Cepheid is Danaher’s Key to Unlocking New Markets in Molecular Diagnostics

Cepheid is Danaher’s Key to Unlocking New Markets in Molecular Diagnostics

Kalorama Information offers market research reports relevant to this industry merger withThe Market and Potential for Molecular Point of Care DiagnosticsandThe World Market for Cancer Diagnostics.

Make sure to visit our Point of Care Testing page, Kalorama's all-in-one resource covering the POC testing market. 

For an in vitro diagnostics (IVD) heavyweight, Danaher Corporation had uneven exposure to the molecular diagnostics market, one of the most dynamic and highest growing IVD market segments. Danaher’s recently announced near $4 billion acquisition of molecular diagnostics leader Cepheid effectively closes the gap in diagnostic coverage and introduces the conglomerate to key markets such as hospital lab molecular testing; decentralized and point-of-care (POC) molecular diagnostics; hospital-acquired infection (HAI) tests; sexually transmitted infection (STI) tests; and liquid biopsy tests. Cepheid’s product line will complement existing Danaher molecular diagnostic product areas such as core lab virology (subsidiary Beckman Coulter) and tissue-based hybridization testing (Leica Biosystems). By total revenue (~$540 million in 2015), Cepheid never counted among the IVD industry’s largest companies, but its specialization made it the second-largest molecular diagnostics market player behind only Roche. Cepheid’s track record of innovation and success in the development of molecular diagnostic market channels such as hospital labs made it an ideal acquisition target.

In both molecular infectious disease and cancer testing, Danaher’s IVD subsidiaries were in danger of neglecting or entering late into critical markets. Subsidiary Beckman Coulter’s molecular analyzer, the DxN Veris, has yet to be approved in the U.S. market and offers only a core lab virology menu of HIV, hepatitis, and CMV. Future DxN Veris assays for STIs and HAIs are planned, but in the meanwhile Cepheid products will grant Danaher access to those markets, particularly in less penetrated market segments among hospital labs and outpatient clinics. Projected to reach more than $1 billion by 2020 and with potential to address over $4 billion in sales, the global molecular POC diagnostics market is a key target in business development for IVD leaders with Cepheid arguably the most established asset to acquire. With its GeneXpert, Cepheid led market expansion for molecular into hospital labs by offering faster turnaround time; user-friendly and integrated testing with only CLIA moderate complexity requirements; and an expansive assay menu including HAIs, STIs, and other critical infections. Cepheid also used the GeneXpert to address tuberculosis (TB) testing in the developing world. Cepheid aims to expand into near-patient and POC molecular testing markets worldwide through platform releases of the Cepheid GeneXpert Xpress and Omni and accompanying CLIA-waived molecular tests.

Danaher subsidiary Leica Biosystems currently addresses  companion diagnostics (CDx) markets through its tissue-based immunohistochemistry (IHC) and molecular in situ hybridization (ISH) tests. With the addition of Cepheid, Danaher will be able to pivot and keep pace with the diagnostics market as it shifts to advanced testing technologies such as liquid biopsy tests. As tissue pathology tests, ISH tests can be very time-consuming and complex, requiring specialized laboratory equipment and personnel expertise. The cost and difficulty of sampling is also comparatively high with ISH-based cancer testing requiring biopsied tissue samples. Still tissue samples make up roughly 90% of the tests performed on cancer patients. While ISH continues to play a strong role, oncology CDx development activities are increasingly by technologies such as PCR and sequencing.

Cepheid is targeting oncology and companion diagnostics as its primary expansion market beyond infectious disease testing. The company plans to incorporate cell-free DNA sample compatibility, FFPE tissue sample compatibility, methylated target-specific PCR and “honeycomb” microwell cartridge design for higher multiplexing as cornerstone features of its oncology GeneXpert platform. Decentralized testing of methylation changes in DNA sequences in 3 hours or less is in development for the GeneXpert system and could serve as a widely distributed healthcare tool for the early detection of cancer. While cell-free or bloodstream DNA is the ideal, less invasive option, the GeneXpert system would also be compatible with conventional tissue biopsy samples. Serum or plasma DNA samples along with urine and other non-invasive samples are collectively referred to as “liquid biopsies”.