New analysis from Frost & Sullivan, European Molecular Diagnostics Market, finds that the market earned revenues $792.3 million in 2010 and estimates this to reach $1,494.4 million in 2015. The research covers oncology, genetic diseases, infectious diseases and pharmacogenomics segments.
"Technology advances, paralleled by the decreasing cost of automated systems, will boost market prospects," notes Frost & Sullivan Industry Analyst Dominika Grzywinska. "Automation, in particular, will play an increasingly important role in market expansion.
Many molecular diagnostic methods were historically based on steps of manual pipetting. Automated devices are nowadays replacing them and offer numerous advantages. These include faster turn-around time (TAT), manipulation of smaller volumes of liquids as well as more accurate and quantifiable results, compared to manual methods.
"Automation is currently of interest mostly among large diagnostic laboratories, but it is expected that, over time, automated systems will also be available at smaller laboratories," remarks Grzywinska. "In small and medium-sized laboratories, if automation is implemented at all, it is likely to be based on single function automated devices rather than fully automated, comprehensive systems."
However, automation of molecular diagnostics is still considered to be insufficient. This is especially the case in sample preparation and nucleic acid extraction, where the majority of work is performed manually. This leads to prolonged TAT, which is a challenge, especially when immediate results are required.
A key challenge will be to translate research into proven clinical outcomes. Proof of clinical validity is required when clinical claims are made. Proving clinical validity is also often a requirement for reimbursement of a particular test. However, obtaining such clinical proof is an expensive, lengthy and complex process.
"Partnerships between test developers and companies specialised in marketing of such tests are a good solution to translate innovations into clinically applicable solutions," advises Grzywinska. "Small molecular diagnostics companies do not always have sufficient resources to both develop and then market new tests."
Already, the market is witnessing the emergence of several small market participants, often focused on one segment or even delivering one or a couple of products.
These companies are often spin-offs from research institutes or universities. As they often lack the capital for further growth, there is the strong likelihood that they will partner with other companies to successfully market their products.
Meanwhile, the upturn in the fortunes of pharmaceutical companies after the recession is mirrored by the US contract manufacturing outsourcing (CMO) market, which is expected to grow at a compound annual growth rate (CAGR) of 8.3 per cent from 2011 to 2016. The sterile segment accounts for the highest share of revenues, with 38.7 per cent in 2011, which is expected to rise to 47.5 per cent by 2016, says Frost & Sullivan (US Contract Manufacturing Outsourcing Market). The market earned revenues of $10.73 billion in 2011 and estimates this to reach $15.97 billion in 2016.
Despite the inclination for pharmaceutical companies to outsource, R&D spending dipped from 2010 to 2011, resulting in fewer drugs being developed and marketed. As the CMO market's revenue inflow is contingent on drug development, the torpid R&D activity has slowed the pace of market development.
The fragmented nature of the CMO services market has necessitated consolidation to improve profitability. Many CMO providers rely on a single client for more than 50.0 per cent of their revenue. This tilts the balance of power in favor of the manufacturers and reduces prices across the industry.
"To demonstrate value to clients, CMO providers are likely to continue focusing on strategic relationships and promoting more services such as formulation improvements, alternate dose forms, real-time order tracking, and logistics support," said Sullivan. "Further, numerous CMO providers are offering preclinical development services, which creates long-term relationships with manufacturers.
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