WITH THE PANDEMIC NOW IN ITS NINTH MONTH, in vitro diagnostics (IVD) company executives and industry consultants recognize the market for clinical laboratory instruments, tests, and products is changing in fundamental ways.
“Evidence accumulates that the pandemic is helping create new winners and new losers among big and little IVD companies,” stated Peter van Overwalle, who is Head of Marketing and Partner at LiquidSMARTS and previously served in marketing and product management positions at Thermo Fisher Scientific and Roche Diagnostics.
Shortage of Instruments, Tests
“Pre-pandemic, it was common for a clinical laboratory to work with one IVD company as its primary source for instruments, automation, and tests,” he continued. “The pandemic and the shortage of instruments and tests for SARS-CoV-2 has caused many labs to go to multiple vendors to buy analyzers, test kits, primers, and reagents as a strategy to increase their daily COVID-19 test capacity. Since the onset of the pandemic, this created opportunities for certain IVD companies to win market share from their competitors.”
Recently, The Dark Report brought together three IVD executives to offer observations and insights about how the COVID-19 pandemic is changing the IVD marketplace. Joining van Overwalle on the conference call were Gunter Wessels, PhD, and John Hardesky. Wessels is the General Manager and co-founder of LiquidSMARTS, a global professional services and technology company. Wessels has 25 years of experience in healthcare, including 16 years as a consultant to marketing and sales teams. Until recently, Hardesky was Vice President of Customer Laboratory Solutions at McKesson Corporation and has 20 years of IVD experience.
During the interview, the three professionals noted that the widespread supply shortages caused by the pandemic will probably be the single biggest reason why the post-pandemic IVD marketplace can be expected to look much different than the pre-pandemic market.
In fact, while he was still at McKesson, Hardesky was tasked with studying how the pandemic would alter the status quo among lab suppliers. “At McKesson, I wrote a COVID-19 positioning document that reflected my work with key opinion leaders and interviews with numerous customers in different care settings over the last several months,” he said.
“Unequivocally, the number one problem identified were challenges related to supply chain,” continued Hardesky. “There have been donations of supplies and funds from many different sources to hospitals. As a result, most labs have money to buy instrumentation for testing, but they continue to struggle in obtaining it. In addition to equipment, labs reported concerns about obtaining personal protective equipment to keep testing staff safe.”
“Because clinical labs of all sizes and settings have been under extreme pressure to increase the volume of COVID-19 tests they perform, the inability of many of the largest IVD companies to meet the quantity needs of their long-time lab customers caused these same customers to open their doors to IVD firms that could supply additional instruments, tests, and other supplies,” observed van Overwalle.
Major Weakness Exposed
“This is a key insight,” interjected Wessels. “The pandemic has exposed a major weakness in the common practice of a clinical lab working with one major IVD company for the majority of its automation, instrumentation, and tests.
“Before the SARS-CoV-2 outbreak, labs working with a primary IVD supplier could negotiate lower price because of a larger volume of purchases,” added Wessels. “Standardization of instruments and tests across the different lab sites in a health system also helped improve productivity and quality while lowering costs.
“It is now tougher for a large manufacturer to dominate a laboratory’s inventory because the pandemic has shown how that strategy concentrates the risk of a single source in the supply chain,” he said. “That alone is a pretty big incentive for laboratory customers to diversify their suppliers of instruments, tests, collection supplies, and other consumables.
More Workstation Options
“I agree,” noted van Overwalle. “The dominance of an IVD firm as a featured or preferred provider is significantly strained. On one hand, labs are going to need to consolidate some significant workflow onto a consolidated platform. On the other hand, workstation options are going to multiply and the ability to do more specialized testing from newer products—and not the same brand—is enhanced by this trend. The IVD industry has forced labs to shop for alternate sources and shopping now doesn’t seem as scary.”
“Scarcity drives a lot of purchasing decisions, which we know is more emotionally-rooted,” stated Wessels. “What I find concerning is the erosion of standardization because it affects what these larger IVD companies could offer via the same platform for multi-site labs.
