Markets and strategy

Tecan also offers a wide range of own detection devices. This includes analytical devices such as microplate readers, which analyze reactions on a microtiter plate. For selected applications, Tecan also increasingly offers integrated total solutions, including appropriate reagents and functional consumables.

The company also develops and produces a whole range of OEM solutions for the detection step, which includes a number of very different instruments.

After the acquisition of Paramit, Tecan is able to provide an even more comprehensive value proposition for customers in the healthcare industry. Paramit has developed and/or manufactured several FDA-approved medical devices, including critical modules and systems for surgical robotics, point-of-care and personal testing devices. Paramit also works with life science companies developing and manufacturing high-precision instrumentation, including a range of products for genomics, proteomics and cell-analysis.

The Company serves some customers directly, but is also a leader in developing and manufacturing OEM instruments, components and modules that are distributed by partner companies. These are for example diagnostics companies that market the products under their own names as total solutions together with the relevant test kits. With the acquisition of Paramit Tecan has expanded its OEM business also in the area of medical devices.

These two segments, the Life Sciences Business (end-customer business) and Partnering Business (OEM business) complement each other and achieve a position that is unique in such depth on the market. Tecan can offer the complete spectrum for different customer groups, from benchtop devices for basic research to sample-to-result solutions for in-vitro diagnostics companies to modules and systems for surgical robotics and personal testing devices for medical technology companies. This puts Tecan in a unique position to combine insights from basic research with the requirements for solutions for routine clinical use.

The life science research area is highly innovative and is where most new technologies are developed and initially employed as a matter of routine. Traditionally Tecan has a strong position in life science research thanks to its own end-customer business, covering a broad range of applications with modular and configurable instrument platforms.

Many of these technologies here also have great potential for diagnostic application. In the last few years, for example, next-generation sequencing has proved to be of great benefit, such as in identifying inheritable diseases, in cancer diagnostics or in non-invasive prenatal diagnostics.

New types of tests are normally carried out after an initial transition to diagnostic application, at first in large or special laboratories. As demand rises and the processing of many samples is centralized in a small number of locations, automation solutions are mostly required to scale up throughput. As in life science research, most individual work steps of a workflow are separately optimized and carried out in succession. As lab developed tests, the test procedures are internally developed and validated by the laboratories in this regulated market segment. The application is scaled and industrialized. Tecan has already gained significant experience in new types of technologies and can now make this available to clinical testing laboratories. Through its life sciences business, Tecan often has application-specific platforms that are approved for use in the regulated area. For example, the Fluent Gx platform variant has been successfully registered as a Class I medical device in the US. Its specific functionalities facilitate greater process security, traceability of samples and stricter user management.

For further transition to routine clinical application, as a technology becomes increasingly mature, demand from decentralized clinical laboratories for the new types of test procedures also rises, such as in hospitals. These laboratories typically have other requirements for a total solution: The tests should be developed by a diagnostics company as ready-made reagent kits and the licensing authorities should have granted market authorization. Furthermore, the dedicated automation platform designed for a specific functionality should be very easy to use and all work steps necessary for carrying out the test are ideally covered in one instrument (sample in, result out).

For companies in the in-vitro diagnostics sector, Tecan is a preferred partner for these automation systems through the Partnering Business. For example, Fluent Gx can be adapted for a partner company’s specific test and workflow. A diagnostics company can benefit from Tecan’s expertise and platform availability, leading to cost-efficient development and quicker market entry. Based on this strategic orientation, collaboration with different partners enables Tecan in turn to benefit from the growth potential in a range of different types of technologies and tests for numerous therapeutic areas and other special parameters.

Despite different requirements, the fundamental technologies are very similar for the automation of work steps compared to previous solutions. By choosing to partner with Tecan as OEM customers, diagnostics companies get access to all the Company’s previously developed technologies and platforms, all modules and software solutions as well as its expertise in system integration and regulatory and quality-related processes.

At the moment, different technologies are in a transition phase towards increased deployment in in-vitro diagnostics, such as next-generation sequencing (NGS), mass spectrometry or the use of liquid biopsies, such as for cancer diagnostics.

The addressable market for Tecan in life science research is valued at USD 4-5 billion and is growing at an annual rate of 3% to 5%.  Some two-thirds of sales come from instruments and about a third from reagents. 

The total addressable market for Tecan in in-vitro diagnostics is valued at around USD 4 billion and is comparable to the life science research market in terms of the average annual growth rate. 

The market structure in general is dominated by the share of sales generated by diagnostics companies through the sale of reagents and consumables. These recurring sales make up about 80% of the market volume, while the remaining 20% of sales are generated with instruments.

The addressable market of medical mechatronics products represents a significant opportunity of between USD 13-15 billion, thereby more than doubling Tecan’s original total addressable market. Approximately one third of sales in the Partnering Business segment are generated in the medical mechatronics end market through Paramit.

