TO NO ONE’S SURPRISE, THOSE IN VITRO DIAGNOSTICS (IVD) MANUFACTURERS that produce molecular tests, instruments, and automation used for COVID-19 testing reported strong growth in revenue and profits during 2020.
In recent weeks, these companies issued their earnings reports for the fourth quarter 2020 and full year 2020. As expected, most companies announced substantial increases in revenue and financial performance.
However, probably of greater interest to clinical lab managers and pathologists are the statements and predictions IVD executives made to financial analysts and investors during these earnings calls about the ongoing COVID-19 pandemic. Some IVD leaders called COVID-19 an endemic disease similar to influenza. They see continuing demand for COVID-19 diagnostic testing through 2023 and perhaps beyond. Antigen rapid testing is key, they said.
IVD company executives are watching the pace and effectiveness of vaccines and their roll out. They are concerned, too, about SARS-CoV-2 variants and how that may create the need to develop related assays and clinical lab tests to help manage new COVID-19 variants.
Here is a recap of recent data reported by top IVD companies (See also “The Dark Report’s Ranking of 2019’s Top 10 IVD Companies,” December 28, 2020).
These summaries include select comments made to IVD company investors, which are likely to be helpful to clinical laboratory leaders developing strategies.
ROCHE: Diagnostics Division Sales Grow 28% in Q4, 14% in 2020
Continued demand for COVID-19 testing in Q4 drove impressive growth in Roche Holding’s diagnostic division. The Basel, Switzerland, IVD leader reported diagnostic division sales growth of $14.6 billion, an increase of 14% for the year and 28% in Q4. Molecular diagnostics drove the growth, swelling 90% during the full year 2020. Roche acknowledged that the growth offset a decline in routine testing during the pandemic.
During 2020, Roche introduced 15 molecular and immunodiagnostic tests for clinical laboratories and point of care.
Thomas Schinecker, PhD, CEO, of Roche Diagnostics, told investors during an earnings call Q&A session that the company’s repeat of positive financial indicators in 2021 may depend on COVID-19 vaccines and SARS-CoV-2 variants. “How quickly is the roll out of vaccines? Is this going to take longer? Then, the question is really on the different variants and what kind of level of vaccine rate do you need to get to herd immunity?
“So, we will definitely see very strong [COVID-19] testing, particularly in the first half year [of 2021]; likely some testing also in the second half of the year and for the years to come, simply because this virus is endemic,” continued Shinecker. “It mutates frequently. So we will have to monitor this.” Severin Schwan, Roche CEO, added, “COVID-19 will continue to stay with mankind like the flu virus.”
ABBOTT LABORATORIES: Diagnostic Sales Grow 110% in Q4-2020 with $2.4B in COVID-19 Test Sales
Abbott Laboratories announced company sales in Q4 grew about 28.7% to $10.7 billion including $2.4 billion of COVID-19 testing. For the full year 2020, revenue was $34.6 billion, compared to $31.9 billion for full year 2019, an increase of 8.5%.
“In total, we delivered more than 400 million COVID tests since the start of the pandemic, including more than 300 million tests in the fourth quarter alone,” said Robert Ford, President and CEO during an earnings call. “We exited 2020 with tremendous momentum, including total sales growth of more than 28%. Our diagnostic business grew nearly 110% in the quarter, driven by $2.4 billion of COVID testing-related sales.”
During a Q&A session, Ford said he anticipates continued COVID-19 testing demand as vaccines become available. “I expect testing demand is still going to remain high even as the vaccines roll out. I don’t think we’ve even seen testing demand peak yet,” Ford said.
“Even if COVID-19 testing starts to mature a little bit in 2022, we believe there’s a significant portion that’s still very sustainable. Can we predict it perfectly today? No, I can’t—not to the level that you’re accustomed to getting from us.”
