Medical Device Daily Executive Editor
The question facing the panel at last week's RBC Capital Markets Healthcare Conference in New York was simple enough: Whither the future for point-of-care (POC) diagnostics?
The answers were a little more complicated, but clearly the growth trajectory is as rapid as the tests that help define the market.
A good example was from panelist Jon Russell, VP of finance for Inverness Medical Innovations (Waltham, Massachusetts), who noted that, while it is built on a foundation of serving the professional diagnostics segment, his company "always has been ultimately pointed at the home."
He said its key growth markets – among them cardiovascular, women's health, infectious diseases and oncology – all are "high-growth areas for rapid diagnostics."
Fellow panelist John Kraeutler, CEO of Meridien Biosciences (Cincinnati), noted that "our product line tends to be broad within the same disease categories, [offering] several ways to test to meet work-flow requirements."
Its key disease-state targets are C. difficile, H. pylori, upper respiratory diseases and food-borne infections such as this past winter season's spinach scare.
The third panel member, Clint Seversen, chairman/president/CEO of Abaxis (Union City California), characterized his company as having been "fairly successful in doing something that other companies have tried but most everybody else has failed, and that is to bring blood chemistry closer to the patient."
It has done so with the Piccolo express analyzer.
"We entered the market in fiscal 1997, but we launched with only about half of the test menu developed, so we couldn't sell it to the medical market," Seversen said. "But we found that the veterinary market didn't require as many tests, so we sold to them."
In the meantime, Abaxis focused on filling out its test menu, and by 2003 had a full menu to offer, entering the medical market by selling its first Piccolo system that year.
In 2004 and 2005, the emphasis was on getting CLIA waivers for its rapid test line, and on selling Piccolo systems on which to run those tests.
Now selling a mature and broad product line, the company is focused on urgent care, family practice, oncology clinics and internal medicine. "We have sold about 1,800 Piccolos in the U.S., another 1,000 or so outside the U.S.," Seversen said.
Company revenues hit the $20 million mark in the most recent quarter, and its emphasis is to continue to add more tests to the Piccolo menu.
Inverness is one of the biggest players in the diagnostics space, having ridden a wave of acquisitions to take it from start-up in late 2001 to some $1.7 billion in revenues in the most recent quarter.
Russell noted that, while the company's leaps-and-bounds growth was built on buying other manufacturers and distributors worldwide, "we have now switched over to more organic growth."
And organic growth, as the saying goes, ain't bad. "Near-term organic growth possibilities are in place," he said, "running at 8% for the business as a whole this year. And we expect that to grow year-over-year through 2012."
While Inverness is "primarily a professional diagnostics company and will remain a professional diagnostics company," Russell said, "The bulk of our research and development spending [today] is going into development of devices that can go into the home."
From its start as a company with sector-leading experience in blood glucose measurement, Inverness has operated under "a blueprint that we wouldn't just develop new technologies, but would control the entire value chain," he said.
Thus its great focus on the marketing and sales side, "which allow us to leverage acquisitions rapidly through our distribution capabilities," Russell said.
"We operate direct in 11 of the 20 top geographies of the world," he said, "with a goal of being direct in all 20."
The company's reach is broad in other ways as well. It tests for more than 100 disease states in a rapid format.
A key area of focus is the "home diagnostics" push in health management, spurred by Inverness' acquisition of Matria Healthcare (Marietta, Georgia), which closed in May. With the integration of the two companies nearly complete, "we expect to see product growth rates from that business in 2009," Russell said.
For Meridien, Kraeutler cited 15% top-line growth over the past three years and 19 straight years of paying a dividend as evidence of the company's financial discipline.
"We operate a matrix of efficiencies that are stellar in the industry," he said.
Some 80% of its business is in the development and distribution of rapid tests for the acute-care market, in the variety of testing formats cited earlier.
The other 20% is in what is known as Meridien Life Sciences, a supplier of essential proteins to what he characterized as "the largest diagnostics manufacturers in the world," Abbott and Siemens among them.
Meridien's goals include introducing three to five new products a year. "We will invest in a new disease state that very often will take five, six, seven years to develop," Kraeutler said.
He noted, for example, that "we were early into strep, H. pylori and E. coli."
On the revenue side, the company targets 50 to 150 basis points of growth a year, while on the expense side, it tries to wring a similar amount out of overall expenses. "Our discipline is there," Kraeutler said.
He noted that while the company has operated outside the U.S. for more than 20 years, there are "great opportunities for growth internationally."
With about 30% of current revenues generated outside the U.S., Meridien's goal is to grow that to 50%, driven by both market expansion and growth of its distribution network.