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Trends in Food Safety Testing Continue

The June/July issue of Food Safety Insights is now available and follows up what we learned in the April/May issue about the major trends in food safety testing, namely 1) continued growth in testing volume, 2) growth and changes in environmental monitoring, 3) outsourcing and growth in the lab markets, and 4) WGS. In the June/July issue, we wanted to dig further into the numbers behind these trends.

One caution – as we mention in the article, the data for the article was collected and developed during peaks in the COVID-19 epidemic which has disrupted everything about food processing. We have tried to separate any impacts from COVID-19 from the longer term impacts of these trends. The short-term disruptions from COVID – 19 will end eventually and we project that we will get back to the longer-term underlying drivers of testing.  If there are lasting impacts from COVID-19 that significantly change any of these trends, or cause new ones to develop, we will address these in a future article.

The first trend that is clear in our data is the steady pressure toward more testing volume. While most processors report that their test volumes will remain “about the same” the number of processors that report increasing volumes outnumber those with decreasing volume by about 4 to 1. A key factor in these volume increases reported by processors is the main driver is business – that is they are reporting that they are testing more because they are making and selling more product. Processors also report that more of their customers are requesting more testing data. These two factors combine for a sustainable and steady driver for growth.
A high proportion of this increase in test volume is also due to environmental monitoring – and especially with Listeria being the test target. This demand is continuing to drive Listeria test volumes keeping it the fastest growing test target (pathogen or non-pathogen).

It is also clear that processors are relying more on their lab partners for analysis and continuing to do less and less testing in-house. The amount of pathogen testing outsourced has grown for a long time in an effort to get pathogens out of the plant. Increasingly, however – and it shows up in this survey – more and more processors are sending out their indicator or non-pathogen samples too. This will continue to drive growth in the lab markets creating opportunities for growth for commercial labs, and also continue the M&A activity in that market.

You can see more in the Food Safety Insights article in Food Safety Magazine here – https://www.foodsafetymagazine.com/magazine-archive1/junejuly-2020/trends-in-food-safety-testing/

Baltimore County-based Company develops COVID-19 test to be used across Canada

Technology from InstantLabs is now being used to supply more than 500,000 COVID-19 tests per week to the government of Canada.

InstantLabs was founded in 2008 and is currently located in the University of Maryland Baltimore County’s (UMBC) bwtech@UMBC campus. InstantLabs’ original focus was on the development of point-of-care clinical diagnostic testing solutions. InstantLabs later expanded its focus to include the detection of problematic and pathogenic microorganisms in food processing and food packaging as well as in water system corrosion.

InstantLabs sought the help of Strategic Consulting, Inc. to identify strategic opportunities for growth of the company and the technology. As part of this process, SCI introduced InstantLabs to LuminUltra, an international diagnostic testing leader headquartered in Fredericton, New Brunswick, Canada who subsequently acquired the company in 2018.

This year, using the technology developed by InstantLabs, LuminUltra mobilized quickly to develop a test for COVID-19 to respond to a call from the Government of Canada for urgently needed COVID-19 tests. In April 2020, Prime Minister Justin Trudeau announced that LuminUltra had been selected to supply 500,000 tests per week (See the Prime Minister’s Announcement) – enough tests over the course of the contract to essentially provide a test for every Canadian.

InstantLabs is a fully-integrated part of the LuminUltra family – a group of companies that has operations in 6 countries and customers in more than 80 around the world. InstantLabs remains located at UMBC and their laboratory and operations at UMBC now serves as LuminUltra’s global R&D center and is the site at which the molecular testing capabilities for this COVID-19 response were developed. The solutions developed at their labs in Baltimore are also being used not only in Canada, but throughout the world as part of sanitation test and certification efforts to prevent the spread of COVID-19 as buildings and businesses start to resume operations.

This response to COVID-19 has also expanded LuminUltra’s need for R&D space and additional manufacturing capacity. They have seen the benefits of being located in Maryland with the state’s focus on life science business and are looking at options near Maryland’s life science centers.

