Sigma-Aldrich, Ivax Diagnostics, i-STAT, Quest Diagnostics, Unilab

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SIGMA-ALDRICH SELLS ITS EIA PRODUCT LINE TO IVAX DIAGNOSTICS

FOLLOWING ITS DECISION TO EXIT the clinical diagnostics market, Sigma-Aldrich, Inc. has sold its global enzyme immunoassay (EIA) product line to Ivax Diagnostics, Inc., based in Miami, Florida.

The sale occurred on May 15. Sigma-Aldrich, through its Sigma Diagnostics division, was selling EIA instruments and reagents produced by Ivax, and “private-labeled” under the Sigma name. One consequence of this sale is that Ivax Diagnostics becomes the prime supplier for those lab customers who were using Sigma’s EIA products.

Ivax Diagnostics is a relatively small manufacturer, with annual sales of about $10 million. Its business strategy is to offer a full menu of test kits for lower volume EIA assays. It sells an automated “walk-away” EIA instrument, called Mago®, that is an open system. Labs seeking to consolidate a variety of low-volume EIA assays on a single instrument platform will find several aspects of the Mago system to be appealing.

POINT-OF-CARE TESTING CONTINUES TO MAKE NEW INROADS IN HOSPITALS

THROUGHOUT THE 1990s, there was a running debate about the value of point-of-care testing (POCT) in hospital settings.

Advocates of core lab testing argue that there are advantages of lower cost, better supervision of testing activity, and higher quality of test results when tests are performed in a core laboratory.

Advocates of POCT argue the advantages of faster TAT, lower cost per healthcare encounter, and acceptable quality when POCT operators are properly trained. The core lab-POCT debate often turns intense, because each side has evidence to support their position.

However, it is always the marketplace which gets the final word. One bellwether for the growth of POCT testing is i-STAT Corporation of East Windsor, New Jersey. It was one of the earliest manufacturers of a viable POCT instrument.

The inroads i-STAT has made in POCT is revealed in its first quarter earnings report, which was made public last month. i-STAT now claims to have 27,000 analyzers in use worldwide. Its sales of cartridges for these analyzers totaled 2.69 million units during first quarter 2002.

This means that i-STAT analyzers are performing almost 11 million tests per year in the hospitals and healthcare settings where they are used. Sales of i-STAT analyzers, cartridges, and peripheral equipment should bring the company revenues of more than $59 million this year.

More intriguing is what lies ahead. i-STAT intends to introduce several new tests this year. These will be in the form of cartridges that are compatible with the i-STAT analyzer. A test for prothrombin time is heading to market. i-STAT is also preparing to introduce its first immunoassay test. It will be the cardiac marker troponin I.

The market acceptance of i-STAT shows how the healthcare community is steadily adapting to the concept of POCT. For lab administrators and pathologists, there are two key insights revealed by this situation.

First, as diagnostic instrument manufacturers develop POCT analyzers which are perceived to be easy to use, accurate, and cost-effective in clinical settings, healthcare providers will accept them. But these POCT instruments must truly deliver those benefits.

Second, i-STAT shows how rapidly the technology that enables random test-random specimen diagnostic instrument platforms is developing. Since its introduction early in the 1990s, i-STAT has steadily added new tests to the menu of cartridges that can be utilized with its analyzer. i-STAT’s first immunoassay test opens the door to an even wider menu of tests.

i-STAT is only one example of how diagnostic manufacturers are making progress at reducing size of the instrument required to perform a test, as well as reducing the amount of reagent and specimen. It is this type of innovative technology which will encourage a growing number of tests to migrate out of the core lab and into point-of-care and near-patient settings.

FTC EXTENDS REVIEW OF QUEST DIAGNOSTICS’ ACQUISITION OF UNILAB

It was a closely-watched deadline. As of Friday, May 24, Quest Diagnostics Incorporated released the news that the Federal Trade Commission (FTC) had requested additional information concerning the Quest Diagnostics’ acquisition of Unilab Corporation. (See TDR, April 22, 2002.)

This surprised many in the lab industry. That’s because, of the great number of lab acquisitions transacted over the years, the FTC’s past pattern has been to allow mergers between commercial laboratory companies to proceed without additional delay. Generally, government concerns about potential antitrust issues triggered by specific mergers were not enough to trigger government action.

This situation may be changing, particularly after the remaining “middle-tier” public lab companies, American Medical Laboratories, Unilab, and Dynacare, have been acquired by Quest Diagnostics and Laboratory Corporation of America during the past four months.

This concentration of market share in the physicians’ office lab testing segment by the two blood brothers seems to have caught the attention of government antitrust regulators. Unilab is already the dominant presence in the physicians’ office segment of the California market. Post-merger, Quest Diagnostics would hold a commanding market share in California. That seems to have antitrust regulators concerned.

THE DARK REPORT has spoken to several owners of independent commercial laboratories in California. Each has gotten calls from individuals at the FTC. Different sources have told THE DARK REPORT that some independent physicians’ associations (IPA) have complained to the FTC. They are unhappy with the prices and the quality of lab testing services provided to them in the state already. They are concerned that Quest Diagnostics’ acquisition of Unilab, by creating a clear monopoly, would cause the current situation to further worsen.

The FTC also delayed its ruling on the acquisition of Digene, Inc. by Cytyc Corporation. (See TDR, March 11, 2002.) Twice the FTC has extended its period of study on this deal, apparently concerned about the antitrust issues related to Cytyc’s ownership of Digene and its DNA-based HPV test technology.

Since the FTC’s extension of time in the Quest Diagnostics-Unilab merger is unusual, lab industry experts are closely watching further developments.

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