pathogen testing

Troubling Times for Food Safety Diagnostic Companies

Increased competition, the growing dominance of food contract testing labs, and changes in product mix are turning good times to troubled ones for some food safety diagnostic companies.

For much of the past 20 years, the food safety market has been very, very good to the diagnostic companies, especially those making pathogen testing instruments and consumables. A number of dramatic shifts in the market, however, resulting from increased competition, the growing dominance of food contract testing labs and the subsequent change in product mix, have turned good times to troubled ones for some pathogen test manufacturers.

The story of big changes for pathogen testing and the food safety diagnostics industry begins with the Jack-in-the-Box disaster in 1993. Described by Jeff Benedict, author of the 2011 book, Poisoned, as “far and away the most infamous food poison outbreak in contemporary history,” the E. coli outbreak from tainted ground beef sickened 732 people and killed four children, and set a number of pivotal market drivers in motion.

Most importantly, this incident (and a number of other egregious recalls later the 1990s) raised food safety to a top-of-mind issue and compromised the public’s trust in the safety of their food. This drove major changes in government regulation as well as food industry processing and testing practices, and greatly increased the level of pathogen testing conducted by food processing companies worldwide.

food safety testing, pathogen testingAt the same time, the food supply chain was growing increasingly complex, with imports accounting for 15-20% of U.S. food consumption. The increase in imports led to even more pathogen testing to monitor food safety at every point along the global food chain.

As seen in the chart at right, these factors have driven worldwide pathogen testing volumes up by more than 400% in the past 15 years.

Competition Among Diagnostic Companies Increases

As test volumes increased, food diagnostic companies began to introduce new technologies to help food plant labs (FPLs) handle the growing workload and testing requirements. The higher cost of these new test methods sent the market value for pathogen testing up, faster even than the impressive 9.4% compound annual growth rate (CAGR) for test volume seen over the same period.

The increased sales and success of the food diagnostic companies with their new, “rapid” pathogen systems attracted many other participants to the market. The number of companies providing pathogen-testing products went from a handful in the 1990s to more than 20 a decade later. While each new participant offered advances in testing technology, most were evolutionary and not revolutionary. And every improvement—for example, reduced enrichment time or increased system sensitivity/specificity—would soon be matched by others manufacturers.

With numerous pathogen systems on the market and competitors finding it hard to differentiate themselves, many pathogen diagnostic companies were forced to compete on price. Their customers at food industry plant labs (FPLs) and corporate labs, and particularly at food contract labs (FCLs), soon saw that price per test had become a very big lever they could use with competing pathogen diagnostic companies having somewhat interchangeable systems. Price per test has been under pressure ever since, and the profitability of pathogen test diagnostic companies has suffered as a result.

Fewer—and Bigger Laboratories Drive Test Costs and Requirements

Compounding the increased price competition has been the concentration of pathogen analysis (and other food safety testing) in fewer and larger facilities. As discussed in the three previous blogs in this series, more and more pathogen analysis is now conducted at FCLs or in larger FPLs. Small and mid-sized food plant labs seem to be closing, and looking to third-party contract testing labs for their food safety analytical needs. This concentration puts more buying power in fewer—and bigger—hands, and further exacerbates price competition among test manufacturers.

Customer concentration also is changing the requirements for pathogen testing systems, as automation, throughput and matrix versatility become increasingly important for large volume testing laboratories. Some pathogen diagnostic companies are having difficulty matching the revised product requirements, and as a result are not competing as effectively in the new environment.

Although pathogen diagnostic companies are already challenged, SCI sees another big change in the market with the potential for even greater profit impact. IEH Laboratories, one of the larger FCLs, has been producing their own “home brew” reagents for pathogen test analysis for the past 10 years. By making their own reagents, at a cost of roughly $1-$2 per test, IEH avoids the added costs of purchasing reagents from diagnostic companies, with prices ranging from $4-$8 per test. As a result, IEH has had a lower cost basis—and greater profits—than its competitors. This “home brew” approach is also affecting profits for the pathogen diagnostic companies.

Other FCLs are aware of their competitor’s “home-brew” reagent approach. With the leading FCLs running 100+ labs worldwide, to avoid paying full price to diagnostic companies for reagents is compelling. While a country-by-country approval of this approach would need to be secured (e.g., AOAC approval is required in the U.S.), the leading FCLs have the critical mass/size—and profit incentive—to move forward. IEH has, in fact, received AOAC approval for its methodology/system for pathogen analysis. If and, most likely, when more of the larger FCLs follow the “home-brew” route, the impact on the food diagnostic companies could be significant.

It should be noted that not all pathogen diagnostic companies are being equally impacted by these trends. Anticipating the increasing importance of FCLs, some diagnostic companies already have introduced automated sample prep and analysis systems with higher throughput, targeted to the needs of larger corporate and food contract labs. Others diagnostic companies are using a different strategy, developing and selling pathogen-testing approaches that specifically target small and medium food plant labs. The hope is to get FPLs to keep pathogen analysis at the food plant or, even better, to bring it back from the FCLs because of lower costs, better control and quicker results.