FSMA Intentional Adulteration Rule

The first compliance date for FSMA’s Intentional Adulteration Rule occurred in July 2019.  This compliance date applies to the largest facilities – >500 employees – with additional dates for smaller facilities coming in 2020 and 2021.  The FDA has also said that they will not commence with compliance inspections until March 2020 to give processors time to get ready.

In our article in the Aug/Sep Food Safety Magazine, we asked if processors felt they were ready for this new rule and most said they they were.  Greater than 70% of those US and Canadian companies with fewer than 500 employees, and nearly 90% of those with more than 500 employees reported being ready.

As with many of these new FDA rules, the processors said that they believed that they were ready but that they really would not know until they had their first inspection under the rule when they could find out if their interpretations matched – or at least were acceptable to – those of the regulators.

What were they most concerned about?  Most were worried about how broadly they needed to consider risk scenarios and how unlikely does a attack need to be before it no longer needs to be considered in their IA plan?  Do they need to address every scenario that a regulator can dream up?

We’ll find out more about how ready processors are come next year.  In the meantime find out more about what they are saying in our Food Safety Magazine article.  The link is below.

The FSMA Intentional Adulteration Rule Is Here: Are Processors Ready?   http://bit.ly/2HvimFE

Whole Genome Sequencing – Ahead of its Time?

At the Food Safety Summit in Rosemont, Illinois this past May there was a great deal of discussion about the use of Whole Genome Sequencing (WGS).  These discussions were also apparent at the IAFP conference in Louisville last month as well.  At both conferences there were presentations from officials from CDC and FDA who discussed how WGS is being used in conjunction with the Pulse Net and GenomeTrakr databases and how this use of WGS has been essential at investigating foodborne illness outbreaks and tracing them back to their source.

Other presentations addressed technical issues related to the use of WGS. While everyone recognized that the technology is powerful and provides a significant increase in the detection and resolution of pathogens compared to other available technologies, caution was advised as the technology is not the panacea that some are starting to think that it is.  Success in using WGS comes from knowing exactly what the data is and is not able to tell you.  A point that was raised repeatedly was just because the genome sequence of a patient-derived pathogen matches that found in a food plant does not automatically mean that plant is the source.  The WGS data must be used in conjunction with data from a thorough epidemiological investigation.  CDC officials indicated that while they considered WGS to be powerful evidence they concluded that epidemiological data is ultimately more reliable in source identification.

Something else noticeable was that the presentations were delivered primarily by regulators, university researchers and public health officials – not food processors.  In our view, this is because this is where most of the work with WGS is occurring – not with food processors.

As part of our Food Safety Insights program in conjunction with Food Safety Magazine, we have conducted multiple surveys of food processors about their use of WGS over the past few years.  In the surveys that we’ve conducted each year since 2017, which include responses from nearly 500 food processors, no less than 90% of the respondents each year indicated that they have not yet employed WGS in any capacity.  Of those who indicated that they have used the technology, most said that they have not used the technology on a routine basis but only on a periodic basis to identify the source of contamination as part of a specific project – such as “search and destroy” projects designed to identify and eliminate “hot spots.”   One processor reported that they used WGS as part of a one-time project to compare the pathogens found in environmental samples across multiple facilities to determine if they had a common source.  A few reported that they had used WGS, but the data did not help them solve their issue, and they felt WGS was less useful than they originally hoped when they started the project.

As of now, WGS seems to remain a technology of limited applicability for food processors.  Some experts believe it will remain this way for years to come.  The ones we’ve spoken with believe the use of WGS by processors for incident investigations will continue to grow but question whether it will ever see widespread use for analysis of daily or routine samples.

This is a market that we will continue to track closely.

