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Companies with Lab-Developed Tests Raise USD 2 Billion

By Labmedica International staff writers
Posted on 11 Oct 2017
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Image: Companies with laboratory-developed tests are attracting increasing investor interest and raised over USD 2 billion between January and August 2017 (Photo courtesy of iStock).
Image: Companies with laboratory-developed tests are attracting increasing investor interest and raised over USD 2 billion between January and August 2017 (Photo courtesy of iStock).
Companies with laboratory-developed tests (LTDs), tests performed by laboratories owned by IVD companies and others, are attracting increasing investor interest and raised over USD 2 billion between January and August 2017. These are the latest findings of Kalorama Information, (New York, NY, USA), an independent medical market research firm.

LDTs, also called as "home-brew tests" or "in-house tests" were historically low-volume, simple and well-characterized tests for low-risk diagnostic applications. However, in recent years, there has been increased focus and attention on the emergence and growing use of complex LDTs based on technologies such as polymerase chain reaction (PCR), microarrays, next generation sequencing, or other complex technology. High-risk, complex tests have now been developed as LDTs in order to provide clinical results to physicians and their patients.

Presently, LDTs are being used for complex testing which smaller laboratories are not equipped or do not choose to handle and are used for a variety of medical conditions. There are all types of LDTs, including histology and molecular testing to immunoassays; or equipment-intensive testing such as mass spectrometry or flow cytometry. The largest segments of the LDTs market are oncology, genetic (inherited) disorders, and infectious disease, although these tests can be developed and used for virtually all types of disorders.

The significant activity in the development of new LDTs, increasing revenues from current LDTs, and the large addressable markets for several emerging LDTs has attracted the interest of investors as well as of other companies looking for acquisitions. For instance, in 2016, the companies included in Kalorama’s report raised over USD 750 million, although this amount was much smaller in comparison to the over USD 2 billion raised between January and August 2017.

The LDTs market has also witnessed a significant number of acquisitions in recent years, with the major companies making several acquisitions to achieve their current market positions, while smaller clinical laboratories have also been making acquisitions. A number of new companies also continue to be founded, thus providing a continuous stream of smaller companies trying to achieve growth, which may come through acquisitions or they may end up being acquired. Hence, consolidation among companies and laboratories offering LDTs is expected to continue in the future.

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