It is all about medtech strategy. Innumerable billion-dollar investments from U.S. government financing of the Precision Medicine program, notable product launches, and significant clinical data is the much-to-admire status of the diagnostics industry.
Similarly striking was the decision by Abbott to withdraw from its intended acquisition of Alere Inc. Abbott put the blame on the “substantial loss” seen during Abbott’s medtech due diligence since the Abbott/Alere deal was first announced in early 2016.
Why Is This Important
The market for diagnostics is big, growing and strategic to other medtech and pharmaceutical companies. It surprisingly emerged into the largest MedTech market in 2014. This was due to diagnostic and medtech innovation strategies and investment by these companies in medtech product development. The significant growth seen in IVD is expected to continue through 2020 (see charts and figures in the link below).
As compared to shrinking markets in diagnostic imaging and orthopedics, IVD is growing, despite the same pricing pressures the former is experiencing. Medtech price strategy will be critical to IVD industry strength and growth through 2020 and beyond.
Another growth indicator is the total worth of 2016 deals in the diagnostic sector. Excluding the uncertain Alere/Abbott merger, deal value increased from $4 billion in 2015 to $15 billion in 2016. According to recent reports, the pace of consolidation is supported by large medtech company strategic needs to procure new “books of sales”. This is an absolute medtech strategy requirement for large companies if they intend to continue strong future revenue growth.