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How Much Money Are At-Home Covid-19 Tests Bringing In? Seven of the most prominent test makers are navigating a whiplash marketplace.
As the Omicron wave of the pandemic swept across America this winter, makers of at-home Covid tests faced a unique business dilemma. Seemingly overnight, demand for their products became infinite. Massive government contracts were up for grabs. By mid-January, the Biden Administration had promised to buy 1 billion of the tests. But it was almost equally certain that demand for the tests would vanish— at least temporarily—by the time spring arrived. Sunnyvale, Californiabased iHealth Labs, which only received FDA authorization for its test in November, churned out more than 500 million Covid-19 home test kits for the U.S. market in February an astronomical increase over the 20 million to 30 million it produced in December. “We cranked up very quickly,” says iHealth chief operating officer Jack Feng. F O R B E S M I D D L E E A S T.C O M
“It was almost like a battle.” It was a whole new line of business for iHealth, which is majority-owned by China’s publicly traded Andon Health and made stuff like blood-pressure monitors and thermometers before the pandemic. Its contract manufacturer in Tianjin, China, also owned by Andon, made kits roundthe-clock and even stayed open with partial staff on Chinese New Year’s. To help get the tests to the States, iHealth chartered 100 airplanes. Some 350 million of its antigen tests went to fulfill its government contracts, which are worth more than $1.3 billion, with the rest going to drugstores and other retailers. “I think we provided more tests than the other test makers in total [in February]. More than half in the U.S. market were produced by us,” Feng says. “In the beginning we thought, we are just a small
guy and there are some big guys that are much, much bigger than us. . . . We didn’t expect we can be the major force to supply this test.” iHealth is just one of many companies that have rushed to produce home tests. To date, the FDA has authorized 16 home tests, including 13 rapid antigen tests and 3 molecular ones, from giant companies and startups alike. Abbott, the $43 billion (2021 sales) goliath, built plants in Maine and Illinois to churn out its popular BinaxNow test. To date, it has distributed more than 1.4 billion Covid tests. San Diego-based Quidel says Covid-19 products, including its QuickVue test, accounted for around $1.3 billion of its $1.7 billion in revenue last year. But dealing with the uncertainties of demand hasn’t been easy. Last summer, as virus cases fell, Abbott discarded test cards used in its home tests and laid off employees, only to rehire them in the fall. Now that the latest Omicron wave has passed, testing companies will need to figure out how to plan for a business where demand comes in fits and starts—and where retail prices are under pressure. “If we have seen the worst that Covid has in store for us, given the lackluster support by the CDC for home testing and the current level of Covid fatigue, it seems safe to assume that the future of the Covid at-home testing market won’t support 16 or more products,” says Michael Abrams, managing partner of St. Louis-based healthcare consultancy Numerof & Associates. Here’s how seven of the most prominent at-home test makers are faring:
Abbott Laboratories TEST: BinaxNow (antigen) MARKET CAP (ticker: ABT):
$201 billion
PANDEMIC STOCK PERFORMANCE: Up 46% REVENUE: $43 billion FINANCIAL IMPACT OF COVID: Abbott’s sales related to Covid testing, including BinaxNow, reached $7.7 billion in 2021, nearly double the previous year’s $3.9 billion. WHAT THEY’VE DONE: Distributed more than 1.4 billion Covid-19 tests since the start of the pandemic. Built manufacturing plants in Maine and Illinois. WHAT THEY PLAN TO DO: Crank up production from 70 million tests per month in January toward 100 million in March. KEY QUOTE: “I think the bigger picture here is, obviously . . . testing will eventually ramp down, but there will be a portion that will be sustained,” CEO Robert Ford said at the JPMorgan healthcare conference in January.
Becton Dickinson TEST: BD Veritor (antigen) MARKET CAP (ticker: BDX):
$72 billion
PANDEMIC STOCK PERFORMANCE: Up 10% REVENUE: $20 billion FINANCIAL IMPACT OF COVID: Covid-19 revenue expected to reach $450 million this year, with the majority of it in the first half, according to a report by analysts at William Blair. WHAT THEY’VE DONE: Developed a digital approach to reading test results that may gain it traction in the employer market. PRODUCTION CAPACITY: 12 million tests per month. STRATEGIC DIFFERENCE: According to a report from William Blair analysts Brian Weinstein, Griffin Soriano and Dustin Scaringe: “BD did not compete for high-volume, lower-priced contracts and does not have the same retail presence nationwide that companies like Abbott and Quidel have been able to secure.” APRIL 2022
BY AMY FELDMAN; IMAGE FROM IHEALTHLABS.COM
Healthcare
