Markets and strategy

We live in the century of biology, where an explosion of scientific knowledge is revolutionizing the possibilities for healthcare. New diagnostic tests and medical treatments, including precision and preventative medicine, are being developed to combat cancer, rare and hereditary diseases, metabolic and neurodegenerative disorders, and other significant health challenges.

At the same time, the modern world is facing multiple challenges. A growing and rapidly aging population, and an increasing prevalence of complex disease like cancer, not to mention the persistence of infectious disease. A shortage of skilled labor compounds the pressure on already strained healthcare systems, which further limits the accessibility of healthcare innovations to the broad, global population.

With its expertise, Tecan has the opportunity to accelerate the evolution of research applications and to scale healthcare innovation for the broader, global population.

Tecan empowers customers in academia, biotech and pharma, clinical diagnostics and the medical market, enabling them to understand the biology of diseases and translate research insights into compliant, scalable solutions that improve people’s lives and health.

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.

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.

Two synergistic business segments are leveraging common hard- and software platforms

Strong market fundamentals provide solid foundation for growth 

Traditionally, Tecan’s two main markets were life science research and diagnostics. The acquisition of Paramit Corporation in 2021 further extended Tecan’s position in solutions for life sciences and in-vitro diagnostics (IVD). It also added a new business vertical in the attractive and fast-growing market for medical devices. The structure of these end markets plus the focus on the core applications of genomics, protein analysis and cell analysis form the basis of the corporate strategy. It follows three vectors to ensure sustainable profitable growth. The Paramit acquisition added a vector 4 and 5.

Research and development as well as the Operations division are organized across the Group in order to better leverage synergies through various locations.

The addressable market for Tecan in life science research is valued at around USD 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. Tecan’s modular automation platforms, detection devices, reagents, consumables and digitalization solutions enable experimentation at scale, supporting academic research, pharma and biotech. These products and services make laboratory workflows robust, reproducible and precise.

The total addressable market for Tecan in in-vitro diagnostics is valued at around USD 5 billion and is comparable to the life science research market in terms of the average annual growth rate. Tecan supports clinical diagnostics labs doing translational research to convert scientific discoveries into validated lab-developed diagnostic tests (LDT). The company’s expertise in the development of reagents, automation and software enhances the efficiency, accuracy and traceability of their procedures, while its knowledge of quality and regulatory affairs ensures compliance, easing the transition of applications from research to the clinical environment. Tecan empowers these customers with both Tecan-branded and OEM solutions.

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.

Leading provider from components, point-of-care to fully integrated clinical analyzers

The instruments in the in-vitro diagnostics market are only partly developed and produced by the diagnostics companies themselves, with an increasing share being outsourced to specialists such as Tecan. In this sub-sector of the market segment, which has a value of about USD 3.5 billion, Tecan supplies diagnostics companies with automation solutions through its Partnering Business segment. Customers then market these instruments under their own names, combined with their own reagents as a total solution, such as hospitals, major diagnostics laboratories and blood banks. Tecan also provides components, product and system development, as well as design and manufacturing services to accelerate time-to-market for breakthrough innovations that enable new sample-to-answer workflows. Lab diagnostics is accounting for around 30% of segment sales in the Partnering Business.

In its Life Sciences Business segment, Tecan sells open automation platforms, mainly to major diagnostics and genetic testing laboratories. Overall, slightly more than one third of sales in the Life Sciences Business are generated in regulated markets such as clinical diagnostics.

For example, the Fluent Gx platform variant was developed for the automation of laboratory workflows in regulated markets. Here Fluent can be used for applications such as high throughput nucleic acid purification, quantification and normalization or as a scalable solution for PCR amplification. In the US, it is registered as a Class I medical device.

Tecan also offers detection devices that are used for absorbance-, fluorescence- and luminescence-based clinical immuno-assays.

The addressable market of medical mechatronics products represents a significant opportunity of around USD 14 billion, thereby more than doubling Tecan’s original total addressable market through the acquisition of Paramit Corporation in 2021. Tecan provides contract design, development and manufacturing services for a broad set of medical devices. Similar to diagnostics, Tecan also helps OEM customers in MedTech overcome specific challenges, and can even take on entire projects, from design through to manufacturing. There are numerous similarities and synergies among life science research, clinical practice, and the medical field. Medical mechatronics is an adjacent market that intersects with life science and diagnostic technologies, offering potential for synergies and manufacturing efficiencies.

Approximately one third of sales in the Partnering Business segment are now generated in the medical mechatronics end market.

Leveraging same or similar technical, manufacturing and regulatory competences

Tecan covers a large number of different application areas thanks to its two segments of Life Sciences Business and Partnering Business. Special focus is placed on four applications to achieve continued growth that outstrips the market average. Particularly strong growth drivers form the basis of them:

• Genomics
• Protein analysis, particularly workflows of mass spectrometry
• Cell and tissue analysis
• Medical mechatronics

The first three applications are generally used across life science research as well as in in-vitro diagnostics. As screenings of genomic, proteomic, cellular and tissue assays have grown in sensitivity, breadth and sophistication, so have Tecan’s underlying technology portfolio and product lines. A rationale driving researchers and clinical partners towards Tecan is its overarching integration of modular hardware and software building blocks across a variety of end applications. The company has pioneered the development and deployment of sophisticated architectures and libraries that can be configured rapidly and optimized for specific use cases.

