KI Webinar Review – How Danaher’s Acquisition of Cepheid Could Shape the Molecular POC Market

KI Webinar Review – How Danaher’s Acquisition of Cepheid Could Shape the Molecular POC Market

Kalorama Information received several questions following itsrecent webinarregarding the molecular point-of-care (POC) in vitro diagnostics market segment and impact of recent industry M&A activity, especially Danaher’s acquisition of Cepheid. Due to the volume of questions and the time constraint of the webinar’s Q&A session, we were unable to provide live answers to all questions. This blog post addresses several related questions from the webinar and elaborates onanother recent postregarding Danaher and Cepheid.

Kalorama Information published the market research reportThe Market and Potential for Molecular Point of Care Diagnostics. The recent webinar addressing the state of the IVD industry in 2016 isalso available here.

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

The acquisition of Cepheid puts Danaher Corporation in a position to stake a leading claim in the developing molecular point-of-care (POC) diagnostics market. Nucleic acid amplification testing (NAAT) or routine molecular testing was an oversight in Danaher’s Diagnostics group prior to the acquisition of Cepheid. Foremost, Cepheid represents an opportunity for Danaher (potentially through Beckman Coulter) to assert itself in the molecular diagnostics market with the GeneXpert business among hospital labs, mid-level labs, and even independent labs. The potential of a POC segment for molecular diagnostics has to be intriguing for Danaher as well, especially when paired with the existing distribution and client base of Radiometer, Danaher’s near-patient and POC diagnostics subsidiary. Folded into Danaher Diagnostics, Cepheid may also be better afforded the time necessary to develop international markets for the GeneXpert Omni.

Danaher subsidiary Radiometer is a POC specialist in the area of critical testing within hospitals. The primary analyzers for Radiometer are its ABL800 blood gas analyzer and AQT90 FLEX immunoanalyzer for cardiac markers, coagulation markers, pregnancy, and inflammatory response markers. Radiometer’s primary market is in Europe (over 50% of sales) and could introduce more European hospital clients to the Cepheid GeneXpert system. More importantly, Radiometer’s platforms address decentralized testing demand in hospitals or near-patient departmental placements. Such placements will be critical to the molecular POC diagnostics market as well: rapid molecular infectious disease tests are already utilized in emergency departments and maternity wards.

The delay in the introduction of the GeneXpert Omni to at least the third quarter of 2017 was announced by Cepheid during its first quarter 2016 conference call and dampened external forecasts of the company up until its acquisition by Danaher. Cepheid wants to ensure the portability and accurate performance of all GeneXpert tests in the instrument’s I-CORE amplification-detection component prior to its release. The initial planned menu for the GeneXpert Omni targets the developing world with HIV, tuberculosis (TB) and Ebola assays, though these markets are very cost-sensitive and may not initially be widely receptive to molecular POC tests. With Danaher likely to emphasize Cepheid’s established business in laboratory GeneXpert systems in the interim, the subsidiary can afford due diligence in the roll out of the GeneXpert Omni. As mentioned in Kalorama Information’s recent webinar, high-burden diseases in the developing world such as HIV and TB have the highest ceiling in terms of molecular POC market volume, but will be challenging to realize without optimal, cost-efficient performance from molecular POC devices.

Cepheid remains behind Roche and Alere in the introduction of benchtop, molecular CLIA-waived devices applicable to outpatient points of care. However, Danaher may help Cepheid deliver on other near-patient placements available to molecular POC systems within hospitals, including GeneXpert modules and the GeneXpert Xpress system for CLIA-waived respiratory testing. While both the Roche cobas Liat and Alere i have been placed in hospitals (but outside of hospital labs), neither is likely to soon match Cepheid’s near-term assay menu  in terms of breadth available to CLIA-waived and moderate-complexity certified testers. The race to establish molecular diagnostics at points of care in the developing world has yet to truly take off as the Omni and other platforms have technical, cost and distribution hurdles to clear. Cepheid’s investment to date and progress in the Omni platform make it a leading candidate to develop such a market, but the company’s success will depend upon its new parent company’s commitment to pursuing that more distant market opportunity.