Rising Demand for Health Tests: Implications for the Medical Industry

Drivers of Increased Demand for Health Tests

Strong demand for health tests is driven by advancements in diagnostic technologies, consumer-centric capabilities, and increased procedure volumes due to treatment backlogs. Companies like Quest Diagnostics, Danaher, and Abbott Laboratories highlight the adoption of innovative tests and systems across diverse healthcare settings as key growth drivers.

"Demand was strong for our AD-Detect blood tests which assess risk based on amyloid, p-tau and APOE biomarkers. Demand was also strong for our CSF test options for aiding treatment decisions." --- (DGX, earning call, 2024/Q2)

"And it's on the basis of our strategy, which is to apply science and technology to improve human health, that we set a frame and then look for those markets that have the most attractive long term secular growth drivers." --- (DHR, conference, 2024/05/14)

"Healthcare and consumerism will continue to be important. So we're expanding consumer centric capabilities, and we've launched a significant number of tests that consumers can order through us on demand." --- (LH, conference, 2024/06/04)

"While such delays have negatively impacted our procedure volumes in periods with COVID-19 outbreaks, we believe that these delays have also resulted in increased procedure volumes during those periods following such outbreaks, due to the creation of patient treatment backlogs." --- (ISRG, sec filing, 2024/Q1)

"Growth in diagnostics continues to be led by the adoption of our market leading systems and demand for testing that takes place in a variety of settings, including hospitals, laboratories, urgent care centers, physician offices, retail pharmacies, and blood screening facilities." --- (ABT, earning call, 2024/Q1)

Technological Advancements in Health Testing

Illumina's advancements in health testing, particularly with the Galleri multi-cancer detection test, emphasize high specificity and reduced false positives. The company is aligning R&D with customer needs, focusing on critical metrics like PPV and signal origin prediction, and leveraging learnings to enhance test performance and drive a paradigm shift in early cancer detection.

"And because Galleri has been designed with such high specificity, it will minimally increase the number of false positives, making multi cancer lead detection testing one of the most impactful opportunities in healthcare. Adding GALRY to standard of care screening completely improves the signal to noise ratio from approximately 1 to 45 to a combined ratio of approximately 1:15." --- (ILMN, event transcript, 2024/05/13)

"And you're having in the academia with the KOLs or within some of our clinical customers, you can start looking at X and some of the work we're doing on the I could potentially use your technology business that really wasn't something that we would have thought or we shared it in the past, but we think now it could be a viable test." --- (ILMN, conference, 2024/05/29)

"However, the point of elasticity is if you're in the lab, you have test that is running, you go through the process of validating, you will end up getting some benefit out of moving to the inflow That's where you see in their strategies and part of the discussion how does Illumina get closer to our customers to show them really what's coming out of Illumina over the next 2, 3 years so that we can align some of our R and D thought process." --- (ILMN, conference, 2024/05/29)

"There will be a single specificity and PPV becomes really the critical metric for multi cancer early detection testing to avoid all the false positives. The other critical metric, of course, is the signal origin prediction, which enables a very efficient and effective diagnostic evaluation." --- (ILMN, event transcript, 2024/05/13)

"These learnings are critical to enable our own test performance improvements over time, but also to enable the paradigm shift in early cancer detection." --- (ILMN, event transcript, 2024/05/13)

Market Competition and Strategic Responses

Companies in the health test industry face intense competition, impacting demand and market share (DHR). Strategic responses include targeting markets with low share but good access (DGX), focusing on strategic acquisitions (ABT), and maintaining consistent market share in specific segments (LH).

"Important factors that in some cases have affected us in the past and that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements include the following: Business and Strategic Risks • We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share." --- (DHR, sec filing, 2024/Q1)

"Well, I think from a strategic standpoint, we look at the markets around the country where we have great access from a payer standpoint, but very, very low market share." --- (DGX, conference, 2024/05/29)

"then you’ve got to--you know, that’s part of your model, you’re going to have to keep doing that, whether the valuations are right or wrong, or not right. But we look at these strategic fit, can they generate an attractive return, can we make the business better that we’re acquiring." --- (ABT, earning call, 2024/Q2)

"I think our share is remaining consistent within the parts of the market that we compete, we don't compete in all aspects of our -- we don't have a contract manufacturing organization, for example." --- (LH, earning call, 2024/Q1)

"Important factors that in the future could cause actual results to differ materially from those envisaged in the forward-looking statements, and that in some cases have affected us in the past, include the following: Business and Strategic Risks • We face intense competition and if we are unable to compete effectively, we may experience decreased demand and decreased market share." --- (DHR, sec filing, 2024/Q2)

Future Trends and Long-Term Implications

Companies like Danaher and Illumina are focusing on long-term growth through innovation and portfolio transformation, despite uncertainties in the competitive landscape. Abbott anticipates near-term revenue from new products within 12-18 months, indicating a trend towards rapid market adaptation. Overall, the industry is poised for higher growth, expanded margins, and stronger cash flow.

"Statements in this release that are not strictly historical, including the statements regarding the anticipated financial results for the second quarter and full year 2024, order trends, the Company's prospects for delivering long-term performance and any other statements regarding events or developments that we believe or anticipate will or may occur in the future are "forward-looking" statements within the meaning of the federal securities laws." --- (DHR, press release, 2024/04/23)

"That said, there continues to be a lot of uncertainty about things like, first, I'd say your view on Illumina's long-term growth profile, especially given uncertainty about the competitive landscape and the outlook for market elasticity." --- (ILMN, earning call, 2024/Q1)

"The second group of products I would call, probably near-term future contributors, so think about it in the next 12 to 18 months, these products coming to market and starting to kind of generate revenue there." --- (ABT, earning call, 2024/Q1)

"And they have done a tremendous job navigating the current environment to support our customers' life-changing work today, while also delivering breakthrough innovation that is reinforcing our long-term competitive advantage. The transformation in our portfolio over the last several years has created a focused Life Sciences and Diagnostic leader positioned for higher long-term growth, expanded margins, and stronger cash flow." --- (DHR, earning call, 2024/Q2)

"But now in the future, where the customer expectations are aren’t different from what they have been in the past, to really focus on end-to-end workflows, but also new innovations into the multiomics space that we highly committed to." --- (ILMN, earning call, 2024/Q1)