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Bridging the Gap between MDx Testing and Point-of-care by EOS Intelligence
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Bridging the Gap between MDx Testing and Point-of-care

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The COVID-19 pandemic brought innovation and investment to the in vitro diagnostics (IVD) market, opening new pathways to simplify and expand testing. The previously complicated and time-consuming molecular testing gradually started moving towards rapid testing, changing how we manage healthcare. The growing popularity of rapid testing gave way to self-sampling and at-home sampling, which is set to bring molecular testing closer to patients. Another noticeable transformation the industry witnessed post-pandemic was the rise of molecular testing at point-of-care (POC), which is set to disrupt the way clinicians deliver accurate diagnoses in record time.

The latest generation of IVD devices is focused on providing quick diagnosis and being cost-effective. This has led to IVD companies focusing on developing simpler and less invasive sample collection methods, such as self-sampling tests.

IVD innovation is also transforming molecular testing to make healthcare more accessible. To a certain extent, dependence on laboratories is gradually decreasing with molecular testing available at POC. A key development in this area is the use of multiplex assay, which allows to test for multiple pathogens simultaneously, allowing for early diagnosis.

Molecular testing moving near-patient

After using antigen tests during COVID-19, demand for molecular testing for a variety of diseases at POC has risen drastically. In 2023, the industry faced an acute shortage of skilled laboratory staff, further increasing the need for molecular testing to move near-patient. This has resulted in physicians and patients preferring molecular tests at POC (MPOC). Some prominent industry players, such as Cepheid, Abbott, and BioFire, offer CLIA-waived PCR instruments and multiplex assay tests for the POC setting. A CLIA-waived certification allows tests to be performed at a doctor’s office by a non-technician instead of other more complex MDx tests requiring specialized technicians.

Moving these multiplex molecular tests near-patient is revamping the IVD landscape, positively impacting both the patients and payers. Early diagnosis with POC diagnostics empowers physicians with evidence-based decision-making at an early stage. Moreover, with multiplex assays increasingly being used for MPOC and delivering results within 10-25 minutes (in the case of respiratory assays), the wait time for patients to receive the correct diagnosis has reduced substantially. This results in clinicians being able to start with proper treatment on the patient’s first visit, thus reducing the total number of patient visits. Consequently, physicians are also able to accommodate a higher number of patients.

In fact, MPOC could become a critical element of the value-based care model in the USA. The value-based program incentivizes healthcare providers/physicians to provide quality healthcare. With MPOC offering quicker turnaround time and lower testing costs, physicians/payers will likely be better incentivized and motivated to deliver high-quality services.

Growing demand for self-sampling/at-home sampling

The pandemic raised public awareness regarding the use of self-sampling kits and increased demand for them. Further, the FDA granted Emergency Use Authorization to multiple assays during the pandemic to quickly onboard self-test kits and penetrate the US households with this novel testing method.

Driven by the convenience, cost-effectiveness, and accessibility offered by self-sampling kits, they are becoming increasingly popular, particularly amongst the aging population that needs tools and technologies to manage health at home. It is also proving to be a sustainable testing method, as it can be used for preventative screening as well as allows for discretion for patients who may not prefer to get tested in a laboratory or by a physician, particularly in case of sexually transmitted infections (STIs).

Additionally, unlike OTC tests, molecular diagnostic tests allow for better accuracy in results and are recognized by the FDA for clinical diagnosis use. This has given confidence to healthcare providers to advocate self-sampling, as they stand to benefit from bringing care to patients’ homes, eventually reducing healthcare expenses. In a value-based setting, at-home testing proves to particularly benefit physicians who are able to eliminate unnecessary patient visits.

For the prominent industry players, at-home testing represents a key opportunity area to grow in the niche direct-to-consumer testing segment. Companies are also using these tests as an opportunity to target the rural population who do not have easy access to laboratories. Besides infectious and respiratory diseases, companies are now trying to foray into other treatment areas, such as human papillomavirus (HPV). Self-sample collection for HPV has begun in Europe with BD’s Onclarity HPV assay.

EOS Perspective

Establishing a strong foothold in both self-sampling and MPOC segments is seen as a sizeable business opportunity for stakeholders of the IVD market. In the near term, it is likely for the IVD players to continue launching new assays and technologies to expand offerings.

For self-sampling, MDx players have been focusing on infectious diseases, and there still is a vast untapped market for self-sampling at home, specifically when testing for STIs. In November 2023, LetsGetChecked became the first company to secure FDA approval for chlamydia and gonorrhea at-home sample collection. This has opened doors for other players to enter this niche market, and they are likely to jump on the bandwagon by seeking FDA approvals for their STIs self-sampling kits. Major players, such as Hologic, are already gathering data to launch a self-collection device for STIs. Hologic’s Aptima Swab for STIs multi-testing is approved in the EU, and the company is now conducting trials to get approval in the USA.

In the near term, a noticeable trend in the MPOC segment is expected to be the focus of MDx players on developing multiplex assays that follow the ‘one-size-fits-all’ approach. There is a growing demand from physicians for multiplex assays that allow them to test for multiple viruses and deliver results in under four hours. Companies have already started to take matters into their own hands by focusing their R&D efforts on developing panels and preparing them for FDA approval and CLIA waiver. Becton Dickinson announced the launch of its first molecular diagnostics POC instrument, BD Elience, by 2025. The device is expected to allow panel testing for respiratory and sexually transmitted diseases.

Although the self-sampling and MPOC segments present many opportunities for the IVD stakeholders, some roadblocks may hinder their development and adoption. For instance, multiplex assay reimbursement schemes may hamper their widespread adoption in the POC setting. Per the latest guidelines, reimbursement schemes for multiplex assays are less favorable than those for singleplex assays. Furthermore, at present, there are no reimbursement schemes in place to reimburse for self-sampling at home, so patients are required to pay out-of-pocket.

Several players face a crucial challenge for at-home collection: proving to the FDA that the self-sample collected is not contaminated or poorly taken. FDA requirements for approval of these tests are very stringent and demand that companies prove the adequacy of the sample collected by patients to match that of laboratory collection.

Despite these challenges, self-sampling and MPOC present untapped opportunities for many IVD players seeking to expand their capabilities and offerings to position themselves better in the MDx market.

Genetic Testing Fraud – The Next Big Concern for the US Healthcare Industry by EOS Intelligence
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Genetic Testing Fraud – The Next Big Concern for the US Healthcare?

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Over the past few years, lab fraud has become a concern in the USA with the increase in financial gains obtainable through fraudulent billing practices, unnecessary testing, bundling of expensive tests (such as tests for rare respiratory pathogens or genetic tests) with COVID-19 tests, and increase in the number of genetic testing labs. A recent update in the compliance and regulatory requirements and increased focus on analyzing fraud testing schemes are expected to help curb lab fraud in the country.

Genetic testing, due to its increased use in the healthcare industry, is a particularly lucrative fraud target. Despite the presence of various compliance programs and regulations, several laboratories, together with patient brokers, telemedicine companies, and call centers, commit fraud and defraud Medicare. This strains the healthcare system as it increases healthcare costs and influences the patients’ trust in testing, labs, and other stakeholders.

Clinical labs face less scrutiny than full-service health centers. Thus, they are more frequently involved in lab fraud activities. Some of the most commonly noticed lab fraud cases in the USA include kickback schemes, fraudulent billing, and unnecessary testing, among others. Labs team up with parties such as patient brokers to get patients, doctors to refer patients or prescribe unnecessary tests, telemedicine companies to order tests, and call centers to target Medicare beneficiaries and then defraud Medicare by submitting claims.

Lab fraud in genetic testing has emerged in the USA over the past few years due to sprouting genetic testing labs across the country and the increasing use of such tests in health practices to assist disease diagnosis and predict disease risk. Genetic testing enables healthcare providers to offer personalized medicine based on the individual’s genetic makeup and helps identify how the patient will respond to treatments. Genetic testing fraud, mainly targeting cancer screening, pharmacogenetics, and cardiovascular diseases, is on the rise.

One of many such fraud cases was noted in August 2023, when LabSolutions LLC, based in Georgia, USA, submitted over US$463 million worth of unnecessary genetic and other laboratory tests to Medicare, the national health insurance program, of which Medicare paid over US$187 million. These tests were obtained through kickbacks and bribes. The scale of similar fraud is evident from the fact that in July 2022, the Department of Justice announced criminal charges against 36 defendants in 13 federal districts for more than US$1.2 billion in fraudulent telemedicine, cardiovascular and genetic testing, and durable medical equipment purchases.

The COVID-19 outbreak in 2020 further spiked fraud cases, as it gave an opportunity to bundle COVID-19 testing with other forms of expensive testing that patients did not need, including genetic testing for various diseases and tests for rare respiratory pathogens. Financial incentives offered by the federal government to encourage participation in COVID-19 control-related businesses also attracted fraudsters in the laboratory business. According to the US Department of Health and Human Services report, in May 2023, around 378 labs billed Medicare Part B for add-on COVID-19 tests at high volume and payment amounts. Of these, around 276 labs billed for more add-on tests, such as billing Medicaid for COVID-19 tests alongside respiratory pathogen panels (RPPs), individual respiratory tests (IRTs), allergy tests, and genetic testing. An additional 161 of these 378 labs also reported higher costs than usual for add-on testing.

Lab fraud behind money loss, erosion of trust, and increased insurance premiums

Lab fraud causes a significant adverse effect on the integrity and quality of the healthcare system as unnecessary testing and fraudulent billing practices increase healthcare costs, compromise the accuracy and reliability of diagnostic tests, and erode trust in healthcare providers, including doctors and hospitals, among others. Healthcare providers who unknowingly refer patients to fraudulent labs are also likely to face a reputation hit.

Above all, healthcare fraud can cause tens of billions of dollars in yearly losses. According to the National Health Care Anti-Fraud Association, taxpayers are losing over US$100 billion annually to Medicare and Medicaid fraud, including billing for unapproved COVID-19 tests, genetic testing fraud, home healthcare billing, and fraud billing for medical equipment.

Companies manufacturing genetic testing kits may face reputational damage if their products are used in the genetic testing fraud scheme. This is expected to negatively impact their market presence as customers/patients will lose confidence and will likely move to reputed competitors. Also, healthcare providers may stop referring the company products to their patients.

