Three Mega-Trends Shaping the Future of Diagnostic Health
Andrew Henry | September 9, 2021
The field of digital diagnostics has exponentially grown as new technology gives way to novel tests, in-home alternatives, and increased accessibility. For the first time in history, consumers have access to data-driven devices that can monitor countless indicators of health, from blood pressure and heart rate, to sleep quality and even molecular integrity. It’s a watershed moment for consumer empowerment.
The onset of the COVID-19 pandemic understandably accelerated this growth, as many of us stayed home for prolonged periods of time, unable or unwilling to venture to the doctor’s office for routine testing. But COVID is the kind of all-consuming world event that affects nearly every industry in some way, and digital diagnostics are no different. To fully understand where the industry is headed, we dug deeper to uncover the mega-trends that are fueling industry growth in addition to the “pandemic effect.”
Three distinct trends emerged: consolidation, consumerism, and technology. Let’s take a closer look at the forces shaping the future of diagnostic health.
The diagnostics industry is poised for growth, riding a relentless wave of increased deal volume. With major acquisitions by top medical device companies—along with hundreds of investments in novel devices—the face of the industry is changing fast. This leads to increased valuations, shifting executive needs, and a general uptick in investment opportunities.
Take a look at the broader diagnostics field, and you’ll see a landscape dotted with these types of deals. Some of the major plays include Thermo Fisher Scientific’s acquisition of Mesa Biotech, Exact Sciences’ acquisition of Thrive Earlier Detection, and Philips’s acquisition of BioTelemetry (to name only a few). Generally speaking, this level of consolidation drives valuation, which turns diagnostics into a seller’s market for innovative, proven companies looking to cash in on their hard-earned progress.
As you might expect, many investments like the ones listed above have a firm bent towards providing better care to the consumer. We’re seeing a huge increase of in-home options for testing, playing squarely into the consumer’s hands. It’s a trend that is accelerating across all of healthcare. The pandemic certainly contributed to the uptick, but before that, improvements in previous technology set the stage. Tests that once could be done only with a physician—like rapid testing or genomic sequencing—gave way to in-home options.
It’s not a shift that came easily. Services like 23andMe and Ancestry.com prove that the direct-to-consumer model works, but conditions have to be nearly perfect in terms of regulatory changes and acceptance from the medical community. Look no further than Cologuard, an at-home colon cancer screening test that is gaining in prominence. Gastrointestinal doctors were uniformly opposed to the offering, but consumer demand and legislative changes created more suitable conditions for success.
Technology is of course a factor—more specifically, the use of technology has reshaped and will continue to transform healthcare delivery, disease treatment, and even the prediction of risk factors for chronic disease through data analysis. This is a quickly rising trend in healthcare,along with remote monitoring, and the same is true within the sub-sector of diagnostics.
It’s a paradigm shift that has significant implications for the industry. One in vitro diagnostics company based in Israel, Sight Diagnostics, developed a way to use computer vision and algorithms to identify malaria faster in a blood test than what is possible with a microscope. The end result is faster, cheaper, and more accurate than the traditional method offered by most labs. It’s only a matter of time before similar services become available to the regular consumer at home.
The Impact on the Talent Landscape
So what do these mega-trends mean for the executives tasked with leading diagnostics health companies? In our ongoing work with private equity and growth equity firms and their portfolio companies, we have witnessed firsthand a shift in the skills now required for leaders to successfully navigate this evolving business climate. The frequency of major deals, increased focus on consumerism, and influx of technology-enabled services all stand to change diagnostics companies from the top down, including the types of leaders needed to run them. Roles once reserved mainly for subject matter experts now require more financial aptitude to spur organic growth.
The trend of consolidation, for example, has necessitated financial leaders who possess a mastery of mergers and acquisitions. Navigating complex deals and working to increase funding at moment’s notice are now an everyday part of job descriptions. The influence of consumerism has placed more value on commercial leaders who can steer a company toward consumer-focused sales, a goal which may have no historical precedent at the organization until recently. And finally, with the advent of data analysis, CIOs at diagnostics companies must now account for integrating new technology at every turn, ensuring that the digital transformation goes as smoothly as possible.
Don’t Ignore the Triple-Threat
The pandemic is changing the nature of medical treatment in front of our eyes. But to equip your organization for success in this field, it’s imperative to look past COVID and familiarize yourself with these three mega-trends sculpting the entire diagnostics industry in the background. Assessing your team’s shared abilities to navigate the mega-trend trio of consolidation, consumerism, and technology—and equipping your c-suite accordingly—will prime your organization for growth. Those who don’t run the risk of missing the next wave of at-home diagnostic innovations to come.
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