Megatrends are long-term transformation processes that depict far-reaching social and technological changes. The markets in which Tecan is active are positively influenced by a number of megatrends. They also result in increased sample volume and a significant rise in diagnostic tests as well as surgical procedures and other medical interventions that are carried out. This requires higher levels of productivity. The tests and procedures must be reproducible and accurate, the processes standardized and robust. Strict regulatory standards must also be complied with. Tecan has systematically focused its corporate strategy on these markets and requirements and can therefore obtain significant benefits from these transformation processes.

The 21st century has often been described as a century of biological discovery and development – the century of biology. It is estimated that, every six months, the world’s laboratories generate more biological data than has ever been created in human history. The ensuing discoveries and their applications will change human life forever.

For example, with the COVID-19 pandemic, the scientific community reacted fast.

Researchers were able to decode its RNA sequence and identify the structures and made them available globally. Labs were able to develop rapid diagnostic tests and – crucially – pharmaceutical and biotechnology companies were able to develop vaccines within 10 months.

Also in other areas, for example in oncology, new anticancer drugs have been approved in the last few years with entirely novel mechanisms of action for treatment, such as the first products based on gene therapy approaches.

Tecan’s success is based on core competencies that the Company has systematically acquired and expanded over the years. Tecan’s core competence was built around the automation of complex processes in life science research laboratories and in the strictly regulated diagnostics market. This overall competence is made possible by core competencies in system integration as well as in individual aspects of an application’s typical processes. In robotics, Tecan is the market leader in the automation of very diverse repetitive work steps that have to be conducted in laboratories. Its core competencies cover both instruments and the software packages needed for their operation as well as cloud-based software solutions that enable the connectivity of instruments. Tecan offers a wide-ranging portfolio of different modules to automate applications and work processes, such as examining DNA or cells.

Tecan expanded its capabilities and competences through the acquisition of Paramit.

Paramit is an expert at manufacturing complex electromechanical systems for the medical and life sciences industries. The company combines custom microfluidics, electronics, optics and motion control to help its clients create a range of products, from handheld or point-of-care devices to benchtop instruments and cart-based systems.
 
The acquisition also brings significant engineering as well as cost-competitive manufacturing capabilities, both in North America and in the APAC region.

Paramit’s patented, computer-directed assembly technology, vPoke®, resolves complex mechanical assembly into tightly controlled assembly steps for medical device and life science instruments. The process generates a rich device history record, providing component traceability, while reducing the potential for errors (“zero-defect manufacturing”).

There are many commonalities for the various key applications and product use cases of the combined Tecan/Paramit portfolio that cover a variety of healthcare uses, such as cancer, infectious diseases, metabolic diseases and many more. The product and service offering allows scalability of processes and workflows as well as the scaling of the manufacturing itself, it increases reproducibility and standardization of processes and procedures, delivers precision and robustness. As the majority of customers are working in a regulated environment like diagnostics or medical devices, regulatory compliance is a must in these areas.

Tecan has particular technical expertise in liquid handling and detection. Liquid handling involves the high-precision handling of fluids, even in the smallest quantities. This process includes the aspiration and dispensing of liquids with differing physical and chemical properties, such as reagents and blood (both whole blood and serum). The quantities of fluid involved can typically range from milliliters to microliters. Some applications require the handling of even smaller quantities, for which Tecan can also provide technologies. Tecan also has the necessary sensor technology to monitor processes, for example, to ascertain whether a liquid transfer has actually taken place. One of the Company’s particular competencies is the ability to make these often highly complex processes easy to perform through user-friendly software with an intuitive user interface.

To enable the entire workflow to be automated, Tecan also integrates third-party devices. Customers benefit from the enormous application know-how of Tecan specialists, even in strictly regulated areas such as clinical diagnostics.

In the area of detection, Tecan specializes in analytical devices that use a variety of optical methods to detect reactions in a test procedure, such as the binding of an antibody to a target molecule. This can take place, for example, with fluorescence, luminescence, absorption methods or through imaging technologies. Tecan also uses patented technologies here to lower the detection limit or reduce diffused light and thereby increase the sensitivity. Tecan detection instruments are able to process varying wavelengths quickly and flexibly, even in parallel.

Beyond technical expertise, Tecan has significant application know-how in the various disciplines of life science research and clinical diagnostics. One of the Company’s unique selling points and core competences is its ability to bridge the gap between research and the strictly regulated diagnostics market for its customers and partner firms. The steady increase in regulatory requirements presents a major challenge, in particular for smaller companies and companies that are traditionally oriented only toward the research market. Tecan can benefit from these growing market barriers, as it has built up these core competences and invested in regulatory compliance for years.