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As anyone who recently tried to test for Covid knows, the pandemic has radically reshaped the medical diagnostic market several times.
After a crazy battle for tests at the beginning of the coronavirus, the sector fell out of focus last year because the United States and other rich countries gave priority to vaccines. Now testing has shifted forward and centered again as the Omicron variant expands. Some prospective customers had to stand in line for hours for supervised tests, while others struggled to get hold of meager tests at home amid the crowds.
Despite all this, testing on Covid has increased revenue and profits at proven manufacturers and labs and attracted new players who smell the opportunity they believe will outlive the pandemic. Attitudes toward home health care and routine disease screening have changed dramatically, and these companies want to be the ones to benefit from both Covid and other diseases. But in the meantime, they must avoid alienating customers with shortages, high prices and unfulfilled promises.
The sharply rising stock prices of Abbott Laboratories and Roche reflect the large revenues they generated by testing on Covid. Other groups hope to emulate them. Abbott, who has built two new plants, is the largest U.S. supplier of rapid antigen tests, while Switzerland’s Roche is a world leader in laboratory PCR tests. Innova Medical, backed by private capital, has won £ 3.7 billion in contracts with the British state and now supplies 21 countries (although the newcomer also had to reminiscent of American tests after failing to provide acceptable reliability data.)
All manufacturers say their efforts to meet demand have been hampered by the way new variants have led to frequent changes in public health guidelines and inconsistent government procurement. They also complain that national requirements for specific packaging make it impossible to divert inventory when demand changes.
Last summer, after U.S. authorities reduced the use of rapid tests, Abbott fired the workers and disposed of the components only to have to restart this winter. Innova, which mainly sells tests of Asian production, is building a new manufacturing facility in Wales, but CEO Daniel Elliott says it lacks enough contracts to be profitable after the company failed to get additional orders from the British government.
Laboratories and medical clinics are also benefiting from the demand for supervised tests: Australian Sonic Healthcare’s profits have more than doubled. But opportunistic clothing risks undermining public confidence by promising prices and deadlines it does not deliver. In the UK, 13 major service providers have set up Organization of laboratories and industry testing set standards and self-policing.
Predicting demand is difficult. In the UK, the debate over whether tests at home should remain free is raging, just as the US government is starting to share them and require insurers to pay. The need for tests is likely to be seasonal and is likely to decrease even if Covid-19 never completely disappears. Retail prices are also very high: in the US, they are above $ 20 for two tests at home, while French law charges 5.20 euros per test. Meanwhile, the World Health Organization says less than 1 percent of the tests went to low-income countries.
The lasting benefit of testing lies in convincing patients, insurers, and governments that it pays to pay for routine checkups for all types of illnesses. The market was already growing, but Covid got a lot more people used to self-testing. Some companies are betting that patients will now be willing to try home tests to differentiate between the flu, Covid and the common cold. Others believe the market is expanding as tests are being developed to detect viruses that cause chronic diseases such as hepatitis C and cervical cancer.
Companies are also working on low-cost readers that automatically load home test chemical results instead of relying on patients to report if they see a line. There is potential money for pandemic preparedness if austerity over the past two years forces governments to be willing to pay to keep test production lines ready to launch so they can be modified for the next contagious disease.
These and other bets for Covid to transform medicine, including investments in telehealth and artificial intelligence-driven automation, help explain why risk capitalists $ 29 billion to U.S. digital health startups last year. That’s almost twice the 2020 record, according to Rock Health.
Companies should do more to make Covid testing easy to access, use and afford. For them, this is a long-term profit.
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