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Realising the potential of Access to Diagnostics
All insightsThe World Health Organisation estimates that diagnostics influence 70% of healthcare decisions but only make up 5% of healthcare spending.1 However, given the problems of accessing affordable diagnostics, it’s likely that that statistic would be much lower in poorer countries.
Diagnostics play a critical role in ensuring that patients get the medicines they need and access to diagnostic technology improves quality of life and reduces avoidable deaths. However, diagnosis remains one of the weakest links in the care journey in low and middle-income countries, leading to unnecessary suffering and deaths.
Diagnostics is the process by which doctors discover the presence, cause and nature of a disease or other underlying health condition. While this covers activities such as physical examination and imaging techniques, a key tool is laboratory tests. These involve sampling bodily fluids such as blood or saliva to detect pathogens or abnormalities.
The Global access gap
The gap in access to diagnostics between rich and low-income countries was thrown into sharp relief during the COVID-19 pandemic when testing rates in high-income countries were ten times higher than in low and middle-income countries.2 The Access to Medicines Foundation is working to incentivise the companies that produce diagnostic tests to do more to make them available to people in poorer countries. In particular, engaging with them through their Access to Medicines Index.
At Stewart Investors, we’ve been using the Access to Medicines Index since it was first published to analyse the companies we seek to invest in and to guide our engagements with them. This year, in recognition of the importance of their work, we entered into a strategic partnership with the Access to Medicines Foundation. We invest in several companies that make diagnostic tests, and understanding how they solve complex problems for the people at the bottom of the pyramid is critical to building our investment case.
Dr Lal PathLabs: The economic and health impact of diagnostics
We have invested in Dr Lal PathLabs in our Asia strategies for many years. Dr Lal PathLabs is an Indian company founded in 1949 by Dr. Major S. K. Lal, with accessibility as a cornerstone of their business model. Their mission was to become a market leader by providing accessible, affordable and quality healthcare diagnostics, and they are currently India’s largest diagnostics service provider by revenues, profits and number of patients served.
India is among the lowest in the world for total healthcare spend. Still, it is among the highest for percentage of out-of-pocket spend, making affordability key to improving health and economic outcomes. Balancing profit generation and serving society is key for healthcare providers, and making healthcare affordable is the best way to build a sustainable healthcare company. Dr Lal PathLabs provides essential diagnostic services in a highly underpenetrated market with the scale to drive the triple objectives of affordability, accessibility and quality.
Combating Anti-Microbial Resistance through Diagnostics
Diagnostics are not only important in driving better outcomes for patients, they are also vital in addressing one of the major healthcare problems facing the world – anti-microbial resistance (AMR). Diagnostics allow for rapid diagnosis and accurate identification of pathogens, leading to targeted treatments and minimizing antibiotic use. As well as emerging markets companies like Dr Lal PathLabs, we like two European diagnostics companies also contributing to the fight against AMR.
Highlighting innovators: DiaSorin and bioMérieux
DiaSorin is a global diagnostics company based in Italy. It provides tests to discover a wide range of infectious and non-infectious diseases and conditions. It has used its long history and cutting-edge technology to develop a test called MeMed that allows doctors to quickly and easily distinguish between bacterial and viral infections. This allows doctors to prescribe antibiotics only in cases where the disease is bacterial while using other treatments for viral infections. This not only improves patient outcomes, it will also help drive down unnecessary antibiotic use.
Despite the well-documented overuse of antibiotics, many countries in the world are not getting the antibiotics that they need. These are also typically the countries that face the highest risk of infection and highest rates of drug resistance. Reducing the use of antibiotics in richer countries and improving treatment in poorer countries will help avoid spiralling levels of antimicrobial resistance.
bioMérieux is a global diagnostics company based in France that is leading in Antimicrobial Stewardship. In 2021, they established an Antimicrobial Stewardship Centres of Excellence program, partnering with hospitals across developed and developing countries. These hospitals are leaders at integrating diagnostics into antimicrobial stewardship, sharing data and best practices in combining diagnostics, education, lab consultancy and information technology.
Both DiaSorin and bioMérieux are high-quality companies with excellent franchises and strong stewards. Both have demonstrated that they can balance profit generation and serve society to grow successful and sustainable healthcare companies. And both are well placed to contribute to, and benefit from, the promise and potential of diagnostics.
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