Eight of the most prominent test makers navigate a whiplash marketplace.
ONEAs the Omicron wave of the pandemic swept across America this winter, manufacturers of home-made Covid tests faced a unique business dilemma. Apparently, from one day to the next, the demand for their products became endless. Massive government contracts were on the rise. By mid-January, the Biden administration had promised to buy 1 billion of the tests. But it was almost as certain that the demand for the tests would disappear – at least temporarily – when spring came.
Sunnyvale, California-based iHealth Labs, which first received FDA approval for its test in November, discarded more than 500 million Covid-19 home test kits for the U.S. market in February, an astronomical increase over the 20-30 million it produced . In December. “We screwed up very quickly,” says iHealth operations manager Jack Feng. “It was almost like a fight.”
It was a brand new industry for iHealth, which is majority owned by China’s listed Andon Health and made things like blood pressure monitors and thermometers before the pandemic. Its contract manufacturer in Tianjin, China, also owned by Andon, made sets around the clock and even stayed open with partial staff on Chinese New Year. To help get the tests to the states, iHealth chartered 100 aircraft. About 350 million of its antigen tests went to fulfill their government contracts, which are worth more than $ 1.3 billion, while the rest went to pharmacies and other retailers.
“I think we delivered more tests than the other test makers in total [in February]. More than half of the US market was produced by us, ”says Feng. “At first we thought we were just a little guy and there are some big guys who are much, much bigger than us … We did not expect we could be the biggest force to deliver this test.”
“The future of the Covid home test market will not support 16 or more products.”
iHealth is just one of many companies that have rushed to produce home tests. To date has The FDA has approved 16 home tests, including 13 rapid antigen tests and three molecular ones, from both giant companies and startups. Abbott, the $ 43 billion (2021 sale) goliath, built factories in Maine and Illinois to get its popular BinaxNow test out. To date, it has distributed more than 1.4 billion Covid tests. San Diego-based Quidel says Covid-19 products, including its QuickVue test, accounted for about $ 1.3 billion of its $ 1.7 billion in revenue last year.
But it has not been easy to deal with the uncertainty in demand. Last summer, when the virus cases dropped, Abbott discarded test cards used in his home tests and fired employees, only to re-employ them in the fall. Now that the latest Omicron wave has passed, test companies will need to figure out how to plan for a company where demand is picking up – and where retail prices are under pressure.
“If we’ve seen the worst that Covid has in store for us, given the CDC’s inadequate support for home testing and the current level of Covid fatigue, it seems safe to assume that the future of the Covid home testing market won does not support 16 or more products. , ”Says Michael Abrams, managing partner of St. Louis-based health consulting firm Numerof & Associates.
Here’s how eight of the most prominent test manufacturers in the home perform:
SAMPLE: BinaxNow (antigen)
MARKET BEAM (ticker: ABT): $ 201 billion
PANDEMIC INVENTORY PERFORMANCE: at 46%
INCOME: $ 43 billion
FINANCIAL IMPACT OF COVID: Abbott’s sales related to Covid testing, including BinaxNow, reached $ 7.7 billion in 2021, nearly double the previous year’s $ 3.9 billion.
WHAT THEY HAVE DONE: Distributed more than 1.4 billion Covid-19 tests since the start of the pandemic. Built production facilities in Maine and Illinois.
WHAT THEY PLAN TO DO: Turn up production from 70 million tests a month in January to 100 million in March.
KEY QUOTE: “I think the bigger picture here is, of course …. testing will eventually fall, but there will be a part that will be maintained,” CEO Robert Ford said at JP Morgan’s health conference in January.
SAMPLE: BD Veritor (antigen)
MARKET VENGEANCE (ticker: BDX): $ 72 billion
PANDEMIC INVENTORY PERFORMANCE: at 10%
INCOME: $ 20 billion
FINANCIAL IMPACT OF COVID: Covid-19 revenue is expected to reach $ 450 million this year, with the majority of it in the first half, according to a report by analysts at William Blair.
WHAT THEY HAVE DONE: Developed a digital approach to reading test results that can gain a foothold in the employer market.
PRODUCTION CAPACITY: 12 million tests a month.
STRATEGIC DIFFERENCE: According to a report from William Blair analysts Brian Weinstein, Griffin Soriano and Dustin Scaringe: “BD did not compete for high volume, lower prices and does not have the same nationwide retail presence that companies like Abbott and Quidel have been able to secure.”
SAMPLE: Keywords (molecular)
MARKET BEAM (ticker: HLTH): $ 1.1 billion
EQUITY RESULT SINCE SEPTEMBER 2021 IPO: Ned 51%
INCOME: $ 615 million
FINANCIAL IMPACT OF COVID: All of the company’s product revenue comes from their Covid test.
