Now, more than ever, technologies devised for human clinical diagnostics are finding new applications in other fields. According to projections from a recent annual report by Merrill Lynch, In Vitro Diagnostics (November 2000), the field of animal health is taking advantage of such technologies to post significant market gains—to the tune of almost $1 billion.

Over the past few years, conventional human diagnostic methods have been adapted for veterinary testing of all types. Such methods include immunoassays and nucleic acid testing, as well as those used in clinical chemistry and hematology.

The veterinary diagnostics market can be divided into two segments: companion-animal health and commercial animal production. The market for companion animals seems to offer the most potential for human IVD companies, however, because most pets require tests with only slight variations from those made for humans.

According to Merrill Lynch healthcare analyst Susan Vissers Lisa, marketing of companion-animal health products is directed at animal hospitals and clinics, small-animal practitioners with mobile facilities, private toxicology labs, and university and government toxicology research labs. "There are approximately 55,000 veterinarians in the United States at over 20,000 veterinary hospitals and clinics, which makes for a substantial base. Market demand is driven by pet owners' strong emotional motivations."

The availability of faster, more-accurate, and easier-to-use diagnostic tests has fueled recent growth in the animal-testing segment of the IVD industry. New technologies, such as those that enable veterinarians to perform combination testing on animals, have also expanded the market. According to Merrill Lynch, the animal-testing market—estimated to be at $875 million and growing—makes up 5% of the total market for animal health products, which also includes pharmaceuticals, feed additives, and biologicals.

Vissers Lisa says that the market continues to exhibit solid growth prospects, citing "the number of pets, a relatively easy regulatory backdrop, the lack of third-party payer issues, increased demand on the part of veterinary customers for 'one-stop shopping' (i.e., diagnosis, recommendation, and treatment), and improved pathology training among younger veterinarians."

The new testing technologies available have also increased competition among the market's key players—Idexx Laboratories (Westbrook, ME), Heska Corp. (Ft. Collins, CO), Synbiotics (San Diego), and Abaxis Inc. (Union City, CA). At press time, the total market capitalization for these companies was $1.03 billion and total sales were $477.9 million. These sales figures are up more than 20% from total sales in 1998 (see table).

Such increased competition has led to overall growth in the marketplace. To take one example, Heska introduced a room temperature–stable, easy-to-use heartworm assay in 1999, which caused market leader Idexx to suffer a 20% decline in sales of its canine heartworm tests. To combat such a loss, in February 2000 Idexx launched a combination test for heartworm and Ehrlichia canis, a common tick-borne bacteria that causes ehrlichiosis, a weakening of the canine immune system similar to that caused by heartworm. The launch of the combination test helped Idexx recapture market share and also resulted in better medicine. More than 13,000 clinics currently use the Idexx combination test. Says Vissers Lisa, "Our sense is that other combination tests are likely in the future."

Competition in the heartworm market isn't limited to Heska and Idexx. Synbiotics and Abbott Laboratories (Abbott Park, IL) have also launched assays for canine heartworm detection to which the market has been responsive, notes Vissers Lisa.

Competition has also led to advances in in-clinic testing, where Idexx is the market leader. The company's VetLab line includes instrumented diagnostic tests for blood chemistry, hematology, endocrinology, and electrolytes. The VetLab system can test for 28 separate parameters in 15 minutes, and the devices can be linked to produce integrated patient-testing reports. However, Idexx's size and presence in nearly every segment of the animal health market have spurred smaller players to try to gain a share of the in-clinic niche. Such companies include Abaxis, a former human point-of-care diagnostics company that currently develops reagents for Idexx's clinical chemistry analyzers; Heska, which offers a hematology analyzer; and Synbiotics, with its Pro-chem V clinical chemistry analyzer.

Despite strong growth in the in-clinic testing segment, laboratory testing services still represent the bulk of animal diagnostic testing, says Vissers Lisa. "Clinical labs cater to low-volume clinics or clinics in large urban areas, and can also offer testing technologies that cannot be done in-office, such as pathology." The major competitors in this segment are Heska, Idexx, and Veterinary Centers of America (Los Angeles), the largest network of full-service animal hospitals in the United States.

Traditionally, larger human-IVD companies have avoided the animal diagnostics market. However, Abbott is beginning to make its move in this segment. The company's initial focus was on anesthetics, but it currently offers limited veterinary diagnostic products. In addition to its heartworm assay, Abbott distributes a tumor marker for canine urinary tract and bladder cancer developed by Polymedco (Cortlandt Manor, NY).

As the market approaches $1 billion, Vissers Lisa predicts that "we may see more of the big human players targeting this high-growth segment, where reimbursement is not an issue and new diagnostic tools take as little as 18 months to develop and launch commercially. In the interim, market participants are numerous and vary in large part by the technology platform."

At present, however, the veterinary diagnostics market remains very fragmented, which means that there's still room for new players—and plenty of opportunities for human IVD companies to capture a piece of the animal health pie.—Flora Nguyen

Photo By Roy Morsh/Stock Market

Copyright ©2001 IVD Technology