Increasing fraud will likely drive the need for more stringent regulations for genetic companies manufacturing genetic testing kits (requiring compliance in conducting in-depth clinical studies, providing extensive data, maintaining necessary documentation, labeling and packaging requirements, etc.). This is expected to increase the operational costs for genetic testing companies and, thus, the price of genetic testing services. Ever-increasing genetic testing fraud is expected to potentially disrupt the market’s growth trajectory as patients become more cautious. Individuals are likely to receive tests that are not appropriate or required and may become skeptical about the necessity and accuracy of the test result.

Read our related Perspective:
Commentary: The Promise of Comprehensive Genomic Profiling in the USA

Lab fraud also increases insurance premiums as fraudulent activities increase the cost of claims, which in turn increases insurance companies’ expenses. The insurance companies are bound to raise premiums to cover additional costs. Additionally, individuals receiving genetic testing through fraud schemes will likely be denied future coverage. This is because many genetic tests for inherited diseases are offered as a one-time payment for a lifetime of coverage, and fraud schemes can compromise the individual’s access to this benefit.

Regulatory updates and strategies aimed at combating lab fraud

Preventing lab fraud is crucial to maintaining the integrity of scientific research and the functioning of healthcare systems. Lab fraud can be prevented, or at least significantly diminished, by establishing comprehensive compliance programs, stringent licensing and certification requirements for labs and healthcare providers, encouraging employees and stakeholders in labs and healthcare organizations to report any suspected fraud incidences, education, secured data handling, continuous monitoring, improved medical billing processes, and enforcing penalties and legal consequences.

In January 2023, the US government updated compliance and regulatory requirements for laboratories to prevent lab fraud. As per the updates, the laboratories must submit a medical necessity document supporting the ordered test, progress note, and the treating doctor’s signature to support a claim.

Also, providing incentives to physicians to encourage them to refer patients for lab services will be considered a violation of the federal Anti-Kickback Statute, and both laboratory and healthcare professionals will face legal consequences.

Laboratories that fail to adhere to lab billing guidelines published through National Coverage Determinations (NCDs) or Local Coverage Determinations (LCDs) will face civil liability and triple damages under the False Claims Act.

The government also continued its scrutiny of medically unnecessary genetic testing schemes, audited genetic labs, and tried to recoup funds where the medical necessity requirement was unmet. Also, the Office of Inspector General (OIG) issued a fraud alert warning the public about the proliferation of COVID-19 testing and genetic testing scams.

Moreover, in June 2023, the US Food and Drug Administration (FDA) took a crucial measure to regulate an extensive array of laboratory tests, including prenatal genetic screenings, to ensure test result accuracy and prevent unreliable outcomes. The US FDA ensures that the lab test delivers results as claimed by the lab test developer by analyzing the device’s accuracy, specificity, clinical characteristics, and analytical sensitivity. Regulating these laboratory tests will likely reduce the chances of fraud, as laboratories will not be allowed to run specific tests if they are not cleared or approved by the FDA.

EOS Perspective

Increased awareness about genetic testing and its easy accessibility have made it more vulnerable to lab fraud in the country. Genetic testing scams are evolving significantly wherein the scammers (a lab owner or a genetic testing company’s representative) are offering free screening, cheek swabs, or testing kits for genetic testing to get the individual’s Medicare information and submit claims. An increase in the number of genetic testing companies manufacturing direct-to-consumer genetic testing kits is expected to further contribute to genetic testing fraud as it will become easier for lab owners to get access to genetic testing kits and scam Medicare beneficiaries.

Also, the introduction of new tests creates potential opportunities for lab fraud as the lack of proper oversight and safeguards makes it easier for lab fraudsters to exploit gaps while appropriate regulatory norms for those tests are being developed. Thus, there is an increased need to set the regulatory norms for any new tests being developed before they are put to use.

While various compliance and regulatory measures are in place to prevent lab fraud, ethical practices, education, and training for lab employees will likely play a significant role in preventing lab fraud in the country. Many healthcare professionals are often involved between doctors prescribing the test and the persons administering the test. Thus, it becomes challenging to determine whether the referrals are conducted efficiently.

In addition, strong collaboration among healthcare insurers, healthcare providers, and the government can also help prevent this kind of fraud. The government plays a vital role here, as it has the tools to lay more emphasis on continuous monitoring and auditing of genetic testing labs to keep track of lab activities and prevent fraud cases.

New Directions in Alzheimer’s Diagnostics Will Blood Tests Replace CSF and PET by EOS Intelligence
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New Directions in Alzheimer’s Diagnostics: Will Blood Tests Replace CSF and PET?

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Around three-fourths of dementia cases continue to remain undiagnosed even though the incidence of Alzheimer’s disease (AD) is rapidly growing across the globe. AD affects about 60-80% of dementia patients worldwide. Early diagnosis of AD is critical in forging beneficial medical care strategies and enhancing patient outcomes. Current AD diagnostic tests, such as cerebrospinal fluid (CSF) and PET scans, are either invasive or associated with side effects and are generally expensive. This calls for developing less invasive, safer, faster, and more accurate AD diagnostics, such as blood tests.

Blood-based tests promise accurate and non-invasive AD diagnosis

Researchers are developing less invasive and less costly blood tests that are likely to be more accurate than contemporary tests. There are currently two types of AD diagnostics blood-based tests: the phosphorylated tau217 (ptau217) test and the amyloid beta (Aβ) 42/40 plasma ratio test.

The ptau217 biomarker has the potential to differentiate AD from other neurodegenerative diseases, as ptau217 levels can be high in AD patients before the onset of clinical symptoms. Studies have proved that ptau217 tests can detect AD early on and monitor disease progression.

The Aβ 42/40 plasma ratio tests detect amyloid beta protein plaques in the brain that cause cognitive impairment. Due to the lack of a certified reference standard for measuring plasma Aβ42 and Aβ40’s absolute values, ptau217 may be better than an amyloid beta ratio test. However, both tests are accurate enough to diagnose AD.

Notably, ptau217 blood tests are believed to give up to 95% accurate results when coupled with CSF tests as against 90% accuracy of CSF when used as a standalone method. At the same time, amyloid beta (Aβ) 42/40 ratio tests are known to give around 80% accuracy in detecting amyloid positivity.

Many laboratories and diagnostic companies have designed or are designing ptau217 assays. C2N Diagnostics, Quanterix, Quest Diagnostics, and Laboratory Corporation of America (LabCorp) offer ptau217 laboratory-developed tests (LDTs).

Low cost of blood-based AD tests can also be a growth-driving factor

A major push towards blood-based AD diagnostics comes from the tests’ lower cost in comparison to PET and CSF. The cost of blood tests typically ranges from US$200 to US$1,500, depending on the test provider.

The cost of PET ranges from US$1,200 to US$18,000, while the average price of CSF tests is around US$4,000 (in both cases, the actual cost depends on the type of facility, location, and the extent of insurance coverage).

As of 2023, Medicare and Medicaid covered PET scans for AD in the USA outside clinical trials. Therefore, AD patients need to pay around 20% of the PET cost, which translates to US$240-US$3,600, even after insurance coverage.

Considering the high share of dementia and AD cases remaining undiagnosed, there is a chance that the lower cost of blood-based tests can help contribute to higher accessibility to testing and ultimately improve the early detection rate.

Large AD diagnostic players partner with smaller ones to develop new tests

In an attempt to develop ptau217 assays, major diagnostics companies tend to recognize the development progress made by smaller players. ALZpath, a novel AD diagnostic solutions provider, is the pioneer of the ptau217 antibody, which helps in the early detection of the disease. Large players such as Roche and Beckman Coulter are enticed by the synergistic opportunities ALZpath offers.

In June 2024, Roche partnered with ALZpath, an early-stage biopharmaceutical company specializing in AD diagnostics, to launch the plasma ptau217 In-Vitro Diagnostic (IVD) test. As per the partnership, Roche will use ALZpath’s ptau217 antibody to design and commercialize an IVD test to detect AD with the help of Roche’s Elecsys platform.

In July 2024, Beckman Coulter also partnered with ALZpath to utilize ALZpath’s proprietary ptau217 antibody to detect AD on Beckman Coulter’s DxI 9000 Immunoassay Analyzer.

AD diagnostics firms receive funding from various sources, including drugmakers

Constantiam Biosciences, a bioinformatic analysis firm, received a US$485,000 Phase 1 SBIR grant (Small Business Innovation Research) from the National Institute on Aging to develop a tool for deciphering risk variants pertaining to AD and related dementias (AD/ADRD) in September 2024.

Biogen and Eli Lilly invested in the Diagnostics Accelerator, a funding initiative started in 2018, at the Alzheimer’s Drug Discovery Foundation (ADDF) in 2020. The Diagnostics Accelerator has invested over US$60 million across 58 projects, most of which are blood tests. In its Q4 2023 earnings call, Biogen emphasized its support for developing tau biomarker diagnostics and pathways. Its partner, Eisai, has invested around US$15 million in C2N Diagnostics and collaborated with IVD companies such as Sysmex, among others. In September 2024, ADDF invested US$7 million in C2N Diagnostics to further develop blood-based AD detection tests.

Other investors have also identified the opportunities AD diagnostic offers. A 2024 market research report by Market Research Future estimated that the AD diagnostic industry would nearly double, from US$4.5 billion in 2023 to US$8.8 billion in 2032.

FDA stands as an accelerating force for blood-based tests via breakthrough device designation

For a while now, the FDA has been granting breakthrough device designation (BDD) to devices that could address life-threatening diseases with unmet medical needs. BDD facilitates the expedited development, review, and assessment of medical devices, ensuring quicker access for patients and medical professionals. It would not be too ambitious to conclude that strong positive evidence from several uses and studies of ptau217 tests is likely to compel the FDA to approve them for use in the near future. The first sign of this is that the FDA is granting BDD status to multiple ptau217 blood tests.

In March 2024, the FDA granted BDD to Simoa ptau217 by Quanterix. This blood test can detect AD in patients with cognitive ailments even before signs and symptoms start to appear.

In April 2024, the FDA gave BDD to Roche’s Elecsys ptau217 plasma biomarker test to augment early diagnosis of AD. Roche partnered with Eli Lilly to develop this blood test that will widen and accelerate AD patients’ access to diagnosis and suitable medical attention and care.