What Industry and FDA are thinking about FSMA Implementation

The past two years have been a challenge for both food processors and the FDA in understanding and implementing FSMA.  In the June/July 2017 issue of Food Safety Magazine, at the start of FSMA compliance for most processors, we asked processors in the US, Canada and around the world about their plans for FSMA compliance, how they saw the regulations changing their operations, how they were preparing for FDA inspections, and anything else that they saw that they would be facing.

Now that it’s 2019 and processors have had (up to) 2 years of experience with FSMA, we wanted to get an update on how they were dealing with the new rules, what changes they’ve made, what’s working and what’s not, and what they’ve learned about this new regulatory environment.  Our findings have been published in the April/May 2019 issue of Food Safety Magazine – in the Food Safety Insights column.

https://www.foodsafetymagazine.com/magazine-archive1/aprilmay-2019/what-industry-and-fda-are-thinking-about-fsma-implementation-part-1/

We found out that many processors have been dealing with the changes with the changes relatively well, considering the scope of the impacts.  While many of their concerns still revolve around some of the same issues – interpretation of the regulations and managing conflicts from different requirements – their concerns and fears about onerous FDA inspections seems to have seems to have faded.  In 2017, 60% of US/Canadian processors disagreed that the FDA will “educate before they regulate” and they expressed concern that FDA FSMA inspections would be difficult.  In our current survey, 72% said that they found that indeed the FDA is educating before they regulate – and impressive turnaround in only two years!  (Which has been recognized by FDA Officials – https://twitter.com/FrankYiannasFDA/status/1118989658573234176 

Many of the processors who have had an inspection have said the inspections have been going very well, the FDA inspectors are better trained and more open to listening to the processors, and some processors also said their most recent inspections have been the “best ever.”  It seems that we have found out that something is going quite well with FSMA inspections.

In Part Two of this investigation, which will be published in the June/July issue of Food Safety Magazine, we will present  more findings about the changes in sampling, testing and environmental monitoring that processors have been making for FSMAS compliance and we will also hear directly from the FDA on their response to the survey findings.

Outsourcing: Pathogen Testing under the Microscope

The December – January edition of Food Safety Insights is now available in Food Safety Magazine. In this month’s column, we examine the changing food pathogen testing market. We look at the food pathogen testing practices of 100 food processors in the US, Canada and Mexico.

As we have reported in previous articles and posts, food processors are increasingly deciding that they are not in the food testing business and it is to their benefit to outsource their testing. Only the largest food processors are keeping their in-house labs and rest are sending samples to commercial labs – leaving the market divided between consolidating large food processor in-house labs and large commercial labs. This will have a dramatic impact on the markets for diagnostic products.

The New Face of Sanitation Programs: New Rules, New Challenges

The October – November edition of Food Safety Insights is now available in Food Safety MagazineIn this version, we look at the Sanitation Programs of food processors, how they are changing under FSMA, what tools – new and traditional – are being used and how processors are reacting to the new FSMA FDA inspections.

Food Safety Insights is a cooperative program between the industry experts at Food Safety Magazine and the food safety market experts at Strategic Consulting to bring you the latest market research, insights and trends in food safety, analytical testing, diagnostics, laboratory services, sanitation and related topics in quality and safety testing and assurance in the food and beverage industry.

In each edition of Food Safety Magazine, the Food Safety Insights column will review a market topic in food safety.  Our insights come from primary research conducted each month with food processors and laboratories throughout the United States and around the world and provide you with up-to-date facts and figures not available anywhere else. This unique program will advance your understanding of food safety markets and where the best opportunities are developing.

Strategic Consulting Expands to Meet Needs of Industrial Diagnostics Market

Strategic Consulting, Inc., has added Robert J. Ferguson as Managing Director as it continues to expand to meet the growing demand for market intelligence and business strategy in the industrial diagnostics market.

Strategic Consulting, Inc. (SCI), the leading knowledge resource for business strategy and market intelligence in the industrial diagnostics industry, announced in advance of the International Association for Food Protection (IAFP) Annual Meeting that Robert J. Ferguson has joined the company as Managing Director. Founded in 1996 by President, Tom Weschler, Strategic Consulting focuses on microbiology-based, quality and safety testing in the food, beverage, pharmaceutical, and personal care product industries, and in environmental and industrial process water.

