The worldwide lateral flow market is large, and growing rapidly, with more than 2 billion tests produced every year. Worth an estimated $6 billion (US) in 2018, the market is projected to reach $8.7 billion (US) in 2023. In this blog Sona CEO Darren Rowles takes a look at the market and what 2020 might bring.
What is the current state of the market and how might this change in 2020?
Whichever market segment you look at, for example human health, animal health or agriculture, lateral flow is an in-demand technology. Professionals working in these sectors want quick and accurate diagnosis and the evolution of lateral flow technology is allowing this to happen in a cost-effective way.
The human health market segment is growing particularly fast, fuelled by factors such as the high prevalence of infectious diseases across the globe, rapidly increasing geriatric populations, increasing usage of home testing, and growing demand for point-of-care test devices.
I think 2020 will be another strong year for the lateral flow market, with established companies expanding their offers and bringing new tests to market and new companies entering the market. I attend several industry-specific events every year and every year I have seen new companies attend those events with innovative new products or solutions and they quickly become established in the market. I think the full potential of lateral flow technology is only just starting to be realised; there are already multiple applications across different market segments, and I’m sure that in 2020 more new applications for the technology will be realised.
However, all markets go through periods of consolidation. Recently the lateral flow market has seen a raft of new technologies and new entrants, and we’re starting to see evidence that merger and acquisition activity could increase in the near future.
Just recently our partners Expedeon signed a 120 m Euro ($133 m US) deal with Abcam for the sale of its immunology and proteomics business, which is a very positive development. As Expedeon are a valued distribution and development partner of Sona, this deal could widen our access to the market and give us a wider customer base.
One of the most exciting areas of growth for me is the digital technology aspect of lateral flow. Test developers increasingly want their tests to be digitized and to be able to collect and store the data they generate. Several companies, most notably our partners Bond Digital Health, offer digital services (including app, cloud and dashboard connectivity) that transform simple yes/no tests into quantitative, data-gathering tests.
What are the current challenges?
The challenges for the lateral flow diagnostics market are largely the same as they have been for the last few years, and will continue to be for the foreseeable future.
This is a highly competitive market with many new entrants every year. Sona has adopted a collaborative approach because we strongly believe that by companies working together and sharing their technology and expertise we can come up with innovative new solutions that will address some of the world’s most pressing needs.
There are practical challenges that need to be overcome as well, such as the variable availability and cost of materials needed to produce the tests, the complexity of the manufacturing process, the need to produce affordable tests at volume and regulatory and compliance issues.
One challenge that the industry is only just starting to get to grips with is sustainability. I raised the issue of sustainability and our responsibility towards plastic pollution in an essay earlier this year and I was glad to subsequently see it raised at the Advanced Lateral Flow Course.
The problem is that lateral flow is a “throwaway technology”, with most tests manufactured being made of single use and non-recyclable plastic. Most will be incinerated along with other medical waste but many will still end up in landfill.
I believe that lateral flow test developers and manufacturers have a duty to reduce plastic waste by rethinking how they make tests and coming up with innovative new ideas.
What is your advice for investors who are new to lateral flow?
It’s important to remember that at its core a lateral flow test is a fairly simple diagnostic technology used to detect the presence or absence of something, for example a hormone in urine that indicates pregnancy. You don’t necessarily need to understand the science behind the technology to appreciate the enormous value of the tests.
If you think how the home pregnancy test (the original and best-known application of the technology) not only transformed point of care diagnostics but also the lives of women everywhere, you can start to understand the massive potential of the technology. (Today, more than 200 million pregnancy tests are sold every year in the US alone.)
For example, lateral flow tests have the ability to instantly and accurately detect deadly infectious diseases, such as Ebola or Zika virus, on the ground without need for expensive laboratory equipment. The data gathered from the tests can be used to monitor the spread of an outbreak and help authorities deploy resources more effectively. Investing in these inexpensive tests have already saved lives and helped governments save many millions of dollars.
The consumer health and lifestyle market is also a large and rapidly growing segment of lateral flow. Recently a test has been brought to market that can detect food allergens, such as gluten and peanuts, and another that can detect whether beverages have been ‘spiked’ with illegal drugs, for example. With consumer health set to grow in general, there are huge opportunities for investors here.