NEW YORK, Dec. 6, 2011 /PRNewswire/ -- Investor interest in the global in vitro diagnostics (IVD) market is expected to grow in 2012-2014 following a surge in M&A deal values, an acceleration of companion diagnostics partnerships, and the emergence of new prospects for early detection testing, according to Diagnostics 2011, PwC's biennial review of the IVD sector, published today.
According to PwC, interest in the IVD market is coming not only from existing players, but also new entrants such as financial investors, life sciences research groups, clinical laboratories and medical technology players. PwC expects the IVD competitive landscape will be redefined by new market leaders and larger deals as players bulk up on market share, but that sustained momentum of companion diagnostics partnerships with pharmaceutical companies will depend on actions by governments, regulators, payers and industry to support diagnostics innovation.
PwC identifies the following five themes that will likely shape future M&A activity in the IVD sector to 2015:
"With science and technology advancing so rapidly, and with in vitro diagnostics offering much promise, pharmaceutical companies can't ignore the role of diagnostics in their future strategies. The key question is whether it is better to build, buy or partner," said Gerry McDougall, principal, healthcare advisory services, PwC US. "The surge in deal activity and the diversity of buyers highlights a widespread belief in the growth prospects of selected IVD market segments as well as the potential for cross-industry synergies."
Pharma Weighing Options for Accessing Diagnostics Innovation
As pharmaceutical companies pursue external partnerships to access diagnostic innovation, four business models have emerged as regards to their in-house diagnostics capability, according to PwC: (1) Development of a standalone diagnostics division may provide technology that is relevant for in-house drug-diagnostic cooperation; (2) creation of a diagnostics business unit within the pharma division may help develop diagnostics primarily to support in-house drug development programs; (3) establishment of a diagnostics business development group may help guide a company's diagnostics licensing activities; and (4) creation of a standalone life sciences research products division may help provide technology that could be adapted for an in-house clinical companion diagnostic use.
"The IVD sector has attracted exceptional levels of interest, especially reflected in the acceleration of companion diagnostics partnerships with pharmaceutical companies. This momentum will continue as long as innovation and growth prospects in key market segments, such as molecular and tissue diagnostics, remain strong, and rapid action is taken by stakeholders to create a favourable environment for sustaining such innovation, including pricing, regulatory pathways, clinical trial design, reimbursement and drug-diagnostic value-sharing," said Loic Kubitza, director, pharmaceutical & life sciences advisory services, PwC Luxembourg, and author of the report.
In July, The Food and Drug Administration released draft guidance on companion diagnostics that could clarify its future direction. In addition, the U.S. government announced plans to develop a genetic testing registry to support wider adoption of personalized medicine in practice. Also, the FDA's issuance of a black-box warning for a blockbuster drug could drive further the growth prospects of companion diagnostics.
PwC's Diagnostics 2011 provides an overview of M&A deal activity during the past two years and the factors driving it, the development of new prospects for early detection testing and a review of significant events for the development of personalized medicine. The report also includes an in-depth discussion about trends in companion diagnostics and business model considerations for pharmaceutical companies. A full copy of the report is available for download at www.pwc.com/diagnostics2011.
About PwC's Pharmaceutical, Medical Device and Life Sciences Industry Group
PwC's Pharmaceutical, Medical Device and Life Sciences industry group (www.pwc.com/us/pharma and www.pwc.com/us/medtech) is dedicated to delivering effective solutions to the complex strategic, operational and financial challenges facing pharmaceutical, biotechnology and medical device companies. We provide industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. Follow PwC Health Industries at http://twitter.com/PwCHealth.
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