“In our 20-year history, we’ve seen tremendous growth and change in the industrial diagnostics industry, particularly in the food safety sector,” Mr. Weschler said. “With Bob Ferguson’s expertise in all aspects of the market, plus extensive experience in business management, strategy development and international business, SCI will be expanding its services and offering our clients an even deeper skill set and knowledge base.”

Market research is vital to the development of the industrial market, and continues to be in demand. In 2017, we anticipate delivery of new editions of our report on Microbiology Testing in the Global Food Industry as well as the Food Contract Lab Report.

With more than 30 years in industrial and environmental diagnostics and laboratory businesses, Mr. Ferguson has expertise in accelerating growth, international business development, business turnarounds, M&A, and new product development in businesses ranging from start-ups to Fortune 500 corporations. Prior to joining SCI, Mr. Ferguson was Worldwide Vice President and General Manager for Becton Dickinson’s (BD) Industrial Microbiology and Clinical Media Business Unit; a $350M global business serving the clinical and industrial diagnostic markets in food safety, pharmaceutical, personal care and medical devices, with customers in more than 100 countries around the world.

Ferguson, Managing Director, Strategic Consulting, SCI

Robert J. Ferguson, Managing Director

“Having worked with Tom and Strategic Consulting for many years, I am well aware of SCI’s reputation as the leading market knowledge and strategy resource for industrial diagnostics, “Ferguson said. “I’m pleased to be joining SCI, and I look forward to contributing to and building on its outstanding work.”

In its 20-year history, SCI has built a reputation as the “go to” source in the industrial diagnostics space, in part through its 19 well-researched market reports, which are widely accepted by leading diagnostic manufacturers and investors as highly credible analyses of the industry. “SCI market reports having been developed through literally thousands of interviews with production companies worldwide in the food, pharmaceuticals and personal care industries,” Mr. Weschler said.

“Market research is vital to the development of the industrial market, and continues to be in demand,” Ferguson said. “In 2017, we anticipate delivery of new editions of our report on Microbiology Testing in the Global Food Industry as well as the Food Contract Lab Report.”

IMMR—4 is currently available online at www.strategic-consult.com, and a new edition of “Global Review of Microbiology Testing in the Industrial Market”(IMMR-5) will follow Food Micro—9 and FCLR—2, Mr. Ferguson said. SCI also will be expanding its capabilities to provide market research projects specific to individual client requirements.

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Strategic Consulting, Inc. (SCI) provides market reports and business consulting on microbiology-based quality and safety testing for food, beverages, pharmaceuticals, personal care products, environmental water and industrial-process water. With more than 100 combined years of international management in the food safety testing and industrial diagnostics marketplaces, SCI’s principals have proven success in working with venture capital backed start-ups, publicly traded companies, technology acquisitions, and transformation of underachieving companies. For more information on Strategic Consulting and its current market reports, visit www.strategic-consult.com or call +1 443 244 5245.

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Where Has the Growth in Food Safety Testing Gone?

Recent earnings reports from large industrial diagnostic companies in the food safety sector indicate a slowing of growth in this typically robust market. What’s going on? Has growth in the food safety testing market peaked, paused with the economic downturn, or just moved elsewhere?

Strategic Consulting (SCI) has just released our 19th market research report on the industrial microbiology market. Industrial Microbiology Market Review: Global Review of Microbiology Testing in the Industrial Market (IMMR-4) examines the industrial diagnostics market, which includes the food, beverage, pharmaceutical, personal care products, environmental water and industrial process sectors. You can read more about IMMR-4 here.

In addition to a detailed analysis by test volume, market value, organisms tested and methods used, IMMR-4 also provides a thorough discussion of market trends, drivers, and regulatory and topical issues specific to each sector. IMMR-4 also includes a business review of competition, consolidation and key success factors, and profiles 20 leading test manufacturers serving the industrial diagnostics market.