In early 2019, the FDA gave BDD to C2N Diagnostics’ blood test to detect AD. The BDD status of AD blood tests will likely accelerate the development, review, and assessment processes of these tests, improving patient outcomes.

Some FDA-approved AD drugs have used blood tests in clinical trials. Eli Lilly’s Kisunla and Esai/Biogen’s Leqembi have successfully utilized C₂N Diagnostics’ Precivity-ptau217 blood biomarker in their clinical trials. The FDA approved both drugs to manage AD. This improves the chances of this blood test getting approved by the FDA.

Lumipulse G β-Amyloid 1-42 Plasma Ratio test by Fujirebio Diagnostics received BDD from the FDA in 2019. The company submitted an FDA filing for the Lumipulse G ptau217/β-Amyloid 1-42 Plasma Ratio IVD test in September 2024. If approved, this test will become the first commercially available blood-based IVD test in the USA to detect AD.

EOS Perspective

There has been considerable progress in developing blood-based assays for AD diagnosis by pharma and diagnostics companies. However, a good portion of the liability for their products not reaching market readiness faster lies (and will probably remain to lie) on the approving authorities that are unable to accelerate the administrative steps.

Some blood tests, such as PrecivityAD, are approved for safe use in the EU but are still not in the USA. While such approval is typically a time-consuming process and requires a thorough investigation, the blood tests will enter the market at a larger scale across several geographies only if the authorities fast-track their approvals. This is particularly applicable to blood tests previously successfully used in clinical trials for approved AD drugs and for tests that have already attained BDD status from the FDA.

As an example, PrecivityAD by C2N Diagnostics received BDD status in 2019 from the FDA. However, the FDA has still not approved the blood test for safe use in the USA. This is still despite the fact that PrecivityAD and other C2N Diagnostics’ assays have been utilized in over 150 AD and other research studies across the USA and abroad. FDA’s time-consuming and lengthy review procedures and bureaucratic reasons are some of the factors responsible for the delay in approval. In addition to this, C2N Diagnostics needs to submit some more evidential data pertaining to the accuracy of PrecivityAD, which is likely to take time to produce.

These procedural and administrative impediments, along with the time taken by the device makers to present the data to the FDA, will likely continue to put a brake on the blood-based tests becoming available to patients in the near future.

The situation will remain so, given the FDA’s recent decision to regulate new LDTs involving diagnostic tests that use body fluids such as blood, saliva, CSF, or tissue on similar lines as medical devices (meaning LDTs must comply with the same standards as medical devices). As per this regulation, LDTs need to prove the accuracy of their tests. This decision will have both winners and losers in the AD stakeholder ecosystem.

Researchers and physicians are looking at this regulation with a positive stride as this step will reduce the number of tests with unconfirmed accuracy from the market in the USA. This is undoubtedly a positive change for patients’ safety, reducing the number of misdiagnoses and accelerating correct diagnoses.

On the other hand, smaller start-ups and diagnostic companies are not likely to benefit from this decision as it will restrict the development of new innovative tests vis-à-vis large diagnostic companies. Overall, the decision will likely decelerate the approval of blood-based AD tests or at least will require much more paperwork and proof of accuracy from the device makers. This decision will take effect in multiple phases over four years, starting from July 2024.

On the research and development side of the Alzheimer’s disease diagnostics space, a certain level of symbiosis between drug producers and diagnostic solution providers will continue to impact the market positively. Drugmakers are partnering with or investing in diagnostic companies to leverage the latter’s innovative blood-based biomarkers (BBBM) technologies in the clinical trials of their own drug candidates. This trend is likely to continue.

Not only drugmakers but also more prominent healthcare diagnostics companies, such as Roche and Beckman Coulter, are partnering with early-stage biopharmaceutical companies, such as ALZpath, to develop and commercialize AD ptau217 tests. Collaborations such as these are a testimony to the fact that it is mutually beneficial for AD industry stakeholders to work in tandem to advance AD diagnostics research, a significant growth-driving factor for the market.

Personalized Image-Guided Therapy Medicine's New Crystal Ball by EOS Intelligence
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Personalized Image-Guided Therapy: Medicine’s New Crystal Ball?

Precision and personalized care are becoming the keys to unlocking better patient care in modern medicine. With personalized medicine image-guided therapy (IGT) systems offering physicians better control over therapy decisions, the healthcare industry hopes discomfort and uncertainty will give way to reliability and healing.

IGT enhances surgical precision and treatment management

IGT is an approach that uses various imaging technologies to plan, perform, and evaluate surgical procedures and treatments. There are two main groups: traditional surgeries enhanced by imaging technology and newer procedures that use imaging and specialized instruments to treat internal organs and tissues without surgery.

The IGT systems, such as Dutch Philips’ Azurion and American Varian’s Halcyon, help improve minimally invasive procedures by offering real-time imaging support during interventional techniques, especially in cardiology and oncology. They also aid in precise navigation and treatment delivery.

Azurion’s IGT system offers various clinical suites, including Coronary, Onco, and Neuro suites, tailored to a particular surgery. This customization can make a surgeon’s work easier. Many IGT systems also integrate with hemodynamic systems and similar interventional tools that give surgeons more information.

On the other hand, advanced imaging platforms such as the 1788 visualization platform by US-based Stryker, TIVATO 700 by Germany-based Zeiss, and VISERA ELITE II by US-based Olympus specifically work in open surgical settings, providing high-definition imaging that enhances visibility during more invasive procedures.

IGT employs imaging modalities and technological innovations for disease management

The most commonly used imaging modalities in IGT are X-rays, ultrasound, MRI, and CT scans, which provide detailed cross-sectional images of the body. Other supporting technologies include angiography, ultrasound, tracking tools, surgical navigation systems, and integration software.

IGT also offers invaluable insights into disease diagnosis and management of minimally invasive procedures. Significant advancements have been made in this field in recent years owing to developments and integration of innovations such as artificial intelligence (AI), big data, deep learning, sensor fusion, and advanced signal processing.

Personalized Image-Guided Therapy Medicine's New Crystal Ball by EOS Intelligence

Personalized Image-Guided Therapy Medicine’s New Crystal Ball by EOS Intelligence

IGT and advanced visualization systems complement each other in cancer surgeries

Applying advanced visualization systems for open cancer surgeries adds a competitive aspect to the image-guided therapy landscape. Systems such as Stryker’s 1788 have the potential to be a viable option in low-resource environments or hybrid surgical settings. Such facilities may view it as a cost-effective and simpler substitute for comprehensive IGT systems for certain cancer surgeries.

The competition could also intensify in niche applications where minimally invasive tumor resection overlaps with interventional oncology. This is especially true for hospitals that aim for a one-stop surgical solution without high investment in IGT infrastructure.

However, the IGT systems have a different clinical role, being particularly effective in procedures such as catheter-based interventions or radiotherapy, where accurate imaging is extremely critical. Therefore, the competition may be nuanced, depending on the specific surgical approach, as the two technologies could also complement each other by providing tailored solutions for distinct surgical techniques and scenarios.

IGT sector is rapidly growing in minimally invasive and specialized procedures

The IGT market has seen rapid development, especially in the post-pandemic era. The global IGT systems market was US$5.5 billion in 2023 and is estimated to reach US$8.9 billion by 2032, according to an India-based market research firm, IMARC. The company also forecasts the market to grow at a CAGR of 5.4% from 2024 to 2032.

Several factors drive this growth, including IGT’s ability to offer better health outcomes in treating severe conditions such as cancer, its application in treating old age-related conditions, such as stroke and vessel blockage, and the surge in demand for minimally invasive procedures.

Rising cancer cases are boosting sector growth

The American Cancer Society estimates that approximately 20 million new cancer cases were diagnosed, and 9.7 million people died from cancer worldwide. The number of cancer cases is expected to reach 35 million by 2050. The high prevalence of cancer has increased the need for innovative treatment options with limited damage to healthy cells. Oncologists and patients are now opting for IGT, such as image-guided surgeries and radiotherapy, to treat cancers, including severe and complex ones.

For example, hepatocellular carcinoma, the most common liver cancer, is a challenging disease to treat. A 2010 study published in Insights into Imaging, a peer-reviewed open-access journal, indicated that due to the advanced stage of the disease at diagnosis and limited donor availability, only 10–15% of HCC patients are eligible for surgical resection or liver transplantation. Surgical options are primarily reserved for patients with solitary, asymptomatic HCC and well-preserved liver function without significant portal hypertension or elevated bilirubin levels. Also, systemic chemotherapy has largely been ineffective for HCC.

Image-guided procedures can offer doctors detailed imaging data to aid diagnosis, patient risk assessment, and treatment planning during the early detection stages. Image-guided catheter-based techniques are used for treating larger lesions or more extensive liver involvement seen in intermediate-stage HCC, and ablative procedures are employed for early-stage HCC.

Minimally invasive image-guided therapies can also extend survival, preserve more healthy liver tissue (crucial for cirrhotic patients), allow for potential retreatment, and serve as a bridge to transplantation.

Growing geriatric population is also contributing to sector expansion

The rising geriatric population is also driving the need for image-guided therapies. UN estimates there were 761 million people aged 65 or older globally in 2021. This number is expected to rise to 1.6 billion in 2050. Age is a significant factor in determining the likelihood of developing serious conditions such as cancer. According to the National Cancer Institute (NCI), the average age of individuals diagnosed with cancer is 66, indicating approximately half of all cancer cases are diagnosed in people aged 66 and older.

Older people are also at a higher risk of suffering from severe post-procedural complications, especially in the case of invasive surgeries. IGT-supported therapies, especially minimally invasive surgeries, can help doctors treat geriatric patients with limited adverse effects.

Advancements in minimally invasive procedures and cancer radiotherapy are on the rise

The rising demand for minimally invasive procedures is another factor driving the increasing adoption of IGT systems. A 2015 study published in JAMA Network, an open-access medical journal, indicated that minimally invasive surgeries have fewer postoperative complications, provide better outcomes, and reduce healthcare costs. This has prompted many physicians and patients to choose IGT system-based minimally invasive therapies in treating complicated conditions that may otherwise require longer hospital stays and repeat visits.

The growing number of developments in cancer radiotherapy is also an important factor propelling the IGT market forward. AI in radiation therapy enhances the accuracy and precision of treatment. In image-guided radiotherapy (IGRT), AI-based algorithms are used to analyze images taken during treatment and make adjustments to the treatment plan in real time. This enables clinicians to target tumors with greater precision, reduce the amount of irradiated healthy tissue, and improve treatment outcomes.