“Take mass spectrometry as an example. For an open system, a lab gets seven different versions of the truth from operating open systems, which is unfortunate, but true,” Wessels added. “I think standardization in a lab takes a back seat during the pandemic because if the lab is to provide serology results, and it must do it on multiple vendor platforms for the same patient, that’s not going to hold out very well,” declared van Overwalle.
“Not all serology tests are created equal. Lab managers must answer this question for the longer term: Does their lab do best-in-class testing by disease state or not?”
New IVD Companies
“Another change we see in the IVD market is how the pandemic is opening doors for new technology companies and the different solutions they are developing,” stated Hardesky. “It is surprising how many companies have pivoted because of COVID-19 and developed useful solutions for labs.
“Today, the traditional lab customer that utilizes multiple technologies from one major IVD company is forced to go out and look around,” he said. “Lab leaders have opened their eyes and are looking at innovative technologies from smaller companies that they may not have considered prior to the outbreak. I think we’ll continue to see some market changes coming from that as well.”
“Not only is that happening, but I see the direct relationship between IVD manufacturers, and the labs of hospitals and health systems being augmented by indirect relationships and with more focus on having distributor partners,” noted Wessels. “This helps clinical labs because distributors can offer instruments and tests from different IVD companies. They also know and understand the supply chain capabilities of the IVD firms they represent. That’s a big help to labs during this supply chain crisis.”
Opportunities to Add Value
Based on interactions with IVD organizations through the course of the pandemic, Wessels believes IVD companies have three opportunities to add value and be relevant to their clinical lab customers. “First, every close-to-the-customer company will want to work with its lab customers to help them respond to uncertainty,” said Wessels. “That includes showing the lab team to be better and faster at recognizing change. It is a characteristic of many labs to be slow to react to important changes in technology and the clinical market.
“The second thing IVD firms and distributors can do to assist their clinical lab clients is to help them understand how to be better with employee engagement, maintenance, and retention,” he noted. “The lab industry entered this pandemic with a shortage of laboratory technicians. Yes, there is plenty of automation. But the complexity of the COVID-19 assays, the multiple instruments, and tests in the lab requires med techs to have more knowledge and skills to maintain quality test results.
Helping Labs Innovate
“Third, most labs are using multiple platforms and assays for COVID-19 testing,” concluded Wessels. “This gives suppliers the opportunity to add value by helping their clinical lab customers develop new and innovative reconfigurations of workflow and the physical lab space to improve productivity and reduce costs.”
COVID Changes Lab Access and More
BECAUSE OF THE PANDEMIC, IN VITRO DIAGNOSTICS (IVD) COMPANIES and their clinical lab customers are interacting in different ways. For example, it is now more difficult for IVD firms’ service engineers, trainers, and sales reps to gain access to the lab facilities of their customers.
“I know of many examples of IVD company representatives having challenges getting into hospitals and labs now,” said Peter van Overwalle, Head of Marketing at LiquidSMARTS. “In our practice, we’ve reached out to help the IVD companies’ representatives develop communication skills to do their work from afar because the loss of a face-to-face connection really changes the dynamic and nature of the business relations between a lab and its IVD supplier.
“I also hear some of the big players are heavily investing in virtual training whereby they can—without having to bring the customer to their campus for a three-and-a-half or five-day event—do a virtual reality technology training to create a hands-on experience,” he added.
“The pandemic has changed IVD sales in a similar way,” noted Gunter Wessels, PhD, General Manager of LiquidSMARTS. “Physical sales visits to labs have been extinguished. It’s all Web meetings—if it’s happening. Moreover, these meetings are usually about service issues and getting more supplies, such as, ‘This is broke. Fix this. Fix that. My lab can’t get this. Can you get me that?’ There are fewer discussions about how to help the lab move forward.”
“The simple fact is that, for IVD sales reps, it may be more difficult to show up and visit the laboratory,” explained John Hardesky, Commercialization Consultant for LiquidSMARTS. “Sales visits won’t be as frequent as before the pandemic.”
Contact John Hardesky at firstname.lastname@example.org; Peter van Overwalle at email@example.com; Gunter Wessels, PhD, at firstname.lastname@example.org.