From the good times of the 1990s and early 2000s to the increasing price competition over the past 3-5 years and the possibility of being cut out of the food safety testing market completely—these are troubling times for some diagnostic test companies. Some are positioned with differentiated products, and others have strong market channels and broad product lines. They should be fine. Many diagnostic companies, however, could find themselves in the wrong place at the wrong time. For them, the recent evolution of the food safety testing market, and the lucrative pathogen testing market in particular, could prove costly.

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Global Food Contract Testing Lab Revenues Exceed $3 Billion in 2013

Strategic Consulting is pleased to announce our first report reviewing the test volumes, revenues and trends for quality and safety testing services conducted by third party laboratories for food producers around the world.

For some time now, Strategic Consulting has been following the increasing trend at food production companies around the world to send food quality and safety testing to third party contract testing laboratories. This year in fact, total revenues for food contract test labs are estimated to reach $3.05 billion, up from $1.95 billion just five years ago, at a healthy compound annual growth rate (CAGR) of 9.4% worldwide.

contract testing lab, food safety testing, Food Contract Lab Report

read more…

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Food Microbiology Testing in the Global Food Industry

As the global food chain grows more complex, food microbiology testing is increasing worldwide. An authoritative new market research report from Strategic Consulting details worldwide food microbiology testing.

Food microbiology testing varies extensively around the world. Diagnostic testing by food producers differs by geographic region, by the predominant organisms tested (Salmonella, Listeria, and Campylobacter, for example), and by the type of food product produced (meat, dairy, fruits and vegetables, or processed food). Technical differences in global testing practices also exist, such as the point in the food production chain at which samples are collected, and the test methods used for analysis.

The following data and charts from Food Micro, Eighth Edition: Microbiology Testing in the Global Food Industry (Food Micro—8) are drawn from in-depth interviews with quality and safety managers in food plants around the world. More than 450 food production facilities in 19 countries were surveyed, with more than 140 interviews conducted in Asia—in China, India, Vietnam, Thailand and Indonesia. Many of the Asian surveys were conducted in face-to-face interviews in the native language, in order to provide insights into food testing practices that to date have been difficult to gather. read more…

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Comparing Food Safety Testing Practices in the US and Europe: How Fast Is Fast Enough?

US food producers are moving more quickly to new, rapid technologies for their food safety testing programs, while their European counterparts remain more faithful to traditional microbiology test methods, according to Food Micro—7, a new market research report from Strategic Consulting, Inc.

Woodstock, VT October 2, 2012 — A new study comparing food safety testing in the United States and Europe points to key differences between these two large food producing regions, and projects continued but differing growth in the size and value of their respective food microbiology testing markets.

Food Micro, Seventh Edition: Comparison of the Food Microbiology Testing Markets in the US and EU (Food Micro—7) from Strategic Consulting, Inc. (SCI), compares total test volume, market value and growth in food microbiology testing, including the organisms tested and the technologies used for food safety testing in each region. read more…

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Multiplexing Becoming a Reality for Food Pathogen Testing

Dupont and Seegene to jointly develop highly multiplexed assays for food safety testing

In our previous blog post, we discussed the evolution of pathogen testing for food safety and the increasing need for multiplexing to be able to analyze for more than one pathogen at a time. read more…

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Some Thoughts on Food Safety Summit 2012

Food Safety Summit always leaves me with mixed feelings. Spring is a good time of year for the show, and its D.C. location means excellent attendance by government regulatory personnel. However, Food Safety Summit never seems to totally come together, and every year it leaves me wondering if my time and money have been well spent by attending. read more…

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New Report on Food Safety Microbiology Testing in Europe Published

Strategic Consulting is pleased to announce the publication of our 15th market research report, Food Micro, Sixth Edition: Food Microbiology Testing in Europe (Food Micro—6).

Food Micro—6 is the first definitive report to focus exclusively on the European food microbiology testing market, and reviews the methods, technologies, companies, regulations and trends shaping food safety testing in Europe.

In preparing this new report, Strategic Consulting (SCI) conducted more than 175 detailed interviews in 11 European countries accounting for 77% of all agricultural/food value-added in the European Union. Because of this primary research with European food-processing plants, Food Micro—6 is able to offer new, detailed data on European food safety testing including:

  • Test volumes
  • Market value
  • Methods used for routine and pathogen testing
  • Costs per test performed
  • Testing practices by segment for meat, dairy, fruits/vegetables, and processed food
  • Variations by country
  • Expected changes in future testing practices

Strategic Consulting has published six reports to date reviewing quality and safety testing in the food industry. The food sector represents almost 50% of the total industrial microbiology testing market, and is more than double the size of any other industrial segment including pharmaceutical, personal care products, beverage, environmental, and industrial processes.

For more information about Food Micro, Sixth Edition: Food Microbiology Testing in Europe, download a prospectus, email info@strategic-consult.com, or call Strategic Consulting’s U.S. office at 802-457-9933.

 

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New 3M Detection Platform Great Addition to Food Safety Testing Product Line

3M has announced the launch of a new pathogen detection platform, the 3M Molecular Detection System. This new product line makes perfect sense, and should be an excellent and synergistic addition to 3M’s PetriFilm, ATP, and sample prep products. Given the detection technology approach, the instrument has a small footprint and the protocol is very easy to use.