Several premier institutions, such as Cancer Research UK, London-based Medical Research Council (MRC), and US-based Stanford Medicine, are involved in cancer radiotherapy research to develop cancer imaging, diagnostics, and minimally invasive treatment platforms. With the radiotherapy market will likely reach US$12.51 billion by 2029, according to a 2024 report by India-based market research firm Mordor Intelligence, these efforts can contribute to the growth of the IGT sector.

IGT therapies allow for prompt and low-risk interventions

The introduction of IGT into personalized medicine has had a crucial impact on patient outcomes. IGT enables healthcare professionals to diagnose and treat serious conditions more rapidly. This prompt initiation of treatment reduces the risks associated with delayed interventions.

An example of an IGT system offering better treatment management is Philip’s Azurion Lung Edition, a 3D imaging and navigation platform that streamlines the diagnosis and treatment of lung cancer. The system combines tableside CT-like images with real-time X-ray guidance and advanced tools to support guided procedures. It is specifically designed for bronchoscopy procedures and enables clinicians to perform minimally invasive biopsy and lesion ablation in a single procedure. This reduces the need for additional procedures and speeds up diagnosis.

IGT systems also offer a precise, real-time visualization of the therapy site, enabling highly targeted interventions. This level of accuracy can minimize complications and failures during procedures. For example, IGRT used in cancer treatment enables oncologists to target tumors while sparing healthy tissues precisely, reducing side effects and boosting treatment success rates. Surgeons also better comprehend spatial relationships between the tumor and vital organs or blood vessels when they can access high-resolution images highlighting the essential structures during the procedure.

Minimally invasive nature of IGT therapies minimizes complication and disability risks

IGT procedures are minimally invasive in nature. This reduces the trauma caused by the procedure, reducing the risk of complications. Patients can recover faster from IGT procedures, reducing hospital stays and lowering the likelihood of hospital-acquired infections and other potential complications. A 2022 study published in the National Library of Medicine’s (NLM) online portal indicated that image‐guided procedural techniques reduce risks, prompt faster recovery, and shorten hospital stays.

IGT’s minimally invasive nature also reduces the risk of disability post-treatment. In the case of complicated surgeries such as brain tumor removal, surgeons use techniques such as intraoperative MRI (iMRI) to get a detailed map of the tumor and surrounding brain structures before and during surgery. This allows for more precise resection of the tumor and reduces the risk of injury to critical brain areas, thereby lowering the possibility of neurological damage and associated disabilities. A 2014 article published in NLM’s online portal indicated that using iMRI improved surgical outcomes, including increased tumor resection and survival rates and decreased risk of neurological deficits.

IGT systems offer interventional tools supporting surgeons in complex procedures

Advanced IGT systems now come with integrated interventional tools, which can be especially beneficial during complex or delicate procedures. For example, Azurion, an IGT platform developed by Philips, has interventional tools integrated into the imaging system. It offers procedure cards that allow clinicians to pre-program routine tasks and preferences, as well as an interface for performing various procedures in interventional labs.

Integrations such as these can help surgeons make informed and data-driven decisions during procedures, allowing them to make mid-procedure adjustments. Such flexibility is crucial, particularly in complex surgeries or when treating conditions such as cardiovascular diseases.

Development high costs and cybersecurity issues hinder adoption

Despite offering numerous benefits to patients, the developers of IGT systems face several challenges.

Huge R&D costs and market competition are impacting new players

The significant financial burden of research and development in this field is one major obstacle for companies, especially newer ones entering the market with limited budgets. Developing advanced imaging technology that seamlessly integrates with therapeutic tools requires substantial investments in software and hardware.

Also, these systems require continuous refinement to ensure optimal accuracy and adaptability, as they must be able to accommodate diverse patient anatomies and conditions. This is a time-consuming and costly process. Consequently, only established companies with significant R&D budgets may be able to compete in the market.

Not just the R&D budget but also leading players’ brand equity is a significant challenge for new players trying to enter the IGT systems market. The newer entrants face intense competition from established players such as Philips, GE Healthcare, and Siemens. These companies have been in the market for years and have a strong foothold in terms of market share and brand recognition. This can make it challenging for new players to establish themselves in the sector, limiting innovation and market growth.

New companies can attempt to tackle this and make inroads into the market by forming partnerships with hospitals and public health initiatives to drive the adoption of their IGT systems.

High upfront costs are affecting the widespread adoption of IGT devices

The IGT devices’ market prices reflect the high R&D costs. Almost all IGT systems have high upfront costs. For example, an interventional radiology suite can cost anywhere between US$1 million to over US$3 million, depending on its sophistication. This can make acquiring and implementing IGT systems prohibitively expensive for many healthcare providers, particularly smaller or publicly funded organizations.

While healthcare providers can pass on the cost to patients, it can also cause many other challenges. Even with insurance coverage, some patients may not be able to afford certain procedures or treatments when the out-of-pocket expenses are significant. Consequently, this can reduce the overall demand for IGT devices, negatively impacting sales for manufacturers.

Companies can try tackling this issue by offering price flexibility and discounts for large orders or entering into long-term contracts with healthcare providers to help maintain demand. They may also offer leasing or subscription-based payment models instead of selling devices outright. This could encourage purchases by healthcare providers, allowing them to spread out the costs over time and lighten the upfront financial burden on patients.

Cybersecurity challenges are threatening patient care and security

Another significant challenge in adoption is cybersecurity and data management issues. A 2024 fact sheet by the US Office of the Director of National Intelligence indicated that there has been a 128% increase in healthcare ransomware attacks in 2023 over 2022 in the USA. As a result of these attacks, American hospitals have faced disruptions to medical procedures, patient care, and operations, including delayed procedures, diverted patients, rescheduled appointments, and strained acute care provisioning.

IGT systems generate and store vast amounts of imaging and procedural data on the cloud. Any security breach can lead to privacy leaks and misuse of patient data. Attackers can also maliciously embed images or reports and manipulate medical images, thereby delaying procedures and patient care and causing loss of life. This complexity often leads to hesitation in adoption, particularly for institutions that lack the necessary IT infrastructure.

Many companies are addressing this issue by creating devices with secure design and in-depth defense approaches. An example is Philip’s Azurion, which offers a six-layer protection to combat cyberattacks.

EOS Perspective

IGT systems promise to improve patient outcomes and revolutionize healthcare in the long run, particularly in treating serious medical conditions such as cancer. While there are some challenges to address in order to strengthen widespread adoption, with rapid developments underway in technologies such as AI and augmented reality, IGT can play a greater role in disease treatment in the coming years.

Currently, studies are underway using AI and machine learning to predict the response to minimally invasive image-guided therapies. Similarly, AI-based algorithms are also being developed to monitor tumor motion, reduce treatment uncertainty, and improve treatment precision.

One promising direction new entrants can push for is more portable and cost-effective IGT solutions. Research to miniaturize imaging devices and develop affordable hardware could make IGT systems more accessible to a broader range of healthcare providers, even those in remote areas, thereby expanding the market. Also, as costs come down and standardization improves, hospitals and clinics of varying sizes will be more likely to invest in IGT technologies.

In the short term, larger, well-funded players are likely to continue to lead the way in adopting and refining IGT systems. These companies have the resources to invest in technology and training, enabling them to push the boundaries of personalized medicine. However, as the technology matures and becomes more affordable, smaller players will increasingly be able to capture a market share.

Powering Healthcare Diagnostics with AI by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

Powering Healthcare Diagnostics with AI: a Pipe Dream or Reality

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The growing paucity of radiologists across the globe is alarming. The availability of radiologists is extremely disproportionate globally. To illustrate this, Massachusetts General Hospital in Boston, USA, had 126 radiologists, while the entire country of Liberia had two radiologists, and 14 countries in the African continent did not have a single radiologist, as of 2015. This leads to a crucial question – how to address this global unmet demand for radiologists and diagnostic professionals?

Increasing capital investment signals rising interest in AI in healthcare diagnostics

The global market for Artificial Intelligence (AI) in healthcare diagnostics is forecast to grow at a CAGR of 8.3%, from US$513.3 million in 2019 to US$825.9 million in 2025, according to Frost & Sullivan’s report from 2021. This growth in the healthcare diagnostics AI market is attributed to the increased demand for diagnostic tests due to the rising prevalence of novel diseases and fast-track approvals from regulatory authorities to use AI-powered technologies for preliminary diagnosis.

Imaging Diagnostics, also known as Medical Imaging is one of the key areas of healthcare diagnostics that is most interesting in exploring AI implementation. From 2013 to 2018, over 70 firms in the imaging diagnostics AI sector secured equity funding spanning 119 investment deals and have progressed towards commercial beginnings, thanks to quick approvals from respective regulatory bodies.

Between 2015 and 2021, US$3.5 billion was secured by AI-enabled imaging diagnostics firms (specialized in developing AI-powered solutions) globally for 290 investment deals, as per Signify Research. More than 200 firms (specialized in developing AI-powered solutions) globally were building AI-based solutions for imaging diagnostics, between 2015 and 2021.

The value of global investments in imaging diagnostics AI in 2020 was approximately 8.8% of the global investments in healthcare AI. The corresponding figure in 2019 was 10.2%. The sector is seeing considerable investment at a global level, with Asia-based firms (specialized in developing AI-powered solutions) having secured around US$1.5 billion, Americas-based companies raising US$1.2 billion, and EMEA-based firms securing over US$600 million between 2015 and 2021.

As per a survey conducted by the American College of Radiology in 2020 involving 1,427 US-based radiologists, 30% of respondents said that they used AI in some form in their clinical practice. This might seem like a meager adoption rate of AI amongst US radiologists. However, considering that five years earlier, there were hardly any radiologists in the USA using AI in their clinical practice, the figure illustrates a considerable surge in AI adoption here.

However, the adoption of AI in healthcare diagnostics is faced with several challenges such as high implementation costs, lack of high-quality diagnostic data, data privacy issues, patient safety, cybersecurity concerns, fear of job replacement, and trust issues. The question that remains is whether these challenges are considerable enough to hinder the widespread implementation of AI in healthcare diagnostics.