Medical mechatronics is an adjacent market that intersects with life science and diagnostic technologies and products share many commonalities from a high content of robotic technologies and custom electronics to the regulated nature of the end market.

The modular hardware and software building blocks, product commonalities as well as the company’s regulatory and operational expertise allows Tecan to help customers translate research insights into compliant clinical solutions and at the same time serve a diverse set of customers in a variety of end applications. This position puts Tecan in the center of dynamic healthcare ecosystems.

Tecan in the center of dynamic healthcare ecosystems

Genomics is the systematic analysis of the genome, e.g. a cell, tissue, organ or complete organism. A genome is the complete DNA sequence of an organism, including all its genes. Genomics is a fundamental application in life science research and is increasingly used in diagnostics.

Since 2020, polymerase chain reaction (PCR) became one of the most powerful weapons in the fight against the coronavirus pandemic. It provides a fast, specific and very sensitive way to detect invading pathogens, even when they are present in extremely low numbers.

The whole genomics market has grown to around USD 17 billion. The addressable market in genomics for Tecan is approximately USD 4 billion. On average, this application segment is expected to grow at a mid single-digit rate in the mid-term. However, some sub-segments, such as next-generation sequencing (NGS), are developing at a faster pace, with growth rates ranging from high single-digits to low double-digits. These sub-segments, valued at around USD 600 million, are key focus areas for Tecan.

NGS workflows are composed of multiple complex steps, most of which need to be performed prior to loading samples in the actual sequencer. The crucial step prior to sequencing is library preparation, which is a particularly attractive market segment and a focus of Tecan’s area of work. There are also growing needs in handling small volume samples and preparing libraries, especially when derived from challenging clinical samples. But even with other work steps of the various genomics workflows, starting with the basic step of DNA extraction, Tecan is well positioned.

Also, genomic needs in precision and personalized medicine, companion diagnostics, fast and sensitive multiplexed assays are a big growth driver. Increasingly, NGS for example is used for liquid biopsies to detect minimal residual disease in patients, monitor cancer recurrence, or their response to a specific treatment, simply by checking for tumor DNA (cfDNA) in the patients’ blood.

We are integral to the liquid biopsy ecosystem

We are enabling mass spec sample prep and spatial biology

Cells are independent biological functional units and the starting point for many studies. Biological processes can be understood and clarified at cellular level thanks to cell analysis. Researchers offer trials a more realistic model with cells or groups of cells, even so-called organoids, for transferring findings on organisms. For example, cell assays are increasingly used to develop new targeted drugs.

The overall cell and tissue analysis market is estimated to be around USD 28 billion, with an average growth rate in the mid single-digit percent range. Tecan's addressable portion of this market is valued at approximately USD 3 billion. Tecan's focus on higher-growth areas represents about 10%, or USD 300 million, of the overall market, with these segments growing at average rates in the high single-digits.

In cell analysis, Tecan offers innovative detection and imaging solutions, but also a broad portfolio of automation solutions for different work steps. Cell lines and primary cells are widely used for the production of cell-derived biomolecules, as well as for cell-based assays. For example, Tecan provides sophisticated, modular automation solutions from 2D and 3D cell cultures with cloning, transfection and colony picking to the point of cell-based assays and cellular analysis. In 2023, Tecan launched the Uno Single Cell Dispenser™, a compact, automated benchtop instrument that delivers single cell isolation and reagent dispensing in one system.

Through its Partnering Business, Tecan also supplies leading diagnostics companies in the areas of tissue analysis for cancer diagnostics, flow cytometry and other applications.

We are driving progress in 3D and single-cell workflows

For a description of the addressable market of medical mechatronics products, please refer to the information in the previous section.

Attractive market of USD 14 bn with CAGR in the HSD

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.

We’re speeding discovery and increasing clinical impact

Our strategy is designed to address global megatrends

Technology trends

Tecan’s success is based on core competences 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 enabled by core capabilities, including robotics, optics, complex electronics, fluidics, regulatory expertise, systems integration, and scalable high-integrity manufacturing, as well as expertise 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 competences cover both instruments and the software packages needed for their operation as well as a growing digital ecosystem for laboratories, for example cloud-based software solutions that enable the connectivity of instruments. 

Tecan has established a leading open digital ecosystem that is currently deployable in laboratories, serving as a key differentiator and delighting our customers in numerous ways. Leveraging hardware and software modularity, Tecan swiftly adapts to market trends and dynamics while capitalizing on competences across both the Life Sciences and Partnering Business segments. This modular portfolio enables the sharing of hardware and software between divisions, applicable in both regulated and non-regulated environments. The inherent modularity facilitates rapid market entry with new solutions, minimizing financial and risk burdens, which is advantageous for our product development and appealing to our Partnering Business clients. At the core of this capability is our software architecture, MAPlinx, which supports workflows in genomics, proteomics, and cell and tissue analysis, and accommodates a wide range of hardware configurations — from point-of-care devices to complex, fully integrated lab automation systems. This comprehensive approach spans the continuum from research to highly regulated IVD applications. Additionally, Tecan's expertise in digital solutions is transforming our service model from fix-and-repair to prevention, prediction, and remote service and repair. Our extensive software solutions for fleet management, initially launched in the Life Sciences Business division, are increasingly attracting clients in the regulated diagnostic solutions sector of the Partnering Business. Furthermore, our unique lab orchestration platform enhances lab productivity by integrating Tecan products with third-party and competitive offerings.

Enables nimble response to market needs from research to clinical