“Pathogen testing has now been made simple and affordable,” said Niki Montgomery, 3M Food Safety global marketing development manager. “…Numerous organisms can be tested in a single run and it was designed to help our customers perform fewer repeat tests and make critical decisions faster.”

Read the full press release.

After reviews of 3M’s investor presentations and IAFP meeting buzz, we mentioned rumors of this product/technology several months ago in this blog. Products like this will help food producers justify keeping pathogen analysis at their plant labs. Also, this technology platform should help companies migrate from traditional and other methods to molecular methods.

 

 

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European Food Safety Testing Market Poised for Change

Growing public concern could foster significant change in European food safety systems, and increased regulations and testing volumes should follow suit, according to Food Micro—6: Food Microbiology Testing in Europe, a new market report from Strategic Consulting, Inc.

 

Woodstock, VT December 12, 2011 — Europe is a substantial market for food safety microbiology testing. The population of the 27 countries of the European Union is 500 million, nearly 60% greater than the US population. Altogether, EU countries performed an estimated 275 million food micro tests in 2011. In comparison, there were 213 million such tests conducted in the US in 2010.

Food Micro, Sixth Edition: Food Microbiology Testing in Europe from Strategic Consulting, Inc. (SCI) is the first definitive report focusing exclusively on the European food safety microbiology testing market. Food Micro—6 reviews the important markets, methods, technologies and trends shaping food safety testing in Europe.

In addition to size, the European food safety testing market differs from the US market in areas such as methods used, organisms tested, and current and pending regulations. As a result, says Thomas Weschler, president of SCI and lead author of Food Micro—6, “Europe must be examined and understood as a separate entity as it relates to food microbiology testing, and not simply thought of and treated as ‘like the US.’”

“Europe must be examined and understood as a separate entity as it relates to food microbiology testing, and not simply thought of and treated as ‘like the US.’”

A strong global link between the European and US food markets remains however, Weschler says. Key global food companies such as Nestle and Kraft have a significant presence in both geographies. European consumers, like their American counterparts, want access to all types of food year-round and as a result draw increasingly from a global food supply.

At the same time, there is a growing public awareness of food safety issues, with the recent E. coli outbreak in Germany only one of the incidents heightening concern about contaminants in the food supply. “Growing public concern about food safety could ramp up change in Europe, and increased regulations and testing volumes should follow suit,” Weschler says.

In preparing this new and comprehensive review of the European food microbiology testing market, Strategic Consulting (SCI) conducted more than 175 detailed interviews in 11 European countries representing more than 75% of all food production in the EU. Through this primary research at food-processing plants throughout Europe, Food Micro—6 offers new data on European food safety testing practices including overall test volume, cost per test, and methods used for routine and pathogen testing. Differences in testing practices within food segments and countries also are detailed, and expected changes in future testing practices are discussed.

Like all SCI publications, Food Micro—6 is based on new, primary research and industry-specific expertise and analysis. Food Micro—6 incorporates:

• Lengthy interviews with food processing plants in the meat, dairy, fruit/vegetable, and processed food segments in 11 European countries representing more than 75% of the total food production in the EU.

• A discussion of key drivers for food microbiology testing, and a country-by-country comparison of total testing, organisms tested, and methods used.

• Test volumes, methods, and products used for routine, environmental and pathogen tests for TVO, Coliform, Yeast/Mold, ATP, Staphylococcus, Salmonella, Listeria, L. mono, E. coli O157, and Campylobacter.

• Forecasts for the state of the market in 2016 including routine, pathogen and overall test volumes and market values.

• Insights from Strategic Consulting’s principals honed over more than 75 combined years in the worldwide industrial diagnostics marketplace.

Strategic Consulting’s long tenure in the industrial diagnostics industry includes the publication of 14 research reports addressing critical market topics over the last 15 years. Strategic Consulting market research reports are widely accepted by leading diagnostic manufacturers and investors as highly credible analyses of the industry.

Food Micro—6 will publish in January 2012 but orders placed before January 16, 2012 can receive a pre-publication savings of $500 off the report price.

For more information on Food Micro—6, request a prospectus, email info@strategic-consult.com, or call (802) 457-9933.

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Strategic Consulting, Inc. (SCI) provides market reports and business consulting for industrial diagnostics companies delivering microbiology-based products for quality and safety testing in food, beverages, pharmaceuticals, personal care products, environmental water, and industrial-process water. For more information on Strategic Consulting, Inc. and its current market reports, visit www.strategic-consult.com or call 802-457-9933. Follow SCI president and industry expert, Thomas R. Weschler, on LinkedIn or Twitter @tomweschler.

 

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Food Safety Pathogen Testing Market at an Inflection Point

Given it’s the end of summer and vacation time for many, August has been surprisingly full of new information on the pathogen testing market for the U.S. food industry. Much of the buzz began at the recent annual meeting of the International Association for Food Protection in Milwaukee, where a big presence and rumored activity by major market players was evident. read more…

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