The noninvasive prenatal testing "NIPT" market continues to show robust adoption trends. Growth slowed modestly primarily from three market dynamics:
- The high risk market in the US has moved to the back end of the adoption bell curve prompted by widespread coverage over the past three years. The rapid penetration of this market is a precursor for average risk and international markets as they embrace testing at market-appropriate prices.
- International markets are mostly self pay. The total addressable market "TAM" is currently restricted to the economically advantaged.
- Test providers are starting to moderate unreimbursed testing. They are also increasingly controlled by their coverage network which limits their ability to cut co-pay requirements.
The catalysts expected to reaccelerate growth are:
- Average risk endorsement and reimbursement in the US. This process has begun with some coverage polices now accepting average risk. Some in-network coverage announcements have been made. The consensus view is further progress is not likely until 2017.
- Many international labs are signing technology transfer and licensing agreements to accelerate time to in-market processing. Once validated and launched, as lab volumes increase processing costs will decline. Their next step should be to reduce pricing to increase the addressable market, further increasing processing efficiency.
- International coverage policies are starting to emerge, primarily in high risk. As prices contract and volumes increase the process of overall market adoption and coverage is expected to occur. Germany and Switzerland, as two of the highest GDP nations, have already announced coverage for NIPT. The UK is close to coverage for high risk.
- Low GDP and/or healthcare per capita countries may not realistically be addressable for 5-10 years.
The China market is a closed market in most respects. Plasma is not allowed to be shipped outside the country for processing. The dominant test providers are BGI (NIFTY) and Berry Genomics (Bambni). Other providers include Annoroad, Basetra, Macrogen, Novogene and Igenomics. Additional providers with labs in Hong Kong include XCelcom, The Chinese University of Hong Kong and Prenetics. Quest also has a presence in China but it is unclear if they have launched their NIPT, QNatal. PerkinElmer has a strong reproductive health franchise in China but does not yet appear to have an NIPT offering. All NIPT in China is self-pay at an average price point of $400. Both Berry and BGI have indicated the need to eventually cut pricing to around $100 to address the entire market.
There are approximately 18 million births annually in China. The move away from the one child policy should increase the birth rate by 3 to 6 million per Berry and BGI.
Estimated China tests
Source: Personal estimates from BGI website and GenomeWeb articles citing company sources.
Rest of the World
The primary test providers are: Illumina (NASDAQ:ILMN)-Verinata subsidiary, Natera (NASDAQ:NTRA), Roche (OTCQX:RHHBY)-Ariosa subsidiary and Sequenom (NASDAQ:SQNM). The accessions reported by these companies represent the volume of samples received in their labs, which include tests from both domestic and international distributors on a test send-out basis. All of these providers are actively licensing their tests for in-country processing which moves volumes to their licensees. The technology transfers already transitioned to in-country include:
- Australia Douglass Hanly Moir Pathology (Ariosa), Sonic Healthcare (Ariosa) and Victorian Clinical Genetics (Illumina).
- Canada Life Labs (Natera).
- France American Hospital of Paris (Sequenom), Biomnis (Illumina), Laboratoire Cerba (Sequenom) and LaboSud (Premaitha).
- Germany Cenata (Ariosa), Center for Human Genetics (Illumina) and LifeCodexx (Sequenom).
- India MedGenome (Natera) and Synapse Diagnostics (Sequenom).
- Italy Bioscience Genomics (NYSEMKT:BGI), Genoma (Illumina), Personal Genomics and Toma (Ariosa).
- Japan GeneTech (Sequenom) and SRL (Sequenom).
- Spain CGC Genetics (Illumina), Labco/Syngen (Illumina) and NIM Genetics .
- Switzerland Genoma/Espirite (Premaitha), Gentica (Natera), Sonic/MediSupport (Ariosa) and Viollier (LifeCodexx/Sequenom).
- United Kingdom Birmingham Women's NHS (Illumina), DNA Diagnostics Center (Natera), Health Services Laboratories (Ariosa), Source BioSciences (Illumina), St George's Hospitals (Premaitha), The Doctors Lab/Sonic (Ariosa) and Wolfson Institute (Premaitha).
- United States Atlas Genomics (Illumina), Baylor Miraca Genetics Labs (Illumina), Center for Medical Genetics (Illumina), Counsyl (Illumina), Genesis Genetics (Illumina), LabCorp (Illumina), Mayo Clinic (Sequenom), MyGenetx (Illumina), Quest Diagnostics (Sequenom), Pacific Rim Pathology (Illumina), PerkinElmer (Illumina), Progenity (illumina), Recombine (Illumina) and Veritas (Illumina).
- Ariosa has disclosed 6 licensees in various press releases. Additional licensees may exist but have not been seen in Roche reports.
- Illumina and Sequenom have combined their intellectual property "IP Pool". All licensees of the two companies are combined and split in an undisclosed ratio. As of March 31, 2016 there were 23 active third party labs that had transitioned to in-country processing and 21 additional pending licensees.
- Natera has disclosed 4 active licensees as of March 31, 2016. They indicated another 10 Constellation licensees that are pending.
- Many clinical labs have operations in numerous countries. They are currently only mentioned in the initial country validated but may have active or pending operating labs in other countries.
Estimated Tests Outside China
- Data from company disclosures and personal estimates.
- Market penetration is not estimated. Data by geography is not available. Determining total addressable market is too subjective given the economic diversity of the various markets. A table of annual births by region follows.
ROW Annual Births-2014
|Geography: Source Worldbank||Births (millions)||Market potential|
|North America||4.6||Very High|
|Western Europe||1.9||Very High|
Note: Market potential assessment is based upon GDP per country, ability to pay, healthcare spending per capital and reimbursement trends. In markets with low or very low market potential, only a small percentage of the population is assumed to have the ability to self-pay.
Total unit volumes for the primary NIPT providers is estimated as follows:
|Ariosa including licensees||32,000||142,000||204,200||213,300|
|Natera including licensees||0||58,000||185,000||254,900|
Disclosure: I am/we are long ILMN, SQNM.