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Nov. 23, 2004 – Fifteen years ago, lab-on-a-chip was considered the next big thing for MEMS. Yet for all its promise, lab-on-a-chip has never come close to meeting the expectation initially surrounding it. The cluster of startups that brought lab-on-a-chip to market went public fairly quickly, but they’re still struggling to generate revenues, much less recover the hundreds of millions of dollars spent to develop these products.
Even so, a lot of people think there’s considerable market potential, given the fact that the number of companies developing lab-on-a-chip devices — plastic, glass and silicon chips containing complex arrays of channels, pumps and valves that could move minute amounts of fluid — swelled from about half a dozen startups in the early days to more than three dozen companies today.
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Some of the world’s largest semiconductor companies are among the competitors jostling for market share.
In fact, there appears to be something of a mini-bubble occurring. But don’t sound the alarm just yet. New end-uses may allow a large number of these companies to remain in this market and finally build a viable business.
Why now? It may be that lab-on-a-chip was simply too far ahead of its time for the market. It may also be due to the diligent work performed over the past decade to better understand the considerable difficulties of working with fluids at the nanoscale that has finally come to fruition.
It certainly doesn’t help that, in the ensuing years, other (non-MEMS) biochip technologies have entered the market, bringing with them some stiff competition. Lab-on-a-chip is no longer the de facto technology. But thanks to a subtle shift in applications, the technology is positioned to dominate what could be a lucrative market.
There were once two clear end-uses: point-of-care (POC) diagnostics and life science research. However, the applications currently being pursued are increasingly fragmented; more companies are carving out their niche in an emerging category called clinical diagnostics. That alone may allow lab-on-a-chip technology to finally make good on its promise of vastly improving medical science and, ultimately, patient health care.
Clinical diagnostics combine the DNA detection capabilities of lab-on-a-chip chips for use in life science research with the rapid test response of point-of-care diagnostic chips. Chips combining these two features, which could be used at the point-of-need, were seen as the ultimate technology for the detection of biological and chemical weapons shortly after the start of the war in Iraq.
The application faded from public view when the immediate need diminished and it became apparent that getting accurate real-time detection in battlefield conditions was a difficult proposition.
The capability (and need) to rapidly provide DNA-based point-of-need testing still exists, but the market remains a ways off for a number of reasons, the most important being, where to start? There are thousands of biological entities; deciding which one, or perhaps few, to initially detect is daunting.
In the interim, while clinical diagnostics as an application provides the same prospect of seemingly endless choices in terms of what to detect, real market need is pointing the way. The ability to test cells for well-known bacteria and viruses is a start, as are other relatively common diseases where prompt, but not immediate, results are needed.
More importantly, the ability to receive test results in a few days, rather than a week or so, could make a vast difference in diagnosis and treatment, not to mention patient outcome. To this end, lab-on-a-chip chips have been or are being developed to test for SARS, leukemia, breast cancer, stroke and a variety of infectious diseases. However, there’s still considerable work to be done to fulfill the promise of the clinical diagnostics segment as well.
From a unit shipment standpoint, POC diagnostics remain the king of the lab-on-a-chip segment, accounting for more than 98 percent of the devices that were shipped in 2003. On the flip side, lab-on-a-chip for life science research accounted for more than 50 percent of revenues in 2003. Based on half-year 2004 results, those ratios are not expected to change, at least for the next year or so.
In a way, this market segment is a little like RF MEMS and optical MEMS in the greater MEMS industry, where the former is driving unit shipments (at a very low price) and the latter is driving revenues (at a very high price). The chips used in life science research run a couple of hundred dollars, while those for POC diagnostics are just a few dollars. Chips for specialized clinical diagnostics tests run somewhere in the middle.
Unit shipments of lab-on-a-chip are forecast to nearly quadruple over the next five years, at a Compound Annual Growth Rate (CAGR) of 29.6 percent. Given the growth being experienced by market leader i-STAT (which was acquired earlier this year by Abbott Laboratories), lab-on-a-chip for POC diagnostics appears to have finally hit its stride within the market.
In terms of revenues, we’re looking at a CAGR of 31.2 percent through 2008. This is based not only on the high average selling price of lab-on-a-chip for life science research (despite their slow unit shipments into the market), but also on the faster growing segment of clinical diagnostics. Clinical diagnostics is where In-Stat/MDR expects to see the bulk of commercialization efforts over the next few years.