COMPANY HISTORY: CEO Ayub Khattak, who has a bachelor’s degree in mathematics from the University of California, Los Angeles, co-founded the diagnostics testing firm in 2010. Prior to the pandemic, the startup was focused on research. Khattak owns just over 10.9 million shares worth nearly $ 90 million.
WHAT THEY HAVE DONE: Signed contracts with Google, Salesforce and the NBA as well as the Department of Defense. Google began using Cue’s home test for employees last April and is reported to be corporate largest private customer.
SAMPLE: Discover (molecular)
TOTAL VENTURE FUNDS: $ 110 million.
FINANCIAL IMPACT OF COVID: Detect’s Covid-19 test is its first and to date only commercial product.
COMPANY HISTORY: March 7, 2020, scientist and serial entrepreneur Jonathan Rothberg wrote on Twitter “Thinking of a cheap, easy to make home test kit for #Coronavirus.” The test he designed received FDA approval in October 2021.
WHAT THEY HAVE DONE: Made molecular tests at home cheaper. Detect’s recyclable hub required to start using its tests costs $ 39 compared to $ 249 for Cue’s reader.
WHAT THEY PLAN TO DO: Quickly increase the production of its Covid test, which became commercially available in December, to millions a month.
CURRENT STATUS FOR RETAIL CONSUMERS: Out of stock.
FUN FACT: In previous lives, CEO Hugo Barra was vice president of virtual reality at Facebook and vice president of Google’s Android division.
KEY QUOTE: “It’s not like we’ll forget home testing as soon as we enter the endemic phase of Covid,” says Barra..
See the story above.
SAMPLE: InteliSwab (antigen)
Market value (ticker: OSUR): $ 492 million
PANDEMIC INVENTORY PERFORMANCE: at 15%
INCOME: $ 234 million
FINANCIAL IMPACT OF COVID: The Inteliswab tests brought in $ 22 million in revenue last year, under the $ 30 million guidance it had given analysts.
WHAT THEY HAVE DONE: OraSure won more than $ 300 million worth of public contracts, but has struggled to produce tests. The company restructured in late 2021 and hired an operations consulting firm used by NIH’s Rapid Acceleration of Diagnostics, or RadX, initiative to get production on track.
NUMBER OF ANALYZES: JP Morgan’s Tycho Peterson wrote it in January the company’s InteliSwab antigen test “has been plagued by FDA approval delays, as well as notable production upscaling issues during launch.”
THE VIEW: OraSure announced in January that it was exploring “strategic alternatives,” corporate-speak for a potential sale. It also said its CEO Stephen Tang would resign in late March. A new CEO has not yet been appointed.
SAMPLE: QuickVue (antigen)
MARKET VENGEANCE (ticker: QDEL): $ 4.1 billion
PANDEMIC INVENTORY PERFORMANCE: at 11%
TOTAL INCOME: $ 1.7 billion
FINANCIAL IMPACT OF COVID: Sales of Covid-19 products accounted for 75% of total revenue in 2021, or $ 1.3 billion, an increase of 42% from $ 891 million the year before. Quidel performs Covid-19 tests, which are used by doctors’ offices as well as home tests.
WHAT THEY HAVE DONE: Received a 12-month contract with the US Government worth more than $ 500 million and entered into partnerships with CVS, Walgreen, McKesson and NIH. Sold about 65 million QuickVue home Covid tests in the fourth quarter of 2021.
WHAT THEY PLAN TO DO: The company has been working to increase production to 70 million tests per month.
THE BIG DEAL: Quidel agreed to buy Ortho Clinical Diagnostics, an in vitro diagnostic company, for approximately $ 6 billion in December 2021.
SAMPLE: Clinitest (antigen)
MARKETING (ADR: SMMNY): $ 65 billion
PANDEMIC INVENTORY PERFORMANCE: at 56%
INCOME: $ 21 billion
FINANCIAL IMPACT OF COVID: Revenue of nearly $ 360 million from rapid Covid-19 tests in the last three months of 2021. Raised its 2022 fiscal year guidelines (ending September 30) based on forecasts that its diagnostic department, which includes these tests, will bring in more than $ 760 million.
WHAT THEY HAVE DONE: The German medical device manufacturer was one of the last entrants in the US domestic market for Covid testing, and received FDA approval in late 2021.
WHAT THEY PLAN TO DO: Committed to making 50 million tests available at the end of March as part of the Biden Administration’s rollout of 1 billion free tests; also scheduled to deliver 84 million tests to the Department of Defense this summer.
Sources: companies, SEC filings, analyst reports, JP Morgan Health Conference presentations, Morningstar, Forbes research.
Notes: Total revenue is for the 2021 calendar year regardless of fiscal year; Cue Health revenue is preliminary and represents an average of $ 613 million to $ 618 million. Share prices and exchange rates per. March 11, 2022. Pandemic stock development is since March 11, 2020.