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Detailed research report on Laboratory Services services with marketshare and growth rates for 26 countries and information on a further 440 (HBI Intelligence)
Database of 440 Laboratory Services service providers, including profile and major external investors (HBI Intelligence)
Merger and acquisition (M&A) intelligence showing likelihood of sale (HBI Intelligence)
News stories and interviews with Laboratory Services operators (HBI Deals and Insights)
Events that cover healthcare services globally including Laboratory Services (HBI 2024)
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Sector ReportLaboratory Services Sector
Updated: February 2024
Executive Summary
EXECUTIVE SUMMARY
Impact of Covid-19
We now have updates for every country’s growth forecasts for 2020 and 2021 for the diagnostic lab ector. This is a partially elective sector and there has been a strong short-term impact which we have already reported in news. A serious recession will further hit demand and leave many investors breaking their bank covenants.
Introduction
The for-profit lab market has been quickly consolidated over the past decade. Today five players take a quarter of the whole EMEA market with collective sales of €5bn. The next three add an additional €1.3m, meaning that the 2017 market share of the Big Eight was 36%.
The Big Nine are: Synlab (PE-owned), Sonic (listed), Limbach (founders), Cerba (PE), Unilabs (PE), Eurofins (listed), Biogroup-LCD (founders), amedes (PE). The first six of these are pan-European. Synlab has the widest coverage with sales in 27 European markets (plus a few emerging markets).
Aside from these, there remain a few large, family or PE-owned independents in Spain, Norway, Poland, Switzerland and Italy. It’s a question of when, more than whether, these groups will sell.
In some countries, such as Finland, Romania and the UAE, outpatient lab networks are incorporated inside healthcare networks. Private hospital groups, particularly in Germany, also include substantial lab operations. In almost all countries, labs are a discrete business strand, which doesn't perform any other business activities.
We can differentiate between four main types of national markets:
1) NHS/outsource. (the UK/Nordic) All tests, inpatient or outpatient, are typically carried out in large public hospitals and where a small for-profit sector competes for 3-10 year tenders.
2) Outpatient only. (France, Spain, Italy, Switzerland, Belgium, Romania) Traditionally tests ordered by family- or specialist-doctors operating outside hospitals have been carried out by the for-profit outpatient lab sector.
3) Outpatient + outsource. (Germany, Poland, Czechia and Slovakia) Lab groups can address the outpatient market outlined above in 2), but also win substantial outsource contracts from public sector hospitals.
4) Private pay. (Ukraine, Russia, Egypt, North Africa) In these countries citizens typically pay out of pocket for lab tests. There are no tariffs and margins tend to be very high, 35-40% is not uncommon. High co-pay means there is a growing private pay market in Italy. It is also growing across CEE.
Where we are now
The big groups grew by buying up for-profit labs set up by doctors in the 1960s to 1990s. Backed by private equity, their strategy has been to consolidate revenue and aggregate lab tests within larger, highly-automated, regional labs, capable of processing high volumes of tests at very low prices.
The result has meant relatively high EBITDA margins, although the rationalisation still continues. PE likes labs because it was the only sector of healthcare services which could be industrialised in this way.
To sell, IPO or sustain their existing share price, the lab groups have to demonstrate the ability to grow sales, and so profits. Here we look first at current growth drivers and limiters and then at opportunities and threats.
Growth drivers
1. Specialised testing
As healthcare systems across the world move towards personalised medicine and care, there is a growing demand for specialist testing. Testing an oncology patient’s genome can ensure that they are only given drugs they will respond to. Another arena is genome sequencing for the diagnosis of rare medical conditions – although by its very nature this is a low volume market.
Eurofins already has around €100m 2018 sales in genomic testing and claims it is the biggest player in the specialised testing market, with what it describes as the largest IP portfolio of pre-natal testing. Unilabs also has about €30m here. Medicover, Mehilainen, Sonic and Synlab have all made moves into genetic testing.
However, there are a number of sticking points. Samples do not degenerate as fast and so can be shipped to lower-cost markets like Beijing. We have already seen stiff competition with the prices of popular tests: some Downes tests have dropped from $1,000 to $200. On top of this much of the development work in genetics is being done in the public sector and public payors have been reluctant to approve new tests. Eurofins anticipates that France and Germany will start to reimburse some of its pre-natal tests in late 2019. However, overall the sector has grown more slowly than anticipated and profits have been lower. Competition is fierce once a market opens up.
Genetics also calls for substantial investment in R&D to develop new tests and in education to read the vast number of doctors who don’t understand the field at all. It is far from clear that the big lab groups have an appetite for the risks incurred in either of these routes.
See the report for full details on growth drivers in the laboratory sector. See the table of contents for further details on what is covered in the report.
Growth limiters and threats
1. Payor control on price and volume
These have been regular and predictable in France and Italy and intermittent and deep in Germany and Switzerland.
Often lab groups have no visibility of price cuts and certainly no control. The only plus is that institutional deadlock often stands in the way of obvious reforms. The most lucrative tests in Germany are those carried out by the 9% that have PMI. Here the tariffs have not been changed since the 1990s because such changes will need to be approved by both houses of the Bundestag.
