| R. Lewis Dark:
Procter & Gamble Moves into the Neighborhood
Procter & Gamble Moves into the Neighborhood
LAST MONTH, A NEW RESIDENT BOUGHT INTO THE LABORATORY TESTING NEIGHBORHOOD.
Procter & Gamble Company spent a third of a billion dollars to enter
a joint venture with InvernessMedical Products, Inc., with the specific goal
of selling diagnostic test kits to consumers in pharmacies, grocery stores, and
other retail outlets.
As you will read on pages 7-9, Inverness Medical Products—already a
major player in consumer self testing—just outbid Beckman Coulter
Corporation to acquire Biosite, Inc., which has a significant presence in the
point-of-care test (POCT) market. On the same day that Inverness
announced its acquisition of Biosite, it also announced the formation of its
joint venture with Procter & Gamble. The two companies formed SPDSwiss
Precision Diagnostics GmbH (SPD), which will be based in Geneva,
Switzerland. Inverness tossed its kits for home pregnancy tests and
fertility/ovulation monitoring into the joint venture. Procter & Gamble
made a $325 million investment for its contribution.
I consider this to be a notable development. It brings one of the world’s
most respected companies in consumer products a step closer to the laboratory
testing marketplace. P&G's interest in consumer self testing is based on
its belief that consumer demand for health services and healthcare products
will soar in the coming decades. Thus, it wants to position itself to be a distribution,
marketing, and sales channel for healthcare-related products.
Some of you keen observers probably already know that P&G markets a
number of therapeutic drugs. For example, when Prilosec, the heartburn
medicine, came off patent, P&G convinced the drug’s owner, AstraZeneca,
to allow it to market over-the-counter sales of Prilosec.
What does Procter & Gamble’s move into the laboratory testing neighborhood
mean for pathologists and lab directors? In the short term, there is likely
to be no impact.However, in future years, P&G's vaunted expertise in product
development and its ability to launch new products that quickly achieve market
dominance could be harnessed to introduce specific diagnostic technologies
that expand the types of consumer self-tests sold on retail shelves. That is
not likely to affect the volume and menu of tests performed in clinical laboratories.
But it certainly has the potential to transform consumers into more
sophisticated users of diagnostic tests.
Quest Wants It Both Ways
With Payer Contracts
Disruption in managed care contract status quo
could eventually harm entire laboratory industry
CEO SUMMARY: Once again, public laboratory companies
are pursuing short-term strategies that promise competitive
advantage to themselves. But these strategies also carry long
term risks that could burden the entire laboratory industry.
Contradictions in the current cycle of competition for exclusive
managed care contracts are already visible. Ongoing consolidation
of payers is another wild card in this scenario.
Inverness Buys Biosite,
Has NewVenture with P&G
New partnership with P&G signals its
pursuit of consumer diagnostics market
CEO SUMMARY: On the same day that Inverness Medical
Innovations announced that it would acquire Biosite, thus beating
out Beckman Coulter in the bidding war for Biosite, Inverness also
announced that it had entered into a joint venture with Procter &
Gamble. Together, the two companieswill develop,make, andmarket
consumer diagnostics products to be sold in retail outlets.
Inverness expects to mine the Biosite development pipeline for
other assays that can be marketed as point-of-care tests.
Community Hospital Builds
Thriving Lab Outreach Program
NEW LEADERSHIP BUILDS LAB CAPABILITIES, THEN GROWS REVENUE
CEO SUMMARY: When 330-bed Botsford Hospital of
Farmington Hills, Michigan, got interested in laboratory
outreach 10 years ago, it brought in a new laboratory
leader, invested in new analyzers and informatics, and
then let the quality of the operation attract new business
from the community. Today, Botsford’s outreach program
performs 2.4 million tests per year and generates annual
revenues in excess of $14 million. Here’s a look at the key
business strategies that fueled this lab’s growth.
Labs Are Finding Ways
To Link Variety of EMRs
Physicians using EMRs often demand electronic delivery of laboratory test data
CEO SUMMARY: Three speakers at the Executive War College
last month in Miami, Florida, offered case studies on how labs are
developing electronic interface gateways between their LIS’s and
EMRs in the offices of client physicians. Physician clients frequently
want lab data to be among the first links they develop. In
many situations, it is critical for labs to dictate the specifications
of the links between labs and physician offices.
INTELLIGENCE: Late & Latent
BATTLE BETWEEN
DERMATOLOGY AND PATHOLOGY?TRANSITIONS | 
