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July 18, 2019

Technology and Home Health Trends Impacting the Diagnostic Device Industry

MHT Partners  | Healthcare Investment Bank

The introduction of new technology in the healthcare industry has steadily improved patient care. Recently, increasing consumer demand for more convenient healthcare options is bringing a new wave of medical diagnostic devices that are more patient-friendly than ever before.

In vitro diagnostics (“IVDs”) are defined by the FDA as reagents, techniques, instruments, and systems used in the diagnosis of disease or other conditions in order to cure, mitigate, treat, or prevent disease. These products — which involve the collection, preparation, and examination of biological samples — represent a $69.6 billion worldwide market (2018) that is expected to grow at an annual rate of 4.75% through 2026. The U.S. accounts for approximately 45% of the diagnostic market.[1]

The expected growth in the U.S. can be attributed to several factors:

  • First, an increasing geriatric population is driving demand for medical devices, including IVDs. The 65+ demographic is forecasted to grow to 23% of the U.S. population by 2023, increasing the incidence of chronic disease and aggregate healthcare consumption.[2]
  • Additionally, the FDA’s approval processes for medical devices continue to be more efficient, reducing regulatory concerns for device manufacturers and streamlining product launches.
  • Finally, new products and advancing technology are boosting the cost effectiveness, accuracy, and portability of IVDs.

 

 

 

 

 

 

 

The majority of product and technology development is in Point of Care (“POC”) diagnostic tools — devices that allow testing to occur at or near the site of patient care — the highest growth segment of the IVD market. POC tools yield quicker results and drive better-informed, more immediate care decisions by physicians. They also offer portability and advanced functionality. Notably, certain direct-to-consumer handheld devices and test kits are designed for home use.[3] While one 2018 study credited 80% of revenue from the direct-to-consumer POC diagnostics market to glucose monitoring devices, the development of products such as Butterfly iQ’s handheld ultrasound device or TestCard — a kit with medical strips that record chemical reactions to urine samples and can be read via a smartphone app — are expanding the product offerings in this market to other arenas.[4]

 

 

 

 

 

 

 

 

These products lower cost and time commitments necessary to generate medical opinions while increasing accessibility of care, often allowing patients to undergo diagnostic testing in their own home. POC IVD development is consistent with rising consumer demand for at-home and portable healthcare solutions. 57% of consumers say they would use a telehealth platform, such as a video conference, for a remote general consultation if given the option, and the U.S. telehealth services market is expected to grow at a rate of 9.5% annually through 2023.[6] [7] Further, home health expenditures in the U.S. are expected to grow at 7% annually through 2027. Last, wearable technology providing portable health solutions such as fitness trackers, smart watches with EKG features, and AI-enabled glucose monitors are expected to reach 25% of the U.S. population by 2022.[8]

 

 

 

 

 

 

Ultimately, companies that are able to effectively fuse POC diagnostic tools and remote professional care, monitoring, and other healthcare services will be positioned to thrive in the coming years. Indeed, investment in smaller, niche POC device and technology companies has increased recently. Opportunity in the space is highlighted by Siemens Healthineers’ acquisition of Epocal Inc, CK Hutchinson Group’s investment in Sight Diagnostics Ltd., KKR’s investment in Signostics, and Genesis’ investment in Delve Labs Inc.

As healthcare continues to move towards increasing patient convenience, MHT Partners, a leading healthcare investment bank, believes that POC diagnostic manufacturers are positioned to prosper as they grant individuals access to decisive information with improved accuracy, specificity, and speed. If you would like to learn more about MHT’s healthcare services advisory practice, please e-mail Patrick Krause (pkrause@mhtpartners.com) or Alex Sauter (asauter@mhtpartners.com).

[1] “In Vitro Diagnostics (IVD) Market Size, Share & Trends Analysis Report,” Grand View Research
[2] “U.S. Medical Device Manufacturers Market Size, Share & Trends Analysis Report,” Grand View Research
[3] “Navigating the Diagnostics Market,” Medium
[4] “Med Tech Highlights at CES 2019: What does this innovation mean for the future of healthcare?” Pharma IQ
[5] “U.S. point of care diagnostics market size 2015-2022,” Statista
[6] “Telehealth industry defined: the services, systems, benefits & trends of a growing digital health segment,” Business Insider
[7] “Telehealth Services Industry in the US,” IBIS World
[8] “Wearables 2019,” eMarketer

 

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