Diagnostics & Imaging Week Executive Editor

SAN FRANCISCO — As diagnostic test makers roll out new products as part of sector-wide growth (see accompanying story), the labs that run such tests are being peppered with pitches for new equipment on which to do their work.

Almost in lockstep with the growth of the test sector, the major makers of diagnostics lab equipment also are rolling out new products aimed at helping such labs deal with their most significant problem areas:

• Ongoing cost pressures.
• Severe shortages of technicians.
• Space constraints.

During last week's JPMorgan Healthcare Conference, two of the major makers of lab equipment took to the podium on the same day to describe their efforts in the segment.

Jeff Steffenhagen, senior vice president of corporate strategic planning and business development at Beckman Coulter (Fullerton, California), cited the steady growth of the routine diagnostics sector, which he pegged at 5% to 6% annually, driven by the demographics of an expanding older population and by the introduction of new tests.

"There's a resurgence in understanding the value of diagnostics in healthcare overall," he said.

Steffenhagen noted his company's focus on laboratory processes, saying Beckman Coulter helps its customers "automate and optimize" their testing efforts in order to create customer value.

"That is particularly important because of laboratories' need to lower costs and also because of the shortage of medical technologists," he said. "Our systems can address that shortage."

The company's objective is straightforward, Steffenhagen said: "To place more systems with more capacity and to provide more tests to run on those systems."

System placements are important, he said, because they drive the biggest chunk of Beckman Coulter's revenues — the so-called "aftermarket," largely the reagents and assays used in operating the company's lab systems. Sales of such products represent fully two-thirds of Beckman Coulter's revenues.

The other big reason such placements are important is that they tend to be in place for a substantial length of time, since replacing such capital equipment as automated test analyzers is a costly step for the hospitals or other healthcare entities that operate diagnostic labs.

Beckman Coulter's key business units include Cellular, Chemistry, Immunoassay, and Discovery & Automation. Steffenhagen said of the company's customers, "We offer everything they need to do their testing."

He cited several of the company's products, including the next-generation autochemistry units known as Unicell DxC 600 and 800. Those machines have twice the number of tests onboard, allowing for 15% to 50% more testing with the same unit.

A new chemistry workstation, the Unicell DxC 600i, combining chemistry and immunoassay analysis in a single workstation, is due in the third quarter of this year.

The company's next-generation immunoassay machine, the Unicell Dxi 800, will be Dade Behring's fastest-operating system.

Steffenhagen noted that on the day of his presentation, Beckman Coulter announced plans to cut some 350 jobs, with another restructuring move likely to involve the closing of three facilities, due to be announced next month.

John Duffey, CFO of competitor Dade Behring Hold-ings (Deerfield, Illinois), lauded the clinical diagnostics sector, saying it "creates tremendous opportunities to reduce healthcare spending."

Citing Dade Behring's focus on the $12 billion global clinical lab segment, he said it's "a very good industry, very stable, with good, steady growth."

Duffey said Dade has an 11% share of the key chemistry/immunochemistry segment, tied in share points with Becton Dickinson and trailing leaders Roche (Basel, Switzerland), with 18%, and Abbott Laboratories (Abbott Park, Illinois), at 17%.

Referring to the laboratory instrument field as a "razor/razor blades" type of business, he noted that the company has an installed base of 37,000 instruments, which in turn generate a recurring revenue stream. Some 90% of the company's overall revenues come from the "recurring" side of the business.

Duffey said Dade has been "very successful" with its workstation combination efforts, directed toward developing analyzers that perform multiple functions and allow labs to save on both space and personnel, both key problem areas.

He noted, for instance, that the company's Dimension line of chemistry/immunoassay workstations is the No. 1 instrument in the market, saying, "This [unit] helps our customers address the problems they face."

Dade Behring is "the only company with a truly integrated platform," he said, and that "competitors are doing it by bolting systems together, which isn't the same as operating an integrated system."

The company is developing a full Dimension line, including the Dimension Expand for low-volume labs and Dimension RxL Max for mid-volume labs. On the way is the Dimension Vista, a high-volume, integrated analyzer that is expected to be commercialized in the second half of this year.

That product is greatly anticipated, with more and more of the company's lab customers trying to meet high-volume needs by "taking multiple mid-volume Dimension machines and putting them together for use in high-volume settings," he said.

Duffey said the company has been "showcasing" the Dimension Vista to some of its larger lab customers, and producing "tremendous excitement."

Once the Dimension Vista is on the market, he said, "there is no technology out there today that will be able to compete with us."