Enhanced funding provides impetus to global microfluidics/lab-on-a-chip markets

London 24 March 2003As new products emerge with ever-increasing frequency and the number of applications spiral, the global microfluidics/lab-on-a-chip markets are poised for strong growth. According to a new report by international growth consultants Frost & Sullivan, augmented public and private sector funding allied with technology, manufacturing, and medical advances are likely to drive revenues from last year's $127,8 million to $709,9 million by 2008.

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Improved government funding through grants or direct sales is likely to be a key driver in the expansion of the microfluidics industry. The United States National Institutes of Health (NIH) and its various awardees are set to benefit from a $4-billion funding increase from 2002-2003, disbursed among developers of lab-on-a-chip and prospective clients of microfluidics companies.

Government agencies and the private sector have been lending generous financial support to bio-defence detection technologies. The Department of Defense (DoD), Department of Energy (DoE), United States Department of Agriculture (USDA), and Environmental Protection Agency (EPA) are merely some among the growing list of organisations that in the aftermath of 11 September 2001 have been securing funding allocations for research, while boosting end-user demand for bio-defence product applications.

Apart from improved monetary resources, the multi-disciplinary microfluidics industry is also in line to benefit from ongoing technological progress in semiconductors, health care, and genomics. For instance, a wide range of new analyses is now being carried out in research and increasingly in diagnostics due to the availability of partial or entire genomes. Moreover, the emergence of new therapies is likely to stimulate demand for related diagnostics. Such developments are expected to catalyse the microfluidics sector.

The long-term advantages offered by miniaturisation, particularly in terms of savings, are supporting uptake among end-users in research, routine, and diagnostics settings. However, in the near term, adoption rates in the cost-conscious clinical diagnostics field might be slow due to the relatively high price of microfluidics technology.

"However, lab-on-a-chip devices are expected to eventually provide the low cost-per-test necessary to bring in more of these customers due to multiplexing and lower overall price. Once this threshold has been crossed, lab-on-a-chip will compete on price as well as performance and will move rapidly into the diagnostics side", states the report.

At the same time, attributes such as increased sensitivity, mobility, and efficiency are likely to push the technology's deployment by defence and public health sectors. For these end-user segments, the functional superiority of this technology will take precedence over cost issues.

In many high throughput labs in the biotechnology and pharmaceuticals sectors, existing equipment is proving to be inadequate to deal with new bottlenecks. As labs seek to upgrade their automated systems, microfluidics technology is emerging as an attractive solution. "Since automated labs tend to be more technically advanced and forward thinking, they are more prone to adopt a novel technology. At the same time, open technologies and standards will play a major role in driving this acceptance", adds Frost & Sullivan.

A prominent trend in the market has been the remarkable rise in product introductions. With many products in the final stages of beta testing, a slew of new offerings are expected to be made available in diverse and ever-widening applications. All application areas are set to enjoy robust growth rates. Strongly performing protein, cell/tissue, and micro-organism detection segments are likely to chip away at the dominance of DNA/RNA applications. However, the latter will continue to be the largest application sector accounting for 30,8 percent of market share in 2008, while generating the highest estimated revenues of $218,9 million.

Despite a generally upbeat forecast, an inchoate intellectual property and regulatory landscape is seen as a significant deterrent to growth prospects with widespread intellectual property (IP) litigation being a common feature of the microfluidics market. "Many lab-on-a-chip devices incorporate biomolecules for separation, detection, or other functions, which may be vulnerable to IP issues. Lab-on-a-chip companies in the diagnostics segment may be hurt the most by this uncertainty due to the additional product development associated with regulatory requirements", explain the growth consultants.

Cross-licensing initiatives have now helped resolve several major IP-related cases including the high profile Caliper-Aclara tussle. Such cross-licensing arrangements are expected to overcome a critical challenge in the development of companies and products, while bolstering public relations and adoption efforts.

With most companies in the market being start-ups, collaborations have been a defining characteristic of the competitive environment. Strategic alliances with other microfluidics/MEMS design and manufacturing service companies are likely to be highly productive, enabling instant access to technical skill, IP, or distribution channels. A successful example of this trend has been the Caliper-Agilent collaboration, which accounted for a combined market share of 29 percent in 2002.

As this young market develops, a broadening range of applications and a host of promising service opportunities for microfluidics/lab-on-a-chip technologies translate into exciting growth potential for both incumbents and prospective competitors. The report on the global microfluidics/lab-on-a-chip markets is available at the price of $ 3950 and can be ordered by contacting Mrs. Katja Feick of Frost & Sullivan.


Leslie Versweyveld

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