Medical laboratories could benefit by fewer customers for U.S tissue diagnostics products
Even as anatomic pathology laboratories in the United States see a decline in reimbursement for many pathology testing services, the demand for tissue diagnostics products will continue to be robust in coming years. There are at least three reasons why this will be true.
Research analysts at Frost & Sullivan predict that global sales of tissue diagnostics products will grow from $2.4 billion in 2012 to $3.5 billion by 2017. They attribute this to the increased use of anatomic laboratory automation.
These predictions were made in a new report issued by Frost & Sullivan. About 79% of the global tissue processing market is in the United States and Europe.
Three Reasons for Growth in Tissue Diagnostics Market
Author of the report is Frost & Sullivan Senior Research Analyst Divyaa Ravishankar. She presented three reasons for growth in the tissue processing market.
1. Major pharmaceutical companies will acquire businesses involved in molecular diagnostics and tissue in vitro diagnostics (IVD). These acquisitions will be directly related to the growth in companion diagnostics associated with specific therapeutic drugs.
2. Medical laboratories are focused on re-engineering workflows in their lab facilities. They are incorporating Lean/Six Sigma management techniques and automated tissue processing systems often play an essential role in driving down errors and boosting productivity.
3. A lack of pathologists and shortage of histotechnologists in pathology laboratories is generating demand to automate the tissue handling and analysis process. In turn, this drives adoption of automated slide stainers, Ravishankar added.
Declining Capital Budgets at Pathology Laboratories
Vendors of tissue processing systems, however, face challenges, explained Ravishankar. Among them are a declining customer base due to consolidation of hospitals and medical laboratories. This is happening in both the United States and Europe. Another reason is that many of these pathology laboratories have shrinking budgets for capital expenditures.
“Vendors are, therefore, reworking and redefining their strategies, for instance focusing on acquisition and procurement strategies that will benefit customers,” wrote Ravishankar. “These may include offering competitive monthly payments or tax benefits in connection with the IRS section or providing incentives and deferring payments to help overcome budgetary constraints.”
Vendors Look to Emerging Foreign Markets and Personalized Medicine
Meanwhile, opportunities are emerging in Brazil, China, and other Asia-Pacific (APAC) countries. “When the rest of the economy was suffering from budget cuts and slash downs, most companies [selling tissue processing products] witnessed massive growth in APAC and the rest of world countries,” Ravishankar added. She also noted that vendors increased their direct sales force and acquired distributors in these countries and have been successful in gaining new business because of these business strategies.
Also working in favor of the tissue diagnostic product vendors is the coming advent of personalized medicine, which will require information generated by collaboration of pathologists and laboratories performing clinical next-generation gene sequencing. She suggested that this will open up new opportunities in the tissue diagnostics marketplace. “The tremendous growth in gene expression, microRNA (miRNA) profiling and genotyping studies on Formalin-Fixed Paraffin-Embedded (FFPE) will drive the demand for improved upstream,” Ravishankar explained.
“Vendors of FFPE sample prep solutions must understand the current customer trends and future needs to capitalize on the expanding opportunities driven by clinical application of advanced genomic platforms,” she concluded.
With anatomic pathology laboratories in both North America and Europe experiencing a sustained decline in revenue and budgets, companies selling tissue processing systems will need to demonstrate how their products can improve patient safety, support increased productivity, and provide the necessary return on investment. On the other hand, health systems in many developing countries are making rapid advances and that should fuel a robust demand for advanced tissue processing systems in these nations.