Commenting on the future demand for COVID-19 tests, Ford observed that one trend that the pandemic has accelerated is the shift away from the dominance of core lab testing. “I also think that the ability to do testing in a decentralized manner … people talk about how the pandemic has accelerated digital transformation and businesses, and accelerated transformation in the business models.”
On that point, Ford mentioned that Abbott received in 2020 a $760 million federal contract for 150 million rapid antigen tests called BinaxNOW. And the company also launched Panbio COVID- 19, a CE-marked rapid antigen test.
DANAHER–BECKMAN COULTER, CEPHEID: Cepheid Increases Installs 35% in 2020
At Danaher Corporation, full year 2020 revenues increased 24.5% to $22.3 billion. For Q4-2020, revenue for the diagnostics division was $586 million, an increase of 66% over Q4-2019’s $352 million.
For the full year 2020, diagnostics division revenue was $1.5 billion, compared to $1.1 billion for full year 2019, a growth rate of 36%. Danaher’s diagnostic division includes Beckman Coulter, Cepheid, Leica Biosystems, and Radiometer.
During the earnings call with investors, Rainer Blair, President and CEO, described Q4 highlights in the diagnostics division and called attention to the performance of Cepheid. During 2020, “Cepheid’s installed base [increased] by more than 35% year-over-year to over 30,000 instruments globally. Cepheid achieved a significant milestone in December for passing $2 billion in annual revenue, just one year after hitting the $1 billion mark.”
One analyst asked Blair. “…not only has Cepheid replaced a ton of instruments, but a lot of your competitors—all the other companies selling molecular diagnostic tools—have placed enormous numbers of instruments. Are you worried that there is going to be a glut of [molecular testing] machines out there that don’t get used … once we’re past [the demand] for COVID-19 testing?”
Blair answered that question as follows. “… we’ve been very thoughtful about the placement of those [molecular] instruments. First, to help during the pandemic … At the same time, we’ve been thinking about those placements for the long-term … We placed those instruments primarily where we see that, even in a post-COVID world, they would find great utilization based on [Cepheid’s] full testing menu.”
SIEMENS HEALTHINEERS: Diagnostics Revenue Grows 23% to $1.4B in Q1-2021
Siemens Healthineers’ most recent report reflected performance during Q1 ending Dec. 31 for FY 2021. The diagnostics division’s revenue of $1.4 billion was up 23% year-over-year.
“Q1 revenue increased by 13% on a comparable basis, with outstanding 23% growth in diagnostics, but also very good growth in our imaging and advanced therapies businesses with 9% and 6%, respectively,” Bernd Montag, CEO, said in an earnings call.
“Diagnostics has seen nice margin improvement thanks to a strong uptake of profitable rapid antigen tests, but also improving margins in our routine care business where procedure volumes returned to growth again,” he added.
Siemens boosted assumptions for fiscal 2021, stating it now expects antigen test revenue to be about $350 million instead of $117 million.
During a Q/A session with investors, Montag addressed whether testing capacity is sufficient going forward. “When it comes to the antigen tests, capacity is not the limiting factor. Capacity is where it needs to be. It is now really about how does the need for the tests develop? What are programs in society, in programs by government? And also how fast is the progress on the vaccination front?” he said.
THERMO FISHER: 200% Growth in Diagnostics/Healthcare in Q4, 100% Growth in Full Year 2020
Thermo Fisher Scientific reported Q4-2020 revenue grew 54% to $10.5 billion. The company’s revenue for the full year 2020 was up 26% to $32.2 billion.
“In diagnostics and healthcare, we had another incredible quarter, delivering more than 200% growth. Our COVID-19 testing revenue continued to accelerate in the quarter as customer demand for our sample preparation, PCR solutions, and viral transport media remained very robust,” Marc Casper, CEO, said during an earnings call. “For the full-year, diagnostics and healthcare grew by more than 100%, driven by our leading role in supporting COVID-19 testing,” he continued.
