Diagnostic Companies Shine in COVID-19 Gloom

Article By : Anne-Françoise Pelé

Mass testing is crucial right now. The opportunity is huge for diagnostic companies, especially those with microfluidic systems, but can these vendors produce millions of tests per week?

Mass testing the population to identify who is infected with Covid-19 has become one the most critical strategies against the outbreak. It is also the key to the outside world for the billions of people in some form of lockdown around the world. The opportunity is huge for diagnostic companies, but can they produce millions of tests per week? Can the supply chain complete mass production? Is there a risk of shortage for other types of tests? The Covid-19 poses serious questions at a time when action is most needed.

Racing against time

The fight against Covid-19 is a race against time. For every minute that goes by, new cases and deaths surge in every part of the world. Thanks to ever more complex integration and automation on-chip, molecular diagnostics tests offer ultra-rapid and actionable results at the point-of-care (PoC). These tests represented more than half of the value of the testing market in 2019; by 2025 they are projected to account for about 70 percent, according to market research firm Yole Développement (Lyon, France). The overall microfluidic-based point-of-need (PoN) testing market will grow at a CAGR of 13 percent, from $4.1 billion in 2019 to $10.1 billion in 2025, driven by human diagnostics segments.

Molecular microfluidics diagnostics will be a key driver for growth. “Going back a decade, molecular microfluidic testing was the exception,” said Sébastien Clerc, technology & market analyst in microfluidics, sensing & actuating at Yole, in an interview with EE Times. Only a few companies, such as Cepheid and BioFire, were marketing products. Microfluidics is now a mature technology, and the number of companies developing microfluidic-based solutions worldwide exceeds a thousand. “Nowadays, we can automate complex samples on microchips,” said Clerc. “To detect the presence of a pathogen, the molecular test remains the most reliable, especially when compared to immunoassays which are less expensive but less accurate.”

The Covid-19 pandemic will not artificially inflate the growth rates. “We certainly see an impact at the present time, but Covid-19 tests only represent a small part of our overall [microfluidic-based PoN testing] market forecasts,” said Clerc. “The minor decline in respiratory testing after the pandemic will be balanced by other types of testing, which will increase as the health care system returns to normal.”

Producing millions of tests

In its 2019 report, Yole explained that PoC testing, though considered as microfluidics’ greatest promise with the potential for rapid-testing cartridges to reach millions of units per year, were struggling to achieve mass production. Just having good technology is not enough. Supply chain security, financial strength, regulatory approval, and market access are also required.

The huge demand for Covid-19 diagnostic tests could reverse the trend, but are companies ready to move to mass production in a short period of time? “That’s the big question,” answered Clerc. Companies such as Abbott, Biomérieux and Qiagen have large production capacities, “but from there to providing millions of tests per week, we are not there yet.” Abbott, for instance, said it currently manufactures 50,000 tests per day. “It’s significant, but not enough for a mass population screening.” Startups are also active with San Diego-based startup Mesa Biotech now producing 10,000 tests per week. “They do with their own means, and 10,000 tests is always better than nothing,” noted Clerc.

To cope with the exponential demand, large companies such as Cepheid and Abbott said they have adjusted their manufacturing lines and switched the production of some other tests to focus on Covid-19 diagnostic tests, as long as it is not to the detriment of other pathology testing. “They’re not going to cut off funding for other types of tests,” said Clerc. Companies like BioFire produce tests for bloodstream infections. “These tests detect the type of pathogens infecting the patient and help determine which antibiotic to give. Every minute counts, so it’s obvious they can’t stop producing these tests.”

Sébastien Clerc, Yole

If adjusting pilot lines isn’t enough in terms of volume, will companies be able to start dedicated production lines in a timely manner? And who will finance them? Large companies have the financial resources to move fast, and the U.S. government, among others, is funding the production of Covid-19 diagnostic tests. Above all, “these investments are not wasted,” said Clerc. “Companies like Mesa Biotech, which had only installed about a hundred instruments in pharmacies, doctors’ offices and U.S. clinics, have seen the demand for their instruments explode,” said Clerc. These instruments, installed now to test Covid-19, will stay and be used to test other respiratory pathogens such as influenza A and B. “Diagnostic companies, developing respiratory tests for Covid-19, will be positively impacted,” said Clerc. “Some have published their financial results, and they are excellent.” In the first quarter of 2020, Biomérieux indeed reported consolidated sales totaled €769 million (about $836 million), up 21.5% from €632 million (about $687 million) in the year‑earlier period, Qiagen announced a 9-percent net sales increase, and Danaher notified a revenue growth of approximately 3 percent and non-GAAP core revenue growth of approximately 4.5 percent.

As in all crises, the Covid-19 crisis will create winners and losers.

Now that the virus has spread to the four corners of the world, affecting developing countries with limited financial resources, the cost issue arises. “This is a complex question,” said Clerc, assuming that international humanitarian organizations and large companies would reinforce their commitment as they have done for tuberculosis and AIDS, and provide cheaper tests to the local population.

Maintaining the supply chain

The supply chain is like a puzzle. Just one missing part, and system companies can’t deliver. When the epidemic reached its peak in China, transportation came to a standstill. The supply chain was broken, not because nobody was manufacturing, but because components were not moving from one part of China to the other.

“The health industry is the highest priority in today’s environment, and governments are doing everything they can to keep the factories running,” said Clerc. “The whole world cooperates intelligently” to make sure there is no supply chain disruption, especially for the production of Covid-19 tests. In parallel, local companies are working at full capacity. After decades of relocating the production to regions with low labor costs, some governments are changing their rhetoric. French president Emmanuel Macron recently called for European independence and sovereignty, declaring “This crisis has taught us that for certain goods, certain products, certain materials, their strategic character requires that we have European sovereignty.”

Lessons will be learned from this crisis, and “the pandemic will certainly leave its mark on the way we work, produce and live in society,” said Clerc. “There will be an impact far beyond the duration of the virus.”

Governments and health authorities will have to provide R&D guidelines and ensure that efforts are sustained over time. During the SARS outbreak in 2003, a significant budget had been allocated for coronavirus research, but it shrunk after only two to three years. In the 2010s, scientists warned that there were not enough resources allocated to coronavirus research, and a new coronavirus has emerged. To end on a positive note, Clerc outlined the mobilization of all industries: “The entire scientific and medical community has come together to try to find solutions to this pandemic and save lives.”

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