In Vitro and In Vivo Diagnostic Substances

SIC 2835

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing in vitro ("in glass," such as a test tube) and in vivo ("in the body") diagnostic substances, whether or not packaged for retail sale. These materials are chemical, biological, or radioactive substances used in diagnosing or monitoring the state of human or veterinary health by identifying and measuring normal or abnormal constituents of body fluids or tissues.

Industry Snapshot

Often viewed as an extension of the pharmaceutical industry, the diagnostics industry is closely intertwined with cutting-edge developments in the treatment of human and animal disorders. This includes a great deal of genetic research and studies centered around high-profile diseases like cancer and AIDS. Simultaneously, much of the industry's output involves comparatively low-tech, routine diagnostics like allergy assays and home pregnancy tests. Combined, the total industry was valued at $8.8 billion in 2008.

Shipments of in vitro diagnostic products, which are used outside the body, were valued at $8.74 billion in 2005, a drop from shipments in 2002, which were $9.17 billion. The industry employed 26,324 people in 2005, compared to 27,233 in 2002.

The primary market for these diagnostic substances is in hospitals and laboratories, but sales to physicians and individual consumers have grown considerably. In commercial markets, especially, users have emphasized the need for more automated test systems that free staff time and reduce the likelihood of error. Diagnostic applications attracting the greatest market interest include those for sexually transmitted diseases, diabetes, and cellular disorders.

Most, if not all, of the industry's products are regulated by the U.S. Food and Drug Administration (FDA). The agency sets standards for safety and quality in manufacturing and, depending on the diagnostic, usually requires products to be formally reviewed and approved before they are used. For diagnostics, an average review lasts two years.

The current trend in the industry is to miniaturize the machinery and make the items more portable. This point-of-care (POC) testing means tests may be performed at numerous places, including hospital bedsides, physicians' office labs, outpatient clinics, and emergency rooms. POC devices represented the greatest growth in the industry in the early and mid-2000s. The growth was driven by the faster diagnostic benefits POC provided. According to Business Communications Company, Inc., revenue for POC testing reached an estimated $5.07 billion in 2005 and was expected to grow an average of 13.8 percent through 2010. Although POC testing was growing in both home use and near-patient applications, the latter was expected to grow 15.5 percent while home use growth was expected to grow 9.3 percent. The worldwide POC market was estimated at $9.1 billion in 2005, with the United States, Japan, and Germany comprising 53 percent, 11 percent, and 9 percent of the total, respectively. Growth through 2010 for the worldwide market was estimated at 14.9 percent.

In November 2002, the FDA established the Office of In Vitro Diagnostic Device Evaluation and Safety (OIVD). OIVD combines the functions of all the offices within the Center for Devices and Radiological Health into one organizational unit for start-to-finish regulation of in vitro diagnostic devices. The organization is responsible for the pre-market review, current enforcement, and post-market surveillance of in vitro diagnostic devices. In 2004, OIVD approved and cleared thousands of devices used to diagnose and treat a wide variety of medical conditions.

Manufacturers continued to produce new, more advanced diagnostic devices during the mid-2000s in an effort to meet demands for easier-to-use products that were faster, smaller, and more precise. The ability to transfer results to laboratory computers was also an issue in the mid-2000s.

The industry's ties to the pharmaceutical business meant that, like pharmaceuticals, diagnostics are a global business dominated by a handful of wealthy companies. The largest diagnostics makers are some of the world's top drug companies. These deep-pocketed drug makers increasingly see the diagnostics business as a complement to their pharmaceutical operations since a test can indicate whether a patient needs a drug or how well an administered drug is working.

According to industry statistics, the in vitro and in vivo diagnostic substances industry was valued at an estimated $8.82 billion with a workforce of approximately 24,545 medical professionals in 2008. Diagnostic substances represented the largest industry sector with 61.5 percent in market share and product shipments totaling $1.74 billion. Based on revenue, shipments of enzyme and isoenzyme diagnostic agents accounted for $4.63 billion, nearly half the industry total. There was $1.68 billion in pregnancy test kits shipped in 2008, while blood derivative diagnostic agents manufacturers were valued at $276.0 million. Microbiology and virology diagnostic product shipments added $305.9 million into the industry total. The highest concentration of facilities was located in California, Massachusetts, and Florida.

U.S. demand for in vitro diagnostic products was projected to advance 5.4 percent annually before reaching $23 billion in 2013. Hospital laboratories remain the leading market for in vitro diagnostic products due to the large number of inpatient, emergency, and post-surgical testing practices.

Industry Leaders

One of the leaders in the in vitro diagnostic testing industry in the mid-2000s was Johnson & Johnson of New Brunswick, New Jersey. Well known for its consumer products, Johnson & Johnson maintained a large and growing presence in the medical instrument and pharmaceutical markets in the mid-2000s. The company posted sales in 2008 of $63.7 billion and employed 118,700.

Abbott Laboratories of Abbott Park, Illinois, was another industry leader. In 1999, Abbott's diagnostics business was fined an unprecedented $100 million penalty for failing to meet FDA manufacturing quality standards. None of Abbott's products were found to be defective or harmful, but the drug maker was accused of repeatedly breaking FDA rules. Despite its legal troubles, Abbott posted 2008 sales of $29.5 billion and employed 65,000.

Another leading independent supplier of diagnostic kits in the mid-2000s was Bio-Rad Laboratories, Inc. Based in Hercules, California, Bio-Rad supplied more than 4,500 different products for laboratory and medical research, including chemicals and instruments to diagnose and monitor diseases such as anemia, diabetes, and AIDS. The company developed clinical diagnostics test kits and analytical instruments, including a blood glucose analyzer. Founded in 1952 with four employees, Bio-Rad employed 6,600 workers in 2008 and posted sales of nearly $1.7 billion.

IDEXX Laboratories, Inc. of Westbrook, Maine, was another large independent firm focusing on diagnostics. With more than 4,000 employees and revenue of $1.02 billion for 2008, IDEXX is a leader in the veterinary diagnostics market. Included in its line of products are common diagnostics for pet illnesses and diseases, as well as a line of tests for measuring environmental pollution.

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