CEO SUMMARY: It is no coincidence that another public company is shifting its business focus and expanding its efforts to capture cancer-related anatomic pathology specimens. Demographic trends predict a steady increase in the number of new cancer cases yearly, while new technologies are giving physicians more effective ways to detect cancer and treat it. That is why cancer diagnostics is viewed as a “hot market.”
LIKE MANY NEW TECHNOLOGIES which enter the diagnostic marketplace, the Automated Cellular Imaging System (ACIS®) developed by ChromaVision Medical Systems, Inc. has had its critics within the pathology profession.
Using computer images and a proprietary software system, ACIS is one of the first products to offer anatomic pathologists a way to produce quantitative, standardized immunohistochemistry results. It was no surprise to market observers that some within the pathology profession expressed opinions and doubts that this type of technology could do a better job than that currently delivered by competent and experienced pathologists.
Independent of that debate, however, are the actions taken by individual pathology groups to acquire this technology and put it into clinical use. During the past four years, ChromaVision reports that 261 clinical customers acquired the ACIS technology. To put this market penetration into perspective, there are approximately 3,300 pathology group practices in the United States. ACIS placements in clinical settings would indicate that possibly 7% of pathology groups in the United States now use this tool in their clinical practice.
Following the FDA’s clearance of the ACIS for clinical use, it took only 48 months to achieve this market share. Independent of ChromaVision’s profitability as a company, this steady gain in market penetration is a message that the pathology profession’s early adopters are responding to technology and tools which enhance the clinical services they provide to referring physicians.
New Lab Testing Provider
Against this background, THE DARK REPORT considers it significant that ChromaVision now wants to expand its business and became a direct provider of laboratory testing services. For the anatomic pathology profession, this sends several messages–all of which should get strategic attention.
One, ChromaVision is uniquely positioned to evaluate both the current size and future growth in the market demand for immunohistochemistry tests. Investments in its new laboratory and its plans to directly provide such tests are signs that ChromaVision expects robust growth and adequate reimbursement in this area of diagnostic testing.
Certainly this product, along with the change in personal practice patterns it represents, has critics within the pathology profession.
Two, ChromaVision’s three strategic business initatives each expand the company’s presence in the oncology marketplace. This reinforces and further validates a prediction made by THE DARK REPORT during the past 24 months: oncology will be one of the most dynamic, fast-growing, and profitable sectors of laboratory testing.
ChromaVision’s investment to position itself in oncology diagnostics follows those made since 2002 by Laboratory Corporation of America (which paid almost $600 million to acquire DIANON Systems, Inc.), Welsh, Carson, Anderson, and Stowe (which acquired AmeriPath, Inc. for $849 million), and Genzyme Corp. ($250 million invested to purchase IMPATH, Inc. and AlphaGen). Each investment is a major bet to guarantee a significant role in oncology diagnostics.
Shift From Local Pathology
Three, ChromaVision’s desire to enter the national marketplace as a direct provider of (AP) testing services is another sign that anatomic pathology is steadily shifting from a local business, dominated by local AP groups, to a national business. AP groups which fail to respond to this powerful trend will lose access to patients referred by office-based physicians in their community.
Four, the pathology profession should recognize that ACIS is representative of a new class of technology. It is technology which is designed to increase the diagnostic accuracy of pathologists, improve the uniformity of diagnoses between individual pathologists, and enhance the clinical added value that a pathologist provides to referring physicians.
Five, as the use of ACIS and similar technology continues to expand within the anatomic pathology market- place, it will drive two other outcomes. First, these types of tools will tend to increase specialization within anatomic pathology. The generalist pathologist without any subspecialty expertise will find those skills in declining demand. Second, it will raise the expectations of referring physicians, who will want to see a higher quality of test result reporting.
Critics Versus Advocates
Certainly this product, along with the change in personal practice patterns it represents, has critics within the pathology profession. But it also has its advocates. The number of ACIS units placed in clinical settings demonstrates that fact.
As pathologists become more centralized players in the diagnostic picture and patient care they will start to look to technological assistance to make them more efficient, accurate, and precise in their diagnoses.
Patient safety, error reduction and quality medicine is becoming a public mantra. Pathologists will need technologies like that offered by ChromaVision if they are to continually increase the quality of services they provide to payers and the public alike.