In a bid to curb the spread of COVID-19 the UK government has now abandoned its initial containment strategy and has ordered everyone bar essential workers to social distance and to work from home. This policy is designed to save lives and has been adopted across many countries, but it is not without severe economic and human consequences. As many households across the UK grapple with creaking wifi networks and the concept of a family member cutting their hair, it’s reasonable to question how long is this going to last. Unfortunately, the answer seems to be “for a while”, or at least until herd immunity is achieved, either through natural or man-made antibodies. What seems clearer however is that in order for any government to make an effective decision on this issue they need data on who has or has had the virus, and only once we have this information will certain portions of the population be able to safely return to work.
This piece is not designed to be a critique of the government’s response to the crisis nor a deep dive into the science of COVID-19 antibody and antigen test development. That said, for the sake of my hair I remain hopeful that an effective antibody test can be developed and that the current shortages of swabs and reagent that have hindered large scale antigen testing in the UK can be resolved. Instead I’ll focus on the way in which the COVID-19 crisis has underscored the importance of in vitro diagnostics tests (IVDs), (that test a sample of tissue or bodily fluid to diagnose a condition), and the often-overlooked investment opportunity that the space presents.
Across the world treatment is still being prioritised over diagnosis. According to CB Insights, pharmaceutical start-up companies received 8 times the funding of diagnostics start-ups in 2019. Furthermore whilst 70% of clinical decisions were made based on IVD tests, the NHS only spent c.1% of their budget on the development and adoption of new IVD technology. Inflexibility in the adoption of new IVD technologies is a further thorn in the industry’s side. It typically takes 10 years for new technology to be adopted, which in a crisis like we face today, does not provide benefit. However, this crisis has focussed attention on the IVD industry, and many firms have now entered the race to innovate and design more efficient and more accessible tests for the virus. Alpha Helix is speaking to a number of these firms as they race to validate their COVID-19 antibody tests, and in amongst some failures there are positive noises coming out of these trials. However, as governments are already finding with existing antigen tests, managing the mechanics and resources required to test an entire population in a crisis is difficult, and I expect I’ll be waiting a while before finding out if the cough I had a couple of weeks ago was in fact a mild form of COVID-19 or if I’m just over reacting!
Nonetheless, the IVD industry shows great promise as it steps into the spotlight. Evaluate forecasted that the global IVD industry will experience a growth of 6 percent in sales from 2017-2024. This figure is likely to increase as resources are poured into public and private diagnostics capacity around the world. In the UK, where the diagnostics industry is significantly behind countries such as Germany, Health Secretary Matt Hancock has promised a new target of 100,000 tests a day before the end of the month, an ambitious feat which as he states will require building “a diagnostic industry from scratch”. In the medium term as smaller start-up companies begin to make advancements in the field, there is a high probability that consolidation within the industry will take place as larger companies will start to sharpen their teeth. Consolidation could prove to be mutually beneficial with the bidders funding the capital outlays and the targets presenting marketable products and technologies.
The effect that COVID-19 will have on the market is likely to outlive the pandemic itself. Early diagnosis through IVDs plays a crucial part in limiting the spread and therefore the impact of this virus. The current pandemic will focus attention on diagnostics start-ups and the need for widely available point of care diagnostics. Increased funding should also give rise to further advancements in IVDs, enabling the industry to gear up society to combat future pandemics. COVID-19 might serve as the catalyst that the IVD industry needed, as governments and investors are now awakened to the significance of early detection and diagnostic systems.