Powering Healthcare Diagnostics with AIPowering Healthcare Diagnostics with AI

AI advantages help answer the needs in healthcare diagnostics

Several advantages such as improved correctness in disease detection and diagnosis, reduced scope of medical and diagnosis errors, improved access to diagnosis in areas where radiologists are unavailable, and increased workflow and efficacy drive the surge in the demand for AI-powered solutions in healthcare diagnostics.

One of the biggest benefits of AI in healthcare diagnostics is improved correctness in disease detection and diagnosis. According to a 2017 study conducted by two radiologists from the Thomas Jefferson University Hospital, AI could detect lesions caused by tuberculosis in chest X-rays with an accuracy rate of 96%. Beth Israel Deaconess Medical Center in Boston, Massachusetts uses AI to scan images and detect blood diseases with a 95% accuracy rate. There are numerous similar pieces of evidence supporting the AI’s ability to offer improved levels of correctness in disease detection and diagnosis.

A major benefit offered by AI in healthcare diagnostics is the reduced scope of medical and diagnosis errors. Medical and diagnosis errors are among the top 10 causes of death globally, according to WHO. Taking this into consideration, minimizing medical errors with the help of AI is one of the most promising benefits of diagnostics AI. AI is capable of cutting medical and diagnosis errors by 30% to 40% (trimming down the treatment costs by 50%), according to Frost & Sullivan’s report from 2016. With the implementation of AI, diagnostic errors can be reduced by 50% in the next five years starting from 2021, according to Suchi Saria, Founder and CEO, Bayesian Health and Director, Machine Learning and Healthcare Lab, Johns Hopkins University.

Another benefit that has been noticed is improved access to diagnosis in areas where there is a shortage of radiologists and other diagnostic professionals. The paucity of radiologists is a global trend. To cite a few examples, there is one radiologist for: 31,707 people in Mexico (2017), 14,634 people in Japan (2012), 130,000 people in India (2014), 6,827 people in the USA (2021), 15,665 people in the UK (2020).

AI has the ability to modify the way radiologists operate. It could change their active approach toward diagnosis to a proactive approach. To elucidate this, instead of just examining the particular condition for which the patient requested medical intervention, AI is likely to enable radiologists to find other conditions that remain undiagnosed or even conditions the patient is unaware of. In a post-COVID-19 era, AI is likely to reduce the backlogs in low-emergency situations. Thus, the technology can help bridge the gap created due to radiologist shortage and improve the access to diagnosis of patients to a drastic extent.

Further, AI helps in improving the workflow and efficacy of healthcare diagnostic processes. On average at any point in time, more than 300,000 medical images are waiting to be read by a radiologist in the UK for more than 30 days. The use of AI will enable radiologists to focus on identifying dangerous conditions rather than spend more time verifying non-disease conditions. Thus, the use of AI will help minimize such delays in anomaly detection in medical images and improve workflow and efficacy levels. To illustrate this, an AI algorithm named CheXNeXt, developed in a Stanford University study in 2018 could read chest X-rays for 14 distinct pathologies. Not only could the algorithm achieve the same level of precision as the radiologists, but it could also read the images in less than two minutes while the radiologists could read them in an average of four hours.

Black-box AI: A source of challenges to AI implementation in healthcare diagnostics

The black-box nature of AI means that with most AI-powered tools, only the input and output are visible but the innards between them are not visible or knowable. The root cause of many challenges for AI implementation in healthcare diagnostics is AI’s innate character of the black box.

One of the primary impediments is tracking and evaluating the decision-making process of the AI system in case of a negative result or outcome of AI algorithms. That is to say, it is not possible to detect the fundamental cause of the negative outcome within the AI system because of the black-box nature of AI. Therefore, it becomes difficult to avoid such occurrences of negative outcomes in the future.

The second encumbrance caused by the black-box nature of AI is the trust issues of clinicians that are hesitant to use AI applications because they do not completely comprehend the technology. Patients are also expected to not have faith in the AI tools because they are less forgiving of machine errors as opposed to human errors.

Further, several financial, technological, and psychological challenges while implementing AI in healthcare diagnostics are also associated with the black-box nature of the technology.

Financial challenges

High implementation costs

According to a 2020 survey conducted by Definitive Healthcare, a leading player in healthcare commercial intelligence, cost continues to be the most prominent encumbrance in AI implementation in diagnostics. Approximately 55% of the respondents who do not use AI pointed out that cost is the biggest challenge in AI implementation.

The cost of a bespoke AI system can be between US$20,000 to US$1 million, as per Analytics Insights, while the cost of the minimum viable product (a product with sufficient features to lure early adopters and verify a product idea ahead of time in the product development cycle) can be between US$8,000 and US$15,000. Other factors that also decide the total cost of AI are the costs of hiring and training skilled labor. The cost of data scientists and engineers ranges from US$550 to US$1,100 per day depending on their skills and experience levels, while the cost of a software engineer (to develop applications, dashboards, etc.) ranges between US$600 and US$1,500 per day.

It can be gauged from these figures that the total cost of AI implementation is high enough for the stakeholders to ponder upon the decision of whether to adopt the technology, especially if they are not fully aware of the benefits it might bring and if they are working with ongoing budget constraints, not infrequent in healthcare institutions.

Technological challenges

Overall paucity of availability of high-quality diagnostic data

High-quality diagnostic and medical datasets are a prerequisite for the testing of AI models. Because of the highly disintegrated nature of medical and diagnostic data, it becomes extremely difficult for data scientists to procure the data for testing AI algorithms. To put it in simple terms, patient records and diagnostic images are fragmented across myriad electronic health records (EHRs) and software platforms which makes it hard for the AI developer to use the data.

Data privacy concerns

AI developers must be open about the quality of the data used and any limitations of the software being employed, without risking cybersecurity and without breaching intellectual property concerns. Large-scale implementation of AI will lead to higher vulnerability of the existing cloud or on-premise infrastructure to both physical and cyber attacks leading to security breaches of critical healthcare diagnostic information. Targets in this space such as diagnostic tools and medical devices can be compromised by malware or software viruses. Compromised data and algorithms will result in errors in diagnosis and consequently inaccurate recommendations of treatment thereby causing stakeholders to refrain from using AI in healthcare diagnostics.

Patient safety

One of the foremost challenges for AI in healthcare diagnostics is patient safety. To achieve better patient safety, developers of AI algorithms must ensure the credibility, rationality, and transparency of the underlying datasets. Patient safety depends on the performance of AI which in turn depends on the quality of the training data. The better the quality of the data, the better will be the performance of the AI algorithms resulting in higher patient safety.

Mental and psychological challenges

Fear of job substitution

A survey published in March 2021 by European Radiology, the official journal of the European Society of Radiology, involving 1,041 respondents (83% of them were based in European countries) found that 38% of residents and radiologists are worried about their jobs being cut by AI. However, 48% of the respondents were more enterprising and unbiased towards AI. The fear of substitution could be attributed to the fact that those having restricted knowledge of AI are not completely educated about its shortcomings and consider their skillset to be less up-to-date than the technology. Because of this lack of awareness, they fail to realize that radiologists are instrumental in developing, testing, and implementing AI into clinical practice.

Trust issues

Trusting AI systems is crucial for the profitable implementation of AI into diagnostic practice. It is of foremost importance that the patient is made aware of the data processing and open dialogues must be encouraged to foster trust. Openness or transparency that forges confidence and reliability among patients and clinicians is instrumental in the success of AI in clinical practice.

EOS Perspective

With trust in AI amongst clinicians and patients, its adoption in healthcare diagnostics can be achieved at a more rapid pace. Lack of it breeds fear of job replacement by the technology amongst clinicians. Further, scarcity of awareness of AI’s true potential as well as its limitations also threatens diagnostic professionals from getting replaced by the technology. Therefore, to fully understand the capabilities of AI in healthcare diagnostics, clinicians and patients must learn about and trust the technology.

With the multitude and variety of challenges for AI implementation in healthcare diagnostics, its importance in technology becomes all the more critical. The benefits of AI are likely to accelerate the pace of adoption and thereby realize the true potential of AI in terms of saving clinicians’ time by streamlining how they operate, improving diagnosis, minimizing errors, maximizing efficacy, reducing redundancies, and delivering reliable diagnostic results. To power healthcare diagnostics with AI, it is important to view AI as an opportunity rather than a threat. This in turn will set AI in diagnostics on its path from pipe dream to reality.

Pet and Animal Health M&A What’s the Scoop on the Industry's Latest Shake-ups by EOS Intelligence
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Pet and Animal Health M&A: What’s the Scoop on the Industry’s Latest Shake-ups?

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The pet and animal health market has seen a recent surge in M&A, signaling shifting dynamics within the industry. While rising pet ownership and increasing pet care awareness are creating positive momentum for the sector, broader trends are pushing major players to venture into the industry.

Many European players are focusing on cross-border acquisitions

M&A activity is particularly robust in Western markets

A significant number of mergers and acquisitions observed recently in the industry indicate a desire for major players to consolidate their positions and expand geographically in a bid to build their global presence and diversify revenue sources. Many companies pursuing geographic diversification are targeting Western markets with well-established pet care, mainly due to high disposable incomes, advanced veterinary services, and a cultural tendency to indulge pets.

An example of such a move is the 2023 acquisition of UK-based Kin Vet Community by Perwyn Capital, a European private equity (PE) investor, to gain entry into the UK veterinary services market. This acquisition aims to capitalize on the UK veterinary services market’s significant growth, which has risen from US$6.4 billion in 2021 to almost US$8 billion in 2023.

The UK-based veterinary sales and service provider, Animalcare Group acquired Australia-based Randlab in 2024 to strengthen its presence in the equine veterinary market. With this acquisition, Animalcare Group will be able to bolster its existing product portfolio and expand from the UK and Europe into Australia and New Zealand.

Similarly, Sweden-based investment company EQT Partners acquired VetPartners, a veterinary care network spread in Australia and New Zealand, in 2023. This move will not only help EQT enter the Australian and New Zealand veterinary markets but also help gain a strategic position in the veterinary industry with a network of 267 clinics and hospitals.

Experts believe that all these recent acquisitions indicate a desire of players to solidify their industry presence and widen their customer base, especially in the lucrative Western markets.

Central Europe is also experiencing a notable uptick

While M&A activity is the strongest in Western markets, some companies are also looking to Central Europe to search for their acquisition targets. An example is the 2024 acquisition of Bratislava-based VetCare Group by AniCura, a Swedish veterinary care provider owned by US-based Mars. This acquisition will add ten clinics to AniCura’s portfolio, three in the Czech Republic and seven in Slovakia. This strategic move also marks AniCura’s entry into the Czech and Slovak markets, significantly expanding its footprint in Central and Eastern Europe and complementing AniCura’s existing presence in Poland.

The developing markets are also grabbing players’ attention

A few players are also showing interest in developing markets such as Asia and Africa, where pet ownership is increasing, but veterinary and pet healthcare infrastructure remains underdeveloped.

Strategic acquisitions are increasing in Africa

Africa is a particularly lucrative investment zone with a favorable market situation for able players interested in investing in the continent’s animal health sector. This is due to barriers in local drug manufacturing, lack of local vets in private practice, and shortage of veterinary drugs.

A recent example of such an investment is Dutch-based animal nutrition company Nutreco’s 2024 acquisition of AECI Animal Health in South Africa. With this acquisition, Nutreco intends to utilize AECI’s expertise in animal nutrition to bolster its operations in South Africa. This move is also expected to allow Nutreco to tap into AECI’s distribution network and manufacturing facility in Burgersdorp, expanding its footprint in Africa’s crucial markets.

Similarly, in 2022, Ireland-based Bimeda acquired Afrivet, an animal health product distributor based in South Africa. This acquisition facilitated Bimeda’s entry into the African animal health products industry.

Foreign players are targeting the growing Asia-Pacific market

The Asia-Pacific (APAC) animal health market is also seeing similar interest from many competitive players. The pet care market in Asia, though still developing in several areas, is experiencing rapid growth. Countries such as China, India, and Japan are seeing a rise in pet ownership and heightened awareness regarding pet health. This makes it a great place for players looking to concentrate on various growth strategies, including collaborations, partnerships, agreements, and M&A, to strengthen their market presence.

An example of a recent strategic acquisition in the Asian market was France-based animal health company Virbac’s purchase of Japanese ORIX Corporation’s animal health subsidiary, Sasaeah, in 2024. The acquisition will help position Virbac as a leader in Japan’s farm animal vaccine market, particularly in the cattle sector. Sasaeah already has a strong presence in Japan and develops a wide range of veterinary products for both farm and companion animals. With this acquisition, Virbac will also gain Sasaeah’s local manufacturing facilities in Japan and Vietnam and its R&D capabilities. It will also strengthen Virbac’s status as a major player in the Japanese animal health market and offer opportunities for further expansion throughout Asia.

Virbac also acquired in 2023 a majority stake in Globion, a poultry vaccines company located in India, as part of its strategy to enter the avian vaccines market in the region and expand its geographic reach.

Similarly, in 2022, Germany-based Symrise AG, the parent company of Diana Pet Foods, which provides palatants for the pet food industry, acquired Wing Pet Food, a leader in pet food palatability in China. This acquisition gave Symrise access to the APAC markets.

Though the acquisition efforts are much lower in the developing markets, with favorable conditions such as increasing pet ownership and rising demands for efficient veterinary care, interested players can expect an overall improvement in market conditions and attractiveness in the future.

Major players are vying for smaller companies in a bid to grow product portfolios

Beyond increasing the geographical reach, the M&A activities aimed at expanding and strengthening companies’ product portfolios are also a significant trend observed in the animal health industry. Many big players are eyeing smaller firms to build comprehensive portfolios that can compete more effectively against other industry giants.

An example is the 2024 acquisition of Boston-based Invetx, which specializes in protein-based animal therapeutics and monoclonal antibody (mAb) development, by UK-based Dechra Pharmaceuticals. This acquisition enhanced Dechra’s specialty therapeutics portfolio for pets and provided access to the growing mAbs market. It will also introduce new technological capabilities, strengthen Dechra’s pipeline, and create significant future growth opportunities for the company.

Similarly, in 2024, the NJ-based Merck Animal Health acquired Indiana-based Elanco Animal Health’s aqua business to enhance Merck’s position in the aquaculture sector. This includes medicines, vaccines, supplements, and nutritional products for aquatic species, as well as two manufacturing facilities located in Vietnam and Canada and a research center in Chile. With this acquisition, Merck aims to strengthen its extensive portfolio, including warm and cold water products, vaccines, anti-parasitic treatments, and nutritional supplements.

Many other acquisitions materialized in 2024 in a similar vein. This includes Animalcare Group’s acquisition of Randlab to enter the equine care market and Australia and New Zealand’s animal health market. Also, South Korea-based Easy Bio acquired US-based Devenish Nutrition to bolster its feed additive and premix operations in North America.

Players are focusing on consolidation to bolster their veterinary service offering

The veterinary services segment is also seeing robust consolidation. Several corporate buyers acquired independent clinics and businesses to strengthen their market position and access the robust customer base of the target companies. Significant consolidation has been visible in the USA and globally for the past three decades.

A recent example is Norway-based veterinary dental care provider EMPET acquiring Smadyrklinikken, a Norway-based provider of veterinary services, including surgery and emergency care, in 2023. EMPET also acquired a Norway-based horse treatment clinic, Hesteklinikken Bergen, in 2024, further expanding its veterinary treatment scope.

Similarly, in 2024, Miami-based at-home veterinary care provider The Vets merged with Boston-based BetterVet, a mobile veterinary service provider, to combine the strengths of both companies and enhance their pet healthcare services across the USA.

Another acquisition along the same line in 2024 was that by Pavo, part of the Netherlands-based ForFarmers‘ global equine organization, which acquired Thunderbrook Equestrian, operating primarily in the UK and Ireland. Thunderbrook offers a diverse range of products, including conventional and organic horse feed, supplements, and herbs, supported by a strong distribution network and online presence. Experts expect this acquisition to enhance Pavo’s distribution capabilities.

Private equity firms are also targeting pet health firms

It is not only businesses within the veterinary or pet sector that are acquiring clinics and animal health businesses, but also companies from other industries and PE firms.

One example is the 2024 acquisition of Ireland-based veterinary products manufacturer Chanelle Pharma by Exponent Private Equity, a UK-based PE firm. Chanelle specializes in R&D and has a prominent position in the market as a producer of generic pharmaceuticals for both human and veterinary use. This acquisition offers Exponent many opportunities for investments in product development and R&D.

Similarly, UK-based PE firm Apax Partners, in 2023, acquired stakes in US-based pet care software service provider Petvisor to focus on accelerating innovation and to position itself as a market leader in the pet software segment.

This trend will continue since the pet care market is expanding remarkably. According to Fortune Business Insights, an India-based market research firm, the global pet care market valued at US$246.7 billion in 2023 is expected to reach US$427.8 billion by 2032. Experts anticipate that this significant growth fueled by the increasing trend of pet ownership will prompt more PE firms to invest in the pet care market.

Pharmaceutical and vaccine segment is seeing acquisitions with rising pet diseases

The growing demand for specialized pet treatments is driving M&A in the pharmaceutical and vaccine segments of the pet health industry. The rising cases of pet and livestock infections and increasing zoonotic diseases are creating a strong demand for improved treatments, conveniently available medicines, and vaccines. This has prompted many players to divert their attention toward acquiring companies in the veterinary pharma segment to gain market access.

An example is the 2024 acquisition of Iowa-based animal pharmaceuticals and vaccines manufacturer Diamond Animal Health by Minnesota-based animal compounding pharmacy, Veterinary Pharmaceutical Solutions. Experts see this acquisition as the first step in VPS’s plans to grow its capabilities, market presence, product offerings, and research capabilities.

Another example is the 2023 acquisition of PetMedix, a UK-based firm developing species-specific therapeutic antibodies for pets, by US-based Zoetis, a global animal health firm. With this acquisition, Zoetis has gained access to PetMedix’s portfolio of antibody drug candidates targeting unmet clinical needs in dogs and cats with chronic and terminal diseases, including oncology and inflammatory diseases.

Similarly, the US-based Better Choice Company‘s acquisition of Canada-based Aimia Pet Healthco in 2024. This move will allow Better Choice to lead internal clinical trials focused on addressing the increased demands for treating obesity-related issues in cats and dogs.

In 2023, Zoetis acquired Germany-based veterinary care company Adivo, which focuses on creating animal therapeutic antibodies. This acquisition will allow Zoetis to leverage Adivo’s existing libraries of species-specific antibodies, facilitating the creation of a diverse array of new veterinary products.

The vaccine market in emerging economies such as Asia-Pacific is also seeing some scattered M&A activity. Virbac’s 2023 acquisition of a majority stake in India-based poultry vaccines company Globion to venture into the growing avian vaccines market can be seen as an instance of this budding trend.

Preventive care and wellness players are becoming attractive targets

A 2023 survey published by the American Veterinary Medical Association indicated that 76% of pet owners consider their pet’s safety and health a top priority. This disposition has also started influencing how pet owners choose food for companion animals, prompting them to opt for organic and healthy treats. All these have made diagnostics, preventive care, and sustainable health a hot topic among interested players, leading to some major acquisitions.

Wellness and preventive care players are attractive acquisition targets

Many acquisitions in the animal health industry are also focused on wellness and preventive care businesses. The factors driving this trend are the rising awareness among pet owners about the advantages of preventive healthcare, early disease detection, and overall wellness of the pets in the long term.

An example is the 2024 acquisition of US-based treat and pet care company Riley’s Organics by Skane-based Swedencare‘s subsidiary business, Pet MD Brands, marking its entry into the organic dog treat market in the U.S. The acquisition will give Pet MD access to Riley’s premium organic dog treats and nutritional supplements targeting coat and skin health, liver support, ear care, etc.

Similarly, Antelope, a US-based company that offers premium pet care products and services, has acquired My Perfect Pet, a US-based brand known for its ‘gently cooked’ dog and cat food. With this acquisition, Antelope can strengthen its portfolio with My Perfect Pet’s nutritionally balanced pet food without preservatives.

Veterinary diagnostics surge as acquisitions drive segment growth

The veterinary diagnostics sector has also seen some recent acquisitions. Mars, currently a leading name in the pet health segment, acquired Cerba HealthCare’s stake in the French veterinary diagnostics firms Cerba Vet and Antagene. Mars made a similar decision in 2023 when it acquired US-based Heska, a veterinary diagnostic and specialized solutions provider. All these acquisitions can help Mars position itself as a major competitor in the pet diagnostics sector.

