Over the last couple of years the concept of a tipping point has been frequently discussed. Simply, the tipping point is the level at which the momentum for change becomes unstoppable. Given that Cellestis, with it's QuantiFERON product, is attempting to change the way that the world diagnoses Tuberculosis this concept has significant relevance to us. With a current total market penetration of less than 4% of a total estimated market of 50m tests per annum, we have enormous scope for growth. Our faith is that at some time we will reach that tipping point and our sales volumes will spike to much higher levels.
When we apply the concept of a tipping point to this specific market we are really looking at the phenomenon of current sales influencing future sales. This is particularly so in the medical field, where change is slow and considered but once made is made with a justifiable commitment and belief. I (and probably everybody else) don't know exactly what the tipping point is expressed as a percentage of market. Consensus seems to be that it may be around 10% to 15% of the market. In truth, nobody really knows - all we know is that there will be a tipping point.
Again, looking at our current worldwide market penetration of less than 4% both evidentially and mathematically we would have to say that we have not yet reached that worldwide tipping point. However, let's look at the market in a little more depth.
Every country in the world has different rates of TB, different TB resources and different budgetary considerations. Each country has different authoritative recommendations, guidelines and law which, in the end, will determine how that country will implement a new diagnostic regime based around QuantiFERON. There will also be an influence effect - as more countries accept and adopt QFT, other countries will be more inclined to embrace the technology. It goes without saying that the U.S. is a major leader in this.
We can break that country by country division of the market down further. Within each country there are several different classifications of TB testing performed - they might be Contact Tracing, Immigrant testing, Health Care Worker testing, Military testing, International Student testing and Population Screening. Typically, the authorities address each of these groups individually in their guidelines. Again each of these broad brush customers will influence the others.
Having assembled that picture above it is my conclusion that the most important market for Cellestis to penetrate is the US Health Care Worker (HCW) market. The successful achievement of domination in this market will lead to a consequential "toppling of the dominoes" through the rest of the US market and the world. Therefore, reaching the "tipping" point in this one market will be a huge step towards a worldwide tipping point.
Some of the reasons why the US HCW market is a driving force.
- This market is, by definition, largely composed of medical personnel.Their exposure to this diagnostic in this way builds their faith and confidence in using the test for others.
- In putting in place the resources and procedures for performing the diagnostic for themselves, they are putting in place the same resources and procedures needed to test others.
- Patients are unlikely to accept an antiquated and inaccurate diagnostic for themselves if they know that their medical practitioner is using a better diagnostic themselves.
So, where exactly is Cellestis at in this market subset?
As of 2006 there were approximately 14m HCWs in the US. That figure would be higher now, not only because the number of HCWs has increased but also because there has been a tendency for the definition of HCW (for TB testing purposes) to be widened to include ancillary staff in hospitals and medical facilities. The CDC has implemented TB screening for HCW's based upon a risk assessment of individual medical facilities, employee roles and employee history. To date, I have been unable to translate this requirement directly into a specific number of tests conducted each year. Hopefully, in time, this will become a little clearer. However, taking into account new hires, the various cycles of testing mandated by the CDC and the growing awareness of TB, I estimate that somewhere between 3m and 4m HCW TB tests are conducted each year in the US.
What we do know, however, is that as of the end of the 2009 FY, Cellestis stated that they have approximately 10% of the US HCW market. We can only assume that this percentage has grown subsequently. Have we reached the "tipping point" in this crucial market? Probably not. But we must be very close.
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Forrest, this is a very interesting speculation, particularly in the light of the pending (we hope!) announcement of new guidelines for latent TB testing, from the CDC.
ReplyDeleteWould it be reasonable to suggest that HCWs would be both more likely to be aware of current CDC guidelines, and more likely to heed the recommendations, than the other broad groups which you list? If that is the case, and given that market penetration in the HCW group is already around the 10% level, then your implicit projection that we are fast approaching the fabled "tipping point" looks to be soundly based!
Cheers, Ciabatta
G'day ciabatta,
ReplyDeleteYou got it in one. It was only when I sat down to critically examine the market for QFT that I really realized the importance of the US HCW market segment. Clearly that is why CST themselves seem to have been putting in so much on that market also.
Your point about HCW's being more aware and compliant to regulation is well taken also.
Forrest
ReplyDeleteMarketing direct to US HCW's via relevant publications and HCW unions would seem to be a second string to the "top down" approach. Do you know if Cellestis have considered this form of marketing.
Cheers Simon
CST have said that they have about 40% of the Australian market at present,all without much obvious effort on their behalf.
ReplyDeleteRoll on rest of the world!
G'day Simon,
ReplyDeleteI have not seen any evidence of CST directly marketing to individual HCWs or HCW Unions. I actually doubt that CST would do this. There are many considerations in marketing into the medical arena. Bypassing "official" channels may have some undesirable impacts.
On the other hand, all HCWs that are in a position to make informed decisions about testing regimes would be well and truly aware of QuantiFERON-TB.
As you say, CSTs approach to this market has mostly been a top-down one. However, in recent times, with most of the real top being fully aware of the efficacy of QFT, we are seeing "the top moving down". That is, we are seeing significant marketing from US State Authorities and Commercial Laboratories to the medical profession on behalf of QFT. In my opinion, this will ultimately create the "tipping point".
The upcoming CDC guidelines will no doubt accelerate the push of QFT through the medical fraternity at all levels.
Somehow to me it just feels that everything is perfectly in place for a rapid increase in uptake in the not too distant future. It's like a boulder just about to roll down the mountain - once it starts there is no stopping it.