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I need results and I need them now!
by Tom Weschler
This is the third in a series of articles about the business of industrial diagnostics as used in industries including food, beverage, pharmaceutical, personal care products and water - the majority being microbiology tests, more than 90 percent. The first article, “Big Business in Little Bugs,” [Food Quality April/May 2004, pg. 22] reviewed the size of the 2003 industrial microbiology market. The second, “Industrial Diagnostics Duke-Out,” [Food Quality Aug/Sep 2004, pg. 28], discussed the consolidation occurring among diagnostics manufacturers.
In this article, we will drill down a little deeper into the industrial diagnostics market to explore the accelerating conversion from traditional microbiology methods--some dating back to Louis Pasteur’s time --to newer, alternative methods.
One thing is clear regarding industrial microbiology testing, most people want and need faster results. In most cases, waiting the hours and days to get actionable results after the sample is collected is both frustrating and unacceptable. In fact, a long time to result is the most common gripe amongst plant and QC managers. Driven by economics and risks, processing companies need to get their microbiology results more quickly.
Processing companies are being pressured to change their micro testing practices in the following ways:
Proactive measures: Companies are adopting comprehensive testing regimens as part of due diligence to guarantee that the factory is under control, that product being shipped meets label claims and protects the company’s brand name and image.
Reactive measures: When/if issues do occur or if customers (retailers generally) require end-product validation, companies adopt testing measures to meet these imposed requirements.
Regulatory: Driven by increasing governmental oversight, companies are adopting testing practices to comply with regulatory mandates.
As a result, the amount of micro testing performed at industrial processing plants and associated laboratories are increasing. In addition, there are very sizable economic issues at play in the plant, which are directly affected by micro testing. The carrying costs associated with the ability to release inventory one day or even hours sooner because of faster actionable micro results represents an obvious economic savings. But this is by no means the only plant cost potentially impacted. Reduction in waste and/or the potential down stream value-added unnecessarily to out of spec product, labor reductions and production turnaround times are other considerations.
Beyond this is the immeasurable, but significant, cost to the company’s image/brand name and the related impact on the company’s future revenues/profits/share price should a problem occur.
All these changes and pressures are driving diagnostic manufacturers to develop products that yield faster actionable results. In today’s world we’re spoiled by the increase in instant information and access. Global positioning systems (GPS) that cost $100 can tell you where you are within 2 to 3 feet. However, it still takes days to get microbiology results. In a perfect world, we should have a microbiology testing platform the size of a GPS that can tell us instantly how many bacteria are present and what type. But, we’re a long way from there.
In interviews Strategic Consulting, Inc. (SCI) has carried out for our market research reports, we asked hundreds of QC managers at processing plants worldwide what their biggest need is when it comes to industrial microbiology testing. Faster time to actionable results leads the wish list, followed by ease of use (see Figure 1).
Having said this, diagnostics companies have been listening, and over the past decade, there has been excellent progress in test methods. In several instances, when using some of the newer pathogen methods/technologies, days have been taken out of the time required for actionable results.
In addition, convenience-based methods, although often not as fast, represent important improvements in ease of use and reproducibility of results for routine testing often in a unskilled laboratory environment. In response to these improvements, there has already been a sizable migration from the slower, traditional methods to these newer methods (see Fig.2).
What is “Rapid Micro?”
One thing that is a bit confusing, given the claims in the market, is what is meant by “rapid” microbiology. The term, as currently used in industrial diagnostics, is a bit of a misnomer. To keep it simple, at SCI we define rapid to mean any method that is non-traditional.
In launching new products and technologies to replace traditional methods, diagnostic companies sometimes have referred to their tests as rapid methods. Their use of this terminology has generally been driven by the time it takes for a phase of the test protocol, rather than the total time it takes, to get a result.
To us it seems inappropriate to refer to a test as rapid when it actually takes 24 hours or more to get actionable results, even if this test is more rapid in terms of on-time to set up, process and read than the corresponding traditional method it is replacing.
Until we get to desired performance the market truly wants, perhaps we should refer to this as “more” rapid microbiology.
Aggressive Adoption by Market
Regardless, the industrial diagnostics market has been aggressively adopting these newer tests. In 2003, approximately 20 percent of all microbiology testing was carried out using rapid methods. This means that of the over 1.1 billion tests that comprised the industrial microbiology market in 2003, 230 million tests were performed using newer methods. This volume has grown significantly in recent years.
Looking forward, by 2008, over 30 percent of all testing is forecast to be performed using rapid methods. With the growth in the size of the testing market (anticipated overall to rise by almost 370 million tests to total 1.5 billion tests in 2008) rapid tests will double to 460 million tests, representing a 15 percent growth in the volume of rapid tests used each year (see Fig.3).
Rapid tests almost always carry a price premium on a price per test basis versus the test being replaced. As a result, the market value of the rapid testing will increase in percentage terms even faster than the unit growth in test volume.
As mentioned earlier, the industrial diagnostics market has six key sectors; food processing, beverages, pharmaceutical, personal care products, environmental water and process water. The relative penetration of rapid microbiology methods by sector is illustrated in Fig.4.
The food processing and environmental water sectors have been the quickest to adopt newer or “rapid” methods. The food processing sector represents almost 50 percent of testing in the industrial market. Driven by economic issues, regulatory requirements, consumer pressure, the press and proactive practices, the food industry has been quickest to move towards alternative methods and away from traditional microbiology.
An important question is why hasn't there been more adoption of these newer methods. Also, why is there such variation across the sectors? What are the restrictions or resistances? In addition, is there a variation of adoption practices across different geographies? These and other questions will be covered in future articles.
Industrial Microbiology Market Review-2nd Edition, Strategic Consulting, Inc., March 2004.
Tom Weschler is president of Strategic Consulting, Inc. and former president of Idexx’s Food & Environmental Division. Reach him at 802-457-9933 or email@example.com.