Similarly, in 2024, US-based Ollie, a subscription service for fresh dog food, acquired Dig Labs, a diagnostic company that delivers real-time health screenings for pets, including stool analysis and weight management. This acquisition also aims at helping pet owners monitor their pet’s food intake and get personalized food intake recommendations to prevent health issues.

We expect the veterinary diagnostics segment to grow significantly, and M&A activity will continue accelerating in the coming years.

EOS Perspective

The flurry of M&A activity in the animal health sector highlights the industry’s significant potential. Along with the existing trends, experts believe there are many more segments interested and able players looking to consolidate their position in the industry can focus on.

Online and mobile pet care is a promising area for businesses considering investment or acquisition within the pet health sector. Companies that can effectively navigate this space will likely capitalize on the increasing demand for online services, likely through acquiring businesses with an established customer base to strengthen their portfolio. It will also help firms enhance their competitive edge through a digital-first approach. The 2024 acquisition of The PharmPet Co by Pharmacy2U, both UK-based firms, can be seen as one of the early steps in this direction. This merger will allow Pharmacy2U to offer pet medicines online to customers.

A nascent trend that could offer opportunities in the future is pet owners’ increasing interest in their pets’ gut and microbiome health. Experts believe this inclination of pet owners will increase in the coming years, creating a massive market for pet foods and supplements, especially those containing probiotics and gut-supporting formulas. This will make profitable businesses in the pet supplement segment a lucrative option for able and interested players to focus on.

Read our related Perspective:
 Poop to Pills: Is FMT the Future of Veterinary Medicine?

Sustainable and eco-friendly products are another segment with growing attractiveness thanks to the ever-increasing environmental awareness. As in many other markets, pet owners will seek products that consider environmental impact. With consumers aligning their choices with eco-friendly solutions, we can expect major brands to merge or acquire companies making eco-friendly pet products. The 2024 merger of Chr. Hansen and Novozymes, both Denmark-based firms, to create Novonesis is an example. With this merger, the new company aims to develop microbial solutions and enzymes while focusing on minimizing chemical use and advancing climate-neutral practices.

Pet Wearables – Are Companies Barking up the Right Technology by EOS Intelligence
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Pet Wearables – Are Companies Barking Up the Right Technology?

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As the human wearables market begins to mature, a lot of interest and developments are also happening in the pet wearables space. An increasing number of pet owners becoming more technologically savvy has fueled product innovations in this segment, which traditionally was limited to GPS tracking. While location tracking continues to be the largest piece of the pie, other solutions, such as health monitoring devices, have been gaining prominence. However, this segment is still in its infancy and is toying with several technologies, such as biometrics, radar, and acoustic technology, to develop functional, accurate, and price-effective devices.

The last decade has witnessed exponential growth and advancements in human wearables. However, recent years have also seen the trend of wearables permeating the pet market. With upcoming technological advancements, the industry is expected to witness double-digit growth over the next six years and expand into new territories.

Read our related Perspective

Poop to Pills: Is FMT the Future of Veterinary Medicine?

ID tracking is the largest category, health monitoring is growing the fastest

The pet wearables market is primarily bifurcated into four applications: ID tracking, behavior control, safety, and health monitoring. At the moment, the largest category within the market is ID tracking solutions, which comprise GPS—and RFID-based trackers that help identify and locate pets. One of the leading players in this space is US-based Tractive, which provides a GPS collar that allows pet owners to know the exact location of their pets at all times.

The fastest-growing category is health monitoring. This segment encompasses devices that monitor a pet’s vitals and general health and raise an alarm in case of any irregularities. Growing pet obesity cases have resulted in pet owners choosing health monitoring devices for their pets. A popular product in this space is the PetPace Smart Collar by US-based pet wearable company, PetPace, which tracks physiological metrics such as pulse, respiration, temperature, heart rate variability (HRV), activity level, and posture. Along with GPS tracking and emergency alerts, it helps in early symptom detection and disease management.

The behavior control segment, which is still relatively small, covers products that help teach pets appropriate behavior, such as bark collars, which deter dogs from barking continuously. An innovative and popular product in this category includes the PetSafe Treat & Train Remote Reward Dog Trainer by US-based pet-tech company PetSafe. The product allows pet owners to dispense treats remotely through an electronic trainer to induce calm behavior in case of distracting situations, as well as allows owners to reward their pets in case of good behavior.

The smallest category is safety, which is largely an extension of ID tracking and comprises pet cameras that capture a pet’s movement. Mr. Petcam is a US-based company that provides collar-mounted HD video cameras for dogs or cats, allowing pet owners to see what their pets see in the yard, at home, or during walks.

Pet Wearables – Are Companies Barking up the Right Technology by EOS Intelligence

Pet Wearables – Are Companies Barking Up the Right Technology? by EOS Intelligence

The industry is undergoing both organic and inorganic growth

Pet adoption increased significantly during the COVID-19 pandemic as people were confined to their homes and lacked social and emotional connection. As per the American Society for the Prevention of Cruelty to Animals, one in five Americans purchased or adopted a pet during COVID-19.

Many of these pet owners are adept in technology and spend vast sums of money on their pets. As pets are increasingly considered family members and with growing concerns for their health and well-being, pet wearables are experiencing a surge in popularity. The success of wearable technology for humans further fuels this trend. Moreover, increasing costs of veterinary services and treatments have propelled pet owners to invest in health and prevention-based wearables. Therefore, the industry is expected to grow significantly, especially in Europe and North America, in the coming years.

However, that being said, the industry is in its nascence and is highly fragmented at the moment. There is a large number of players fueled by several start-ups and new entrants. The industry is seeing a surge in acquisitions as players in the pet care and tech space are looking to expand their offerings to include pet wearables. Moreover, growing interest from venture capital firms is also resulting in large investments in companies showing promise in this space.

One of the leading players in the pet market, Mars Petcare, launched Companion Fund in 2018 and Companion Fund II in October 2023. The US$100 million and US$300 million venture capital funds, respectively, have been created to invest in start-ups in the pet care space, including pet wearables. Earlier, in 2016, Mars Petcare acquired the Whistle pet monitor and GPS tracker, similar to a Fitbit for dogs, for about US$117 million. This provided Mars Petcare an entry into the pet wearables space.

Several other players in the technology space have also acquired companies to expand their business to cover pet wearables. In 2019, Florida-based IoT company Smart Tracking Technologies acquired Link AKC for an undisclosed amount. This wearable pet technology company developed GPS-enabled dog collars and won the Best Innovation award at CES 2017 in the wearable technology category.

In April 2023, Ultrack, a leading global GPS tracking solutions provider, signed a contractual agreement to acquire and market Supreme Product’s wearable GPS-based Pet Tracker. The device is expected to have multiple features, such as health monitoring, behavior modification, predictive analytics, social media integration, and virtual fences.

Similarly, in May 2023, Datamars, a global data solutions company, acquired Kippy, an Italy-based GPS tracking and activity monitoring solution provider. Kippy collar’s main features include GPS tracking, customized activity monitoring and analysis, reminders and access to vet records, temperature alerts, tone and vibration training controls, a built-in flashlight, and the ability to create safe places for the pet.

While several companies are adopting the inorganic growth strategy, there is also a lot of venture capital interest, especially in ID tracking, which is the largest product category and acts as an entry point device for many customers in the pet wearables space. In 2021, Austria-based leading pet tracking company Tractive raised US$35 million Series A round (led by Guidepost Growth Equity) to expand its offerings in the USA. Similarly, in 2021, Fi, a US-based pet wearable start-up, received US$30 million in Series B funding (following a Series A funding of US$ 7 million in 2019) for its smart pet collars to expand its footprint across the USA.

Pet wearables companies seek the right tech for pet health monitoring

While most technologies used in pet wearables are fairly similar to those used in human wearables (such as GPS), one of the key differentiators is the effectiveness of biometric sensors for health monitoring. Biometric sensors are widely used in human wearables, although given the fur presence in animals, they are somewhat ineffective in the case of pets. Thus, pet wearables depend on other contactless sensors such as radar and acoustic. However, these have their own functional and developmental challenges.

Among these, acoustic sensors are some of the oldest and are used by one of the market leaders, PetPace. Acoustic technology uses sound waves to monitor a pet’s heart rate, heart rate variability (HRV), and respiratory rate. Players such as PetPace and Inupathy use this technology in their smart collars. Moreover, in 2020, the Bioengineering Department at Imperial College also developed wearable technology for sniffer dogs based on acoustic sensors.

While this technology is fairly widely used for clinically monitoring health for both humans and pets, there are certain challenges when it is translated into wearables for pets. Given external factors, such as background noise and motion artifacts, the PetPace collar is said to have only 53% heart rate detection sensitivity (i.e., in 53% of the cases, the standard deviation from measurements by PetPace and ECG was within 10%) based on a study conducted in 2020. However, based on another 2017 study, the device’s pulse monitoring accuracy levels can be much higher at 94.3%.

That being said, Tokyo-based Inupathy also uses acoustic sensors to capture a dog’s heart rate and HRV and displays colors and patterns on its pet collar to depict emotional state and heartbeat ranges. For instance, the calmest state is depicted with deep blue, whereas the most excited state is bright red. While the company claims to have 90% accuracy when compared with ECG monitors, the collar is marketed as a device to broadly understand the mental and physical state of the pet instead of accurately monitoring and projecting heart rate readings.

Thus, while acoustic technology can be used in pet wearables, it has limitations, especially regarding accuracy. With the PetPace collar being priced at about US$150 (with a monthly subscription of US$15) and Inupathy at US$200, the customer must be able to find value in the readings. One of the initial companies using acoustic sensors, Voyce, went out of business in 2016 due to slower-than-expected acceptability.

Acoustic sensors-based solutions by themselves may not be a sound product offering, however, when clubbed with other technologies and solutions, they can offer a wholesome solution to the pet owner. This can be seen in the case of PetPace Smart Collar, which, along with acoustic-based health monitoring, has additional offerings such as thermometers for temperature detection, 6-D accelerometers for activity, calories, and posture calculation, and GPS for location tracking.