2. Disintermediarisation
Just as an artificial kidney could destroy the entire dialysis sector, so a new point of care tests (POC) could destroy the diagnostic lab market. The well-documented failure and fraud of US-based Theranos, which claimed it could carry out a range of tests in a few minutes from a single drop of blood, terrified the industry.
Hundreds of startups around the world are working on POC testing, as are major lab suppliers like Roche, Abbott and Siemens.
Sample report pages and data
What we offer
- Instant overview of the EMEA laboratory services market and players This report gives you visibility of this important, fast-growing market across 21 countries with market data on 11 as well as detailed profiles of the Top 50 players.
- Ever green! Updated throughout your subscription As part of our HBI intelligence platform this report is updated throughout the period of your subscription. You will also receive additional news stories and interviews on laboratory services throughout the period.
- Insights on business models The report is based on in-depth interviews with many operators. The report also looks at how laboratory services players can best build customer loyalty.
- Identify national opportunities We assess opportunities at national level based on the regulatory environment and proposed reforms.
- Size markets This report enables you to swiftly see market sizes and market shares
- Save time and money This report will save you weeks researching these opaque markets and enable you to swiftly identify investment opportunities, new partners and markets.
Table of Contents
Table of Contents
EMEA overview
Datasets Size of EMEA market 2018 Marketshare of major EMEA players 2018 Comparison of market sizes 2018 Comparison of market growth rates 2016-2020
Introduction
Differentiation of four types of national markets - NHS/outsource
- Outpatient only - Outpatient + outsource - Private pay
Where we are now
Growth drivers - Specialised testing - Increasing test volumes
- Consolidation - Outsourcing
- Winning new accounts - Further rationalisation
- Growing B2C sales - Diversification beyond labs
Growth limiters and threats
- Payor control on price and volume
- Disintermediarisation
Belgium
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Czech Republic
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Denmark
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Finland
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
France
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Germany
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Greece
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Ireland
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Italy
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Netherlands
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Norway
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Poland
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Portugal
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Romania
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Russia
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
South Africa
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Spain
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Sweden
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Switzerland
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Ukraine
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
United Kingdom
Data sets For-profit /private market size and growth rates 2016-2020 Marketshare of major players 2018
Market description and trends.
Laboratory Services News & Interviews
Our indepth stories dig deep and cover profit multiples, revenue, EBITDA and CEO thinking.
Labs groups saw huge revenue increases in 2020 and 2021, as they made the most of the Covid testing windfall. But in 2022 Covid testing began winding down and the revenue of major labs groups began returning to their pre-Covid trajectories....
Contrary to reports in the Spanish media suggesting it is less profitable, Spanish healthcare group Ribera Salud’s president Alberto de Rosa tells HBI profits at the group are up....
The London Clinic, a large private hospital in London, is opening a new diagnostics centre just across from its main site in Harley Street, London, to deliver fast diagnostics services to patients wanting to skip NHS queues....
Have public-private partnerships had their day? Who better to answer this than Alberto de Rosa, president of Spanish hospital group Ribera Salud which was forced to pivot away from PPPs to fight off political opposition, and meet the demands of a shifting Span...
Billionaire activist investor Paul Singer has acquired a minority stake in pan-European diagnostic labs group Synlab, just before the deadline for shareholders to decide whether they want to sell to PE firm Cinven, which is trying to take the group private. Si...
Multinational investment bank and financial services company Jefferies published its 2023 Healthcare Temperature Check report this week, to coincide with its healthcare conference which ran between Tuesday and Thursday this week....
Value health is a key proposition in the Saudi 2030 transformation plan. But previous attempts in other markets have met with questionable results. What exactly does value health mean in this burgeoning market - and how is this set to change payor-operator con...
Multinational labs group Synlab has left it up to shareholders to make up their own mind about whether to sell their shares to UK PE firm Cinven. Cinven has already secured 79% of the shares, but remaining shareholders have until November 20 to decide whether ...
Winter is coming, and for the health care sector the end of the year could see a weary workforce and soaring costs push some groups to breaking point. HBI speaks to a selection of operators, analysts and advisers to understand how groups are planning for the p...
Database of 440 Laboratory Services service providers
HBI has built a unique database of the Top 4,000 operators globally in health care services. As part of this, we have identified the top 440 Laboratory Services operators in Europe and will soon add the major players in Emerging Markets.
Profiles include revenue/sales data as well as EBITDA and other profit margins where known. They also cover private equity ownership with dates and mergers and acquisitions.
Mergers & Acquisition (M&A) Intelligence
Our deal pipeline shows how likely all private equity and some privately companies are to sell based on algorithms and journalistic know-how.
HBI 2024 – the only CEO-level conference to cover healthcare services globally
HBI 2020 – the only CEO-level conference to cover healthcare services globally
In 2019 this event brought together 700 delegates from over 40 countries. Over 60% are CEO level and they included 150 specialist investors in health care services. HBI 2020 includes a diagnostics session on opportunities and challenges, with a penal of operator CEOs from the laboratory and imaging sector.
Other sessions look at trends in the investment and merger and acquisition, digital health and telehealth.
Contact us in the UK on 0207 183 3779 for more information.
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