Extensive Primary Research in the Industrial Market

industrial market, primary research, strategic consultingIMMR-4 is based on extensive primary research into all aspects of the industrial microbiology market, including detailed interviews with producers, regulators and diagnostics competitors. SCI conducted more than 650 interviews in 23 countries around the world, with close to one-third of those interviews conducted in Asia (China, India, Indonesia, Thailand, Singapore and Vietnam) due to the region’s economic importance, in both production and consumption, in the industrial market sectors.

Interview data and other information were analyzed using a combined bottom-up and top-down approach. For example, overall market estimates were derived from the test volume numbers given by production companies, and then triangulated with other information gathered through SCI interviews and pubic information research.

In hundreds of interviews over the last two years, when QA/QC managers in production plants were asked about test volume growth, the general response was “yes, growth”. The drivers for test volume growth, such as new regulations and ongoing customer demand, are not consistent across all geographies however. North American and Asian/ROW plants report growth in test volumes, while test volume in European facilities remain flat. Although somewhat diminished, growth in micro test volumes continues even in the face of world economic issues.

In fact, the total market for industrial microbiology tests is projected to increase 25.7% over the next five years, from 2.0 billion tests in 2014 to 2.5 billion tests in 2019. This represents a 4.7% compound annual growth rate (CAGR) in test volumes, which is slower than over the past 20 years. In other words, testing is increasing but not as robustly. With many production companies implementing process improvements over the last decade, growth in test volume may be tied to increased consumption alone going forward.

What’s Up with Recent Financial Reports from Diagnostics Companies?

Given the test volumes and projected growth reported by food production companies, I was a bit surprised by the financial reports of some key companies in the food safety testing market. Roka Bioscience had no new sales of its Atlas System last quarter. Neogen reported that their food safety business grew only marginally (3%) for the current quarter. And although we can’t isolate the food safety business of industry giant bioMérieux, overall their industrial business was flat for the first nine months of the year.

With leading businesses showing little or no growth in the sizeable food safety testing market, are we seeing a market that has become overcrowded, with little or no growth remaining? Based on financial reports, it’s hard to know specifically where growth remains and where things are flat or declining, as these large companies do not report on a geographic or product basis.

Is it time to recalibrate expectations for the traditionally robust food safety testing market? Has the food safety diagnostics business reached its peak in spite of major drivers such as continued media coverage of foodborne outbreaks, ongoing implementation of FSMA, industry-wide efforts such as the Global Food Safety Initiative (GFSI), and the increased consumption of food that is sourced from all over the world?

Perhaps it’s time to recalibrate expectations for the traditionally robust food safety testing market.

I’m going to venture an uncharacteristic answer and say “perhaps”. Perhaps the increased focus on industry testing over the last ten years means that for the most part, major food producers have their testing programs (and thus volumes) in place. Perhaps the five-year economic malaise that has impacted so many countries and businesses is now affecting the until now unmatched growth engine of food safety diagnostics? Or perhaps it is all of the above.

Food Contract Labs Taking Market Share

One other possibility comes out of SCI’s recent review of a particular segment of the market, contract test labs. Over the past few years, there has been a shift in where analysis is performed with some sectors sending a greater percentage of samples outside to corporate facilities or contract testing labs. The Food Sector, driven by lab accreditation requirements among other factors, is utilizing contract labs more heavily in certain geographies.

Is competition for diagnostic manufacturers coming from businesses that had previously been among their best customers? Eurofins reported 15% growth in revenues for the first nine months of 2014. As food contract labs grow their market share in food safety testing, they are able to increase their influence over the test methods and products in use, and their purchase patterns can be different from food plant labs.

Stay tuned. As 2015 approaches, we’ll continue to watch, report and comment, here and on Linked In and Twitter.

And in the meantime, let us know what you think. Are the days of double-digit growth in food safety testing a thing of the past?