A more promising and upcoming technology for health monitoring in pets is radar technology. The technology uses radio waves to enable continuous and contactless heart and respiration rate monitoring. While it is relatively new, it is expected to have better accuracy when compared with acoustic sensors. Two companies, France-based Invoxia, and Taiwan-based ITRI, launched smart collars with radar technology in 2022. Invoxia’s smart collar is priced competitively at US$99 (with a monthly subscription of US$13). It uses embedded artificial intelligence and miniaturized radar sensors to track a dog’s health. In addition, it monitors a dog’s daily activity, such as walking, running, scratching, eating or drinking, barking, and resting. The device has an accuracy of 98% for heart rate detection.

Similarly, ITRI also launched its smart wearable device, iPetWear, in 2022. The device uses contactless micro-physiological radar sensing technology to monitor a pet’s health. The sensor can monitor a pet’s heart rate, respiratory rate, sleep cycle, and activity levels through the detection of pulse and chest motion through its lower-power Doppler radar technology. The device claims to have an error rate of under 10% for heart and respiration rate and under 5% for activity monitoring. The device is priced at US$80.

Given the improved accuracies and competitive pricing of these products, it is safe to say that radar technology-based sensors can disrupt pet health monitoring wearables. However, this technology is difficult to develop, and at the moment, only a limited number of companies have managed to commercialize it.

Companies are also exploring ways to make biometric sensors effective for pets, even though furry pets present a challenge for such sensors. This is seen in the case of Invoxia, which had previously launched the radar-based Smart Collar. At CES 2024, Invoxia launched another pet wearable device, the Invoxia Minitailz Smart Pet Tracker. The tracker uses advanced miniaturized biometric sensors along with AI to track respiratory and heart vitals and detect anomalies in the behavior of both dogs and cats. In addition, it tracks a pet’s location and daily activities and can differentiate between types of movement. It also claims to be the first pet collar in the market to detect atrial fibrillation (AFib). The device also seems to have high accuracy (similar to radar technology) as it claims to have 97-99% accuracy rates for monitoring respiratory and heart vitals. The product, priced at US$99 with a monthly subscription cost of US$8.30, is relatively new in the market, and its effectiveness is yet to be established.

If Invoxia Minitailz Smart Pet Tracker is successful and delivers on its promise (with regard to accuracy and functionality), several other players will likely also explore biometric sensors for pet health monitoring.

Other technologies, such as LiDAR and infrared, are also being explored as potential alternatives. However, there are not many commercially successful solutions based on them yet.

Potential risk of data breach is one of the biggest threats to pet wearables

Given the expanding scope of all these technologies, the pet wearable market is booming. However, it comes with its own set of challenges. While companies claim to have high accuracy rates, no FDA approvals are required for pet wearables at the moment. Thus, there is no way to verify the actual effectiveness of these devices. Moreover, since they deal with critical health conditions, a missed reading or a misdiagnosis can have dire consequences. Pet owners can also not consider these devices to be a replacement for their vet visits at large, and the devices can only act as information gatherers that can help vets make quicker diagnoses.

The industry is also facing a significant obstacle in the form of substandard battery technology. Given the number of features on each device (such as GPS tracking, health monitoring, two-way communication, etc.), its continuous and real-time work requirement, and the limited lifespan of lithium-ion batteries, companies have difficulty providing sufficient battery life for their devices. In several cases, pet owners find that the battery gets discharged sooner than they can recharge it. Therefore, the device loses its purpose since it is meant to provide continuous real-time data to be effective. To mitigate this, companies are looking into other battery options, such as lead acid (less efficient than lithium-ion) and silicon carbide (a more expensive option).

Another issue with these devices is the potential risk of data breaches. Wearables collect large amounts of data about pets and pet owners. In a 2019 study by Bristol University, pet wearable devices collected four times more data about the pet owner than about the pet itself. If this data is not properly secured, it could result in data leaks and cyberattacks and put the owner at risk.

EOS Perspective

With pet ownership increasing, the market for pet wearables will undoubtedly grow. Moreover, as human wearables continue to permeate our daily lives, it is natural that pet owners are looking for a similar advanced level of monitoring for their beloved companions.

The market, which started with single functionality tracking devices, is now moving towards more complex and technologically advanced solutions. While tracking and GPS-based devices continue to form a significant portion of the market at the moment, several leading players in the space (such as Tractive) are now integrating other functionalities with their location-tracking offerings.

Thus, the market is expected to move towards multi-functional solutions that offer basic features such as tracking along with advanced features such as activity and health monitoring. Also, within health monitoring, offerings will continue to differ based on complexity. For instance, some devices offer insights only into weight and temperature changes, while more advanced devices offer heart and pulse rate monitoring. As seen in the case of human wearables, the market is likely to move towards the latter as continuous advanced health monitoring becomes a standard way of managing well-being for both humans and pets.

Given the industry’s nascence, fragmented market, lack of big established brands, and low brand loyalty, the products’ key differentiating factors are likely to remain competitive pricing, advanced offerings, and effective technology.

For this, it becomes essential for companies to stay ahead of the curve and to explore possible technologies, beyond what is effective in human wearables. Therefore, companies that are investing in exploring suitable technologies, such as radar and biometrics, for advanced features, such as heart rate monitoring, are likely to emerge as market leaders in the long run.

Moreover, the pet wearables market is likely to also benefit from integration with pet insurance in the future. Both industries have synergies as the insurance sector can gain from health-based data derived from pet wearables. On the other hand, increasing demand for pet insurance is expected to provide a push to the pet wearables market, as pet owners who track and monitor their pet’s health can negotiate better and more competitive insurance rates.

Undoubtedly, the industry is poised for steady and strong growth. The market will likely consolidate, while players offering technologically advanced wearables focused on health monitoring and priced at around US$100-150 will emerge as leaders.

The Rise and Fall of Cue Health Market Lessons and Implications by EOS Intelligence
by EOS Intelligence EOS Intelligence No Comments

The Rise and Fall of Cue Health: Market Lessons and Implications

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Cue Health, the portable COVID-19 test maker, reached its zenith during the pandemic’s peak, securing investments and contracts from both government and private sectors. The company was lauded for its user-friendly, rapid-response COVID-testing kits. At its peak, Cue Health’s products were seen as game-changers, with the potential to revamp the healthcare sector by providing accurate at-home diagnostic results within minutes. However, sales of these testing kits plummeted before Cue Health could diversify and establish other revenue streams, leading to a series of layoffs and, ultimately, the shutdown of its operations.

As the public focus shifted away from the pandemic, so did the demand for testing. For Cue Health, the COVID-19 test was essentially their sole product, and this decline in demand marked the onset of turbulent times.

In the past few years, Cue Health struggled to maintain its market position and technological edge, focusing on restructuring and streamlining its operations. The company engaged in talks with potential investors and stakeholders, which did not materialize. It also implemented several cost-cutting measures to remain afloat amid financial turbulence, but these were insufficient to counter the broader economic challenges that Cue Health faced. Its share prices declined steadily, and several rounds of layoffs followed.

The final blow came when the FDA issued a warning letter and a safety alert on May 10, 2024, asking users and healthcare providers to discard Cue Health’s product. The FDA discovered unauthorized changes made to Cue Health’s COVID-19 testing kits. This ultimately led to Cue Health’s winding down operations and filing for bankruptcy in May 2024 after laying off all its employees.

Cue Health’s business failures: A look at three critical oversights

Absence of recurring revenue streams: The company’s COVID-19 testing device was a one-time purchase, and it did not need any consumables or refills. This prevented the development of a recurring revenue model, such as subscription-based services or ongoing product sales, which is essential for financial stability and sustained revenue stream. Dependence on the one-time test kit sales implied that once its demand subsided, there was no consistent income to support operations.

Top-heavy business model: Cue Health employed many individuals in leadership positions, a common mistake that start-ups tend to make. This resulted in high salary costs, even amidst financial turbulence, eventually leading to several layoffs.

Moreover, the company struggled with financial management and strategic planning. Efforts to engage with investors and stakeholders did not yield results, further compounding the company’s financial crisis.

Narrow focus: Cue Health’s business model heavily depended on a single product, the COVID-19 testing kit, which nearly constituted its complete product portfolio. This singular focus left the company vulnerable to the declining demand for COVID-19 testing kits, and it was not able to pivot quickly to diversify product offerings. Moreover, the company was also unprepared for post-pandemic market realities, which led to its decline.

Cue Health’s wind down: Repercussions for diagnostics sector and investors

Regulatory and compliance implications: Cue Health’s regulatory challenges highlight the critical need for compliance and transparency in product modifications. Consequently, other companies in the diagnostics and medical devices sector may now encounter heightened regulatory scrutiny by the FDA. To stay afloat and avoid similar pitfalls, these companies must invest more in compliance, ensuring all products meet regulatory and quality standards. This could result in better overall product quality and safety across the industry, although at a higher cost to the device makers.

Industry lesson: Cue Health’s trajectory – from swift growth to sudden downfall – serves as a case study for industry players to understand the risks associated with over-reliance on a single product and the importance of portfolio diversification. Companies operating in the diagnostics sector should leverage the company’s experience to reevaluate business strategies and enhance risk management practices.

Investor sentiment: Cue Health’s downfall, despite the substantial funding and a successful IPO, could lead to more cautious investor behavior and diminished confidence in healthcare start-ups, particularly those with a singular product focus. For future investments, investors may demand more scrutiny and rigorous due diligence. Consequently, companies may be pressured to build diversified product portfolios and more sustainable business models to mitigate risks associated with market fluctuations and regulatory challenges.

EOS Perspective

Cue Health’s shutdown highlights the volatility and unpredictability of the MedTech sector, underlining the importance of regulatory compliance, portfolio diversification, and market adaptability. While innovation and growth are imperative for staying competitive in the diagnostics sector, striking a balance with robust financial planning and risk management practices is equally important.

For other diagnostics companies, Cue Health’s downfall serves as a cautionary tale, emphasizing the importance of building sustainable business models that can withstand market fluctuations and external pressure. For investors and stakeholders, it accentuates the requirement of stringent due diligence and risk assessment for high-stakes investments in emerging health technologies.

Despite Cue Health’s closure, its journey is important. The company leaves behind a legacy of innovations, diagnostic tools, and resourceful healthcare delivery models. Other diagnostics companies can build on Cue Health’s technological foundation, learning from its experiences to navigate the complex healthcare technology landscape.

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