a testament to the growth of the IVD industry that Kalorama has covered for decades.  This year's AACC in Houston, TX did not disappoint.   650 companies exhibited, 100 of them were new. 

Key areas of interest were emerging markets for IVD,  Vitamin D's continued role in the face of controversy, and the recent Supreme Court ruling that isolated human DNA cannot be patented.  AACC hosted a panel featuring ACLU Lead Counsel Sandra Park which explored this landmark decision’s impact on modern healthcare in general, and innovation in genetic research and testing in particular. There were other focuses.  We noted increased competition in POC and hematology, which we will be noting in future blog posts.  New tests to detect life-threatening prostate cancer, new cystic fibrosis tests that can be performed at the point of care, and new ways to determine the safety of schizophrenia and bipolar disorder drugs were also features.

For Kalorama, the meeting was a chance to connect with the industry and notice trends.   Look out for future updates about the meeting from our analysts. 

Proof of RPM Benefit Emerges

The proof of the pudding is in the eating, or so the saying goes.   For insurance companies and governments, they will reimburse if the product can show effectiveness.  As detailed in our report on Advanced Remote Patient Monitoring (http://www.kaloramainformation.com/Advanced-Remote-Patient-7450566/)   These developments will drive implementation of new systems. 

 Numerous studies in the United States and Europe have proven the cost benefits of remote patient monitoring (RPM), despite initial costs to implement.  The Home-Care Management Systems study was partially sponsored by the European Commission under the Trans-European Network initiative.  The study, known as TEN-HMS, was the world’s first large-scale, randomized prospective telemonitoring trial.  The study showed that the use of home-based telemonitoring reduced the number of hospital days by 26% and led to an overall cost savings of 10% compared with nurse telephone support.  Home telemonitoring also increased both patient survival and patient satisfaction. 

Due to the initial expense of telehomecare, Telemedicine, and telemonitoring, several groups have conducted, or are conducting, studies of the effectiveness and benefits.  Constant monitoring and use of alarms that warn of results outside normal parameters for a patient’s condition often allows a patient and his or her provider to immediately react to a health problem before it becomes serious enough to require emergency room service or hospital admission. Authors of a 2010 remote patient monitoring study assessing costs from heart failure reported that cost savings favored remote patient monitoring. Costs saved per patient fell in the range of $400 to $1,300.

 Another study[1] concerning asthma patient self-monitoring using smartphones indicated that there was no cost saving or improvement of care for this group. This suggests that there are some instances where remote monitoring has a significant advantage and some situations where there are none. The advantages in remote monitoring are stronger in more involved care such as with heart failure patients, or diabetes.  

In the United States, a study by Noel et al. (2004) showed that the use of telemedicine added $1,666 to costs during a six-month study.  However, overall health care costs decreased by 58% for the group of patients receiving telehomecare.  According to a Wall Street Journal report, annual savings from remote monitoring could amount to as much as $10.1 billion for U.S residents with congestive heart

 failure; $6.1 billion for patients with diabetes; and $4.9 billion for patients with chronic obstructive pulmonary disease.

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[1] http://www.ncbi.nlm.nih.gov/pubmed/22446569

Cancer Testing Opportunity in Developing Nations

As cancer diagnostics prove to be the key to early detection and improved cancer outcomes, developing nations will be an increasingly important market for these products, says Kalorama Information.  The healthcare market research publisher said that 80% of the market for cancer testing products is now in developed nations, but there is opportunity in the remaining market.  The healthcare market research publisher says western nations have the highest incidence, but also the highest survival rates from cancer, partially due to stringent testing programs.  The lowest recorded incidences of cancer are in the developing countries but they also suffered higher rates of death by cancer.  This according to Kalorama Information’s market research study The World Market for Cancer Diagnostics, 5th Edition, should provide a market opportunity for IVD manufacturers.   

There is a funding gap which has caused the market disparity, according to the report.  Kalorama says that 28 million (80%) of the people who die live in low- and middle-income countries, yet less than 1% of private and public funding for health is allocated to preventing and controlling cancer in these areas.  A burgeoning middle class in Latin America, India, Asia Pacific and the Middle East account for 14% of the market, with the rest of the world accounting for the remaining 3%.  Cancer is a major problem in developing countries - approximately 5.4 million people are diagnosed with cancer each year. 

Part of the problem, the report said, is health funding priorities. 

“These nations are in a continuous fight against HIV, infectious and waterborne diseases that eat away at their healthcare budgets,” said Shara Rosen, Kalorama analyst and the author of the report.  “Little has been left to treat diagnose and treat cancer.” 

But as these nations develop, cancer treatment and testing should be top priorities, while developed nations try to find ways to reduce spending.  In Europe, the aging of the population coupled with the largely unhealthy lifestyle of the Europeans is likely to double the current number of cancer-related cases by 2020. However most of Europe is under extreme financial distress and crumbling healthcare systems are finding hard to cover basic cancer diagnostics.   Japan's commitment to cradle to grave health care coverage would normally result in a robust market.  However, Japan has looked to prevention programs to offset the cost of treatment.  Here too, the market for cancer tests is not expected to grow faster than the market itself. Further, test rationalization and healthcare reorganization is in progress, worldwide, it is not anticipated that cancer testing in any geographic segment will grow faster than the market itself for the next few years – 9%.  The report says the U.S. remains the world driver of cancer test innovation and is the major market for cancer tests and test services, yet even there payers are beginning to rationalize the use of some high-priced tests.  The U.S. with only 5% of new cancer patients in the world per year, accounts for 49% of the market for cancer diagnostics and remains the greatest opportunity. 

“Growth in developing markets such as Latin America, non-Japan Asia and the Middle East should be near ten percent per year from 2012 to 2017,” Rosen said.

The report says for example, cancer is the leading death cause in urban China and the second one in rural China. Lung cancer is the most common cancer, followed by stomach cancer, liver cancer, esophageal cancer and colorectal cancer. Cancer Control Programs in China focus on prevention, early diagnosis and treatment. In June 2009, China Ministry of Health launched six major public health programs including giving booster shots of the hepatitis B vaccine to those under the age of 15 as the supplementation to the immunization of infants against hepatitis B and providing a free screening program for breast and cervix cancers among the rural women in 200 counties.  In Brazil, screening programs for HPV has been implemented.  These are just some of the efforts launched in what have been called ‘rest of world’ regions in the past. 

The report, The World Market for Cancer Diagnostics, has market estimates and forecasts for every major segment of cancer diagnostics.  The report profiles key companies in the industry and talks about future product developments and industry trends.  The report, the fifth of Kalorama’s studies on the cancer testing market in the past decade, can be found at http://www.kaloramainformation.com/Cancer-Diagnostics-Edition-7560357/.