SOURCE: Kalorama Information

Kalorama Information

February 01, 2011 16:18 ET

Novartis-Genoptix Deal Is Proof of Test Servicing Trend in Diagnostics

NEW YORK, NY--(Marketwire - February 1, 2011) - Novartis' acquisition of laboratory service provider Genoptix is evidence of the growth in the test service diagnostics business, according to Kalorama Information. The healthcare market research publisher presaged the growing interest in strategies where IVD companies perform complicated molecular tests for their hospital and physician customers and charge for the service, in its report on the industry "The Worldwide Market for In Vitro Diagnostics, 7th Edition."

On Friday, Novartis announced that it entered into a definitive agreement to acquire Genoptix, which offers personalized diagnostic services, for approximately $470 million or $25 per share. According to Novartis, the acquisition will support the development of companion diagnostic programs, particularly in oncology, and advance the company's ability to define and monitor personalized treatment programs. The transaction is expected to close within the first half of 2011. 

For Kalorama Information, the acquisition confirms a trend that it has studied in detail since 2008: better-than-average growth for companies who sell the performance of a test, when compared to the traditional model of selling equipment, chemicals and kits, which is still the bulk of the industry, however. 

"The test service phenomenon is here to stay," said Kalorama Information's lead diagnostic analyst Shara Rosen in the report. "Test service companies have been demonstrating higher growth than traditional IVD companies."

The report indicates that companies offering test services were growing at an average of 32% over the past few years, versus 13% for molecular diagnostic companies and the slower 6% which is the industry average. Despite the results, Kalorama Information does see some limits to the growth of test services. Only a few test service companies have been able to commercialize their products, and as new companies enter the market they will likely face more regulatory scrutiny as authorities are eyeing this trend and rules are a work in progress.

Kalorama Information's "The Worldwide Market for In Vitro Diagnostics, 7th Edition" represents a complete look at the IVD industry and all of its segments, including molecular testing. Market forecasts and company profiles are included. More information about the report can be obtained at:

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