SIC 2835
IN VITRO AND IN VIVO DIAGNOSTIC SUBSTANCES



This category covers establishments primarily engaged in manufacturing in vitro ("in glass," such as a test tube) and in vivo ("in the body") diagnostic substances, whether or not packaged for retail sale. These materials are chemical, biological, or radioactive substances used in diagnosing or monitoring the state of human or veterinary health by identifying and measuring normal or abnormal constituents of body fluids or tissues.

NAICS Code(s)

325412 (Pharmaceutical Preparation Manufacturing)

325413 (In Vitro Diagnostic Substance Manufacturing)

Often viewed as an extension of the pharmaceutical industry, the diagnostics industry is closely intertwined with cutting-edge developments in the treatment of human and animal disorders. This includes a multitude of genetic research and studies centered around high-profile diseases like cancer and AIDS. Simultaneously, much of the industry's output involves comparatively low-tech, routine diagnostics like allergy assays and home pregnancy tests.

In vitro diagnostics, those used outside the body, constitute by far the largest share of industry sales. In 2000, according to Census Bureau statistics, in vitro diagnostic shipments from U.S. firms were valued at more than $10.5 billion, compared to $8.6 billion in 1997. The cost of materials grew from $2.4 billion in 1997 to $3.1 billion in 2000. Over the same time period, the total number of industry employees grew from 38,485 to 41,581.

The primary market for these diagnostic substances is in hospitals and laboratories, but sales to physicians and individual consumers have seen considerable growth. In the commercial markets, in particular, users have emphasized the need for more automated test systems that free up staff time and reduce the likelihood of error. Diagnostic applications attracting the greatest market interest include those for sexually transmitted diseases, diabetes, and cellular disorders.

Most, if not all, of the industry's products are regulated by the U.S. Food and Drug Administration (FDA). The agency sets standards for safety and quality in manufacturing, and depending on the diagnostic, usually requires products to be formally reviewed and approved before they are used. For diagnostics an average review lasts two years.

The current trend in the industry is to miniaturize the machinery and make them more portable. This point-of-care (POC) testing is expected to present the greatest growth area in the near future for in vitro diagnostics. Already, the technology has found its way into hospitals and medical centers and will soon be available in the home health care field. FDA approval of other products, such as an imaging agent for use with ultrasound technology, is expected to help bolster the industry. Yet, as the industry has grown, FDA approval time has often been slow and more stringent regulations have been enacted.

The industry's ties to the pharmaceutical business mean that, like pharmaceuticals, diagnostics are a global business dominated by a handful of wealthy companies. The largest diagnostics makers are some of the world's top drug companies. These deep-pocketed drug makers increasingly see the diagnostics business as a complement to their pharmaceutical operations—a test can indicate whether a patient needs a drug or how well an administered drug is working.

Integrated Pharmaceutical Leaders. Heading the list is Switzerland's Roche Group, which was believed to hold 17 percent of the $18 billion global diagnostics market in the late 1990s. Roche attained its standing mostly through acquisitions.

Close behind was Abbott Laboratories, with an estimated 15 percent share. In 1999 Abbott's diagnostics business was slapped with an unprecedented $100-million penalty for failing to meet FDA manufacturing quality standards. None of Abbott's products were found to be defective or harmful, but the drug maker was accused of repeatedly flouting FDA rules.

Johnson & Johnson was another sizable competitor, estimated at an 11 percent share of the world market. Well-known for its consumer products, Johnson & Johnson maintains a large and growing presence in the medical instrument and pharmaceutical markets.

Germany's Bayer AG, a major pharmaceutical and chemical conglomerate, likewise has made inroads into the diagnostics market. In 1999 it acquired the diagnostics wing of the biotechnology firm Chiron Corp.

Independent Diagnostics Leaders. One of the leading independent suppliers of diagnostic kits is Bio-Rad Laboratories, Inc. Based in Hercules, California, Bio-Rad supplied more than 4,500 different products for laboratory and medical research including chemicals and instruments to diagnose and monitor diseases such as anemia, diabetes, and AIDS. The company developed clinical diagnostics test kits and analytical instruments, including a blood glucose analyzer. Established in 1957 with four employees, by 1999 Bio-Rad employed 2,675 workers in the United States and abroad. Its 1999 sales for the 12 months ending September 30 reached $474 million.

Los Angeles-based Diagnostic Products Corporation (DPC) is an independent diagnostic manufacturer focusing on tests for immune-system disorders. The $200 million company employed 1,600 people in 1999. Its products are used to identify allergies, thyroid disorders, fertility problems, and some forms of cancer, among other things. DPC also markets a line of automated instruments for use with its diagnostic tests.

Another large independent firm focusing on diagnostics is IDEXX Laboratories, Inc. of Westbrook, Maine. With 1999 sales in excess of $350 million, IDEXX is a leader in the veterinary diagnostics market. Included in its more than 400 products are common diagnostics for pet illnesses and diseases, as well as a line of tests for measuring environmental pollution.

Further Reading

Banks, Howard. "How Roche Got an Edge on Its Competitors." Forbes, 2 November 1998.

Health Industry Manufacturers Association. "In Vitro Diagnostics: Medical Tests That Save Lives and Reduce Health Care Costs." Washington, 1999. Available from http://www.himanet.com .

Hensley, Scott. "A 'Clear Message' for Abbott." Modern Healthcare, 8 November 1999.

Marquez, Rachelle C. "Home Self-Testing Market Grows as Medical Costs Rise." Business Journal, 3 November 1997.

United States Census Bureau. 1997 Census of Manufactures. Washington: Department of Commerce, 1999. Available from http://www.census.gov .

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

User Contributions:

Comment about this article, ask questions, or add new information about this topic: