Diagnostic precision

By identifying real markets and focusing on consumer needs, the new generation of diagnostic companies has shaken off the sector's musty high volume, low value image. Using cutting edge technology to develop products that are clinically superior to previous offerings, these companies have been able approach market caps on a par with emerging biotech bellwethers. To get to the next level, these biodiagnostic plays are planning to expand into newer, potentially more lucrative fields.

AdvaMed, the Advanced Medical Technology Association in Washington, estimates global in vitro diagnostic sales were $28.6 billion in 2005 - of which the U.S. market accounted for $11.2 billion. And while diagnostics account for less than 5% of U.S. hospital costs, and 1.6% of all Medicare costs, they influence as much as 60-70% of healthcare decision making, according to the trade group...