The Future of IVD Testing,
As I See It

By Sigi Ziering, CEO
Chairman of the Board
Diagnostic Products Corporation

On the occasion of the AACC's fiftieth anniversary, DPC is proud to acknowledge the accomplishments of this fine organization, which has contributed so much to improved health care both in the United States and throughout the world and which, for nearly 27 years, has had a strong and mutually beneficial relationship with DPC.

Today, just about 4 percent of total health care expenditures worldwide are spent on in vitro diagnostics (IVD), and less than 1 percent on IVD supplies. These relatively small expenditures are the most cost-effective way to curtail escalating health care expenditures, thanks to the net savings and patient outcome benefits attributable to advances in IVD testing. Yet, our industry as a whole, unlike the pharmaceutical industry, has done little to bring this to the attention of either the general public or the decision makers in charge of third-party reimbursements.

DPC's CEO, Dr. Sigi Ziering, has a simple plan for navigating the IVD industry's uncertain waters: Compete effectively with quality products, such as the IMMULITE® 2000 system pictured to the left, based on total cost per reportable result.

We need to do more as an industry, and we need to publicize more effectively the economic impact of improved patient outcomes and decreased total treatment costs resulting from faster, more effective IVD procedures. Through our failure, as an industry, to educate the medical community on the improved outcomes and cost-effectiveness inherent in faster diagnostic procedures, we seem to be shortchanging the patients as well.

Along with the patient outcome and cost-benefit studies, we also need to make the public better aware of the enormous technical advances achieved by our industry over the last 50 years. In that time span, we have not only been able to measure down to femtogram (10-¹⁵ g) quantities with immunoassays, but are now able to detect substances in attogram (10-¹⁸ g) quantities with PCR techniques. Full automation and shorter times-to-results, plus the ability to detect disease states much earlier with a wide array of better medical technologies, have advanced the practice of medicine immeasurably. The fact that life expectancy in the US, by way of illustration, has increased from 67 years (fifty years ago) to 73 years today is no accident.

What about the next 50 years for the AACC and companies like DPC? Undoubtedly, technology will thrive and advance, especially in the US, provided that the entrepreneurial environment remains vibrant and nurturing for the smaller start-ups. Consolidation within the industry and within the industry's customer base has never been more prevalent than in the last few years. Will the customer be better served by just a few "super companies" dominating the industry? Will this result in more efficient distribution and pricing, or rather in increased monopolistic trends? Will competition and innovation thrive in this new environment? Is there a future for independent small and midsize companies?

These are some of the questions that must concern all small companies within the industry, as well as the customers and end users in today's environment of accelerating mergers that are shifting the supply side to just a few companies which threaten to dominate the industry. It is estimated that the top five companies now account for approximately 60 percent of the IVD market, and the top ten for close to 85 percent.

The IVD sector is far from the only industry affected by this recent consolidation. Judging from our recent experience with the banking industry, customers have noticed two effects: decreasing service and increasing fees. In our existence, we have seen many fine smaller companies--which had succeeded in advancing the state-of-the-art by specializing in immunoassays--disappear for various and sundry reasons. Yet these are the very companies which so often contribute to innovation and technical advances. Even more important, it is in the nature of small companies, anxious to survive and prosper, to go the extra step in service, competitive pricing, and the introduction of unique new products. Removing this competitive threat to the few dominating large companies will only serve to diminish the free enterprise system. Small companies are the gadflys who, in effect, keep the larger companies honest.

The fact is that there is no complete menu available from any one company, large or small. We believe that DPC offers the widest menu in the industry; and yet, for example, being unable to obtain a license for hepatitis C is preventing us from offering this particular test.

For DPC, the answer is clear. We can compete effectively with quality products--including products which are occasionally unique--based on total cost per reportable result. We continue to make high investments in developing state-of-the-art technologies to provide better and more efficient means for improved living conditions and more affordable health care. If the day ever comes when all IVD assays are performed on a single instrument encompassing chemistry, hematology and immunoassay, we will reconsider our strategy. But until that day arrives, we like what we are doing and will constantly strive to do it better.

The consolidation of laboratories has also been carried to an extreme, or so it seems to us. The driving force behind this--the argument that consolidation of testing procedures will result in efficiencies of scale--may have been true a decade or two ago, when running a large batch of T4 assays was more cost effective than running many smaller batches using the technology available then.

Technological improvements have largely invalidated this argument through the introduction of random access, fully automated procedures utilizing stored curves. Indeed, the cost of transporting samples to large centralized laboratories either within hospitals or across town has never been fully considered. Fully automated, user-friendly instruments, with built-in quality control features, largely negate the potential savings from a centralized laboratory setup. We continue to look forward to a promising future, for the AACC as well as for DPC. Notwithstanding reimbursement pressures, consolidation trends and the various other pressures impacting our industry, there are many positive indicators. Increased synergies between therapeutic and diagnostic treatments, an aging population requiring more frequent testing procedures, and the explosive demand for better health care services from less developed countries all combine to increase the demand. These demand-side pressures, when coupled to a growing appreciation for the intrinsic benefits and cost-effectiveness of newer technologies, will undoubtedly increase the need for more IVD testing.

If you have any comments on the foregoing discussion, I would be happy to hear from you .