Looking to 2021, Stephen Williamson, Senior Vice President and CFO, said, “We’re assuming vaccine and therapy revenue is fairly linear in 2021. The testing-related revenue is assumed to be very front-end loaded with Q1 levels similar to Q4 2020. Our guidance assumes [COVID- 19] testing demands may begin to moderate in Q2 and potentially moderate further as the year progresses.”
Casper shared projections for COVID- 19 testing in 2022 and 2023. “Based on what we see with the pandemic and what our customers are telling us, we would expect demand for COVID-19 therapies and vaccines to be very substantial in 2022, and likely to have some level of revenue going into 2023, maybe even longer.”
BIOMÉRIEUX: Sales Increased 20.5% in Q4-2020
bioMérieux said sales were $3.6 billion in 2020, which was up 19.7% over 2019. Sales in Q4 increased 20.5%, led by molecular biology reagents.
During the call, executives singled out the company’s BIOFIRE molecular product, noting that sales increased 76% in Q4 due to demand for the respiratory 2.1 panel.
The company says this panel tests for “19 viruses including SARS-CoV-2, and four bacteria that cause respiratory tract infections in 45 minutes.”
“…our BIOFIRE has proven to be a key diagnostic solution in the fight against COVID-19 with an impressive growth of around 80%. It’s worth noticing that the installed base in terms of units will increase from around 10,000 to 17,300 units worldwide. It’s a major achievement,” declared Alexandre Mérieux, Chairman and CEO.
BECTON, DICKINSON AND COMPANY: Integrated Diagnostics Solution Revenue Grows 106% for Q1-2021
Becton, Dickinson and Company (BD) had revenue of $4.7 billion in the fiscal Q4 ending Sept. 30, 2020, a growth of 4.4% over Q4 2019. COVID-19 testing was associated with more than $440 million in Q4-2020 sales.
BD’s noted life sciences segment revenue was $1.4 billion during Q4-2020, an increase of 31% over Q4-2019. The company associated the sales bump with COVID-19 diagnostic testing on the BD Veritor and BD Max platforms.
Earlier this month, BD reported its first quarter 2021 earnings. For its Integrated Diagnostics Solutions (IDS) business unit, revenue was $1.7 billion, up 106% over Q1-2020, which was the start of the SARS-CoV-2 pandemic.
In looking to 2021, BD said it sees “no significant change in utilization or procedure volumes associated with COVID-19 resurgences.”
Tom Polen, Chief Executive Officer and President, said, “I think there remains uncertainty around the effectiveness and timing of the [COVID-19] vaccines, especially with additional variants that are out there, et cetera. But we can’t predict what is going to happen there in the second half of the year. And so we continue to project that there will be very strong demand for antigen testing in the first half of the year and that the second half of the year is less certain.”
HOLOGIC: 89.3% Growth in Q1-2021 Compared to Q1-2020
Hologic issued its earnings report for Q1-2021, which ended on Dec. 31, 2020. The company said revenue increased 89.3% for the quarter to $1.6 billion, compared to $850 million in Q1-2020.
Hologic has a substantial presence in women’s health and related diagnostics. But it also has a flourishing business in molecular diagnostics.
In its earnings report, Hologic said, “Worldwide molecular diagnostics revenue of $995.3 million increased 457.6%— or 448.7% in constant currency—exceeding expectations based on increased production of, and strong global demand for, the company’s two SARS-CoV-2 assays that run on the fully-automated Panther and Panther Fusion systems.”
Hologic believes there will be an ongoing demand for COVID-19 testing. “… we’ve been in close contact with most of the major governments around the world, [as well as] all of the key labs and health experts,” stated Stephen P. MacMillan, Chairman, President, and CEO. “We believe [there will be] ongoing COVID-19 screening programs … that use the most sensitive [diagnositic] tools out there … hospitals are going to want to continue to test patients coming in … everybody who is going to go in for a hip and knee cardiac, any other procedure, we think will probably to be tested [for COVID-19].”