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FSMA & Lab Accreditation: Tipping Point for Food Safety Testing Labs?

Will FSMA and the push for accreditation of food safety testing laboratories be the tipping point in moving analysis of food samples from food plant labs to contract testing labs?

Food safety is constantly in the news, especially in the U.S. Food recalls happen with too much frequency, and when they do, they grab front-page headlines. The underlying concern is that the food we eat each day isn’t as safe as it could be. Given this fear, food production, food service and food retail companies and government regulators have increased efforts to ensure food safety, which translates into increased food safety testing.

In fact, the global market for food safety testing has grown roughly 5-10% annually, with growth in some geographic regions and testing areas (North America and pathogen testing, for example) at even higher rates. Strategic Consulting has documented this growth in food safety testing over the last 15 years in 18 market research reports.

Food Safety Test Analysis in Food Plant Labs

Until about 30 years ago, food safety testing was conducted in laboratories based at the food processing plant. Food samples collected from raw materials, the production environment or final products were taken to the food plant lab (FPL) to be analyzed. SCI research estimates that there are approximately 40,000 food plants worldwide with 25 or greater employees and, at one point, all of them had FPLs.

food safety testing, pathogen analysis, food industry labToday’s food safety tests and analysis are more complex. Test instruments are more expensive, operator training needs have increased, and documentation requirements are more extensive and involved. In addition, some food companies have restricted the types of tests (e.g. pathogen tests) that can be analyzed in the plant, further impacting the value of in-plant labs. All in all, running a FPL and generating quality data has gotten tougher.

 

food industry, food safety testing, micro labAs a result, food plants are debating whether to conduct food safety test analysis themselves, or to send the analysis outside to corporate labs or independent food contract labs (FCLs). As of 2013, SCI research found that just 86% of food plants still run FPLs.

In response to the public’s growing concerns about food safety, there have been a number of regulatory and food industry initiatives in recent years. In the U.S., the Food Safety Modernization Act (FSMA) was signed into law in 2011 and implementation is ongoing. Industry alliances like the Global Food Safety Initiative (GFSI) and the Food Laboratory Alliance also have emerged. A common goal of many of these initiatives to regain consumer confidence is the accreditation of food safety testing labs, to ensure that accurate and consistent data is being used to assess food plant safety.

Accreditation of Food Safety Testing Laboratories

Currently, most FPLs are not accredited. Recent SCI research found that just 18% of QA/QC managers said their food plant labs were accredited, and other sources have reported this percentage even lower.

food industry, food safety testing lab, accreditation

Lab accreditation is not trivial, and brings added responsibilities and costs. A sizable initial investment is usually required in order to put systems in place and provide proper training for staff. The review fee for accreditation can run $15,000 or more and, once accredited, labs can expect additional ongoing costs for staffing, management and overall compliance.

Merriam-Webster defines the “tipping point” as the critical point in a situation, process or system beyond which a significant and often unstoppable effect or change takes place. Will the drive for lab accreditation be the tipping point for food plant labs, the point at which the bulk of analysis of food samples moves outside the plant to corporate labs or contract testing labs? We think so.

In our conversations with food plant QA/QC managers and executives, we hear more and more questioning whether running a food plant lab is part of the plant’s core competencies. Are they truly adding value by having a FPL or are they just adding costs and complexities?

Food plants can get fast, quality test results from corporate labs or from increasingly sophisticated (and competitive) food contract testing laboratories. Some FCL companies are even willing to locate food safety testing services in a trailer right at the food plant, or to come in and operate the food plant’s lab outright. Additionally, more and more food company customers, including global food retail and food service companies, are requesting analytical results provided by an accredited third-party lab rather than the food plant itself.

Data from our new report, Food Contract Lab Report (FCLR), indicate that things have tipped, and that the food contract lab market is growing faster than the food safety testing market on the whole. Clearly FCLs are taking market share.

In our next post: Growth in the independent food contract laboratory market

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