Growth Seen in European Market for Lab Software and Systems

Driven by the need for improved enterprise connectivity, the European market for laboratory software and systems is projected to increase from the current 172.3 million euros to 216.2 million euros by 2006, a 26% increase, according to a new report from Frost & Sullivan (London, UK), an international market research firm.

"Although actual market needs and end-user requirements are not changing significantly at the laboratory level, what is changing is the relationship between the laboratory system and the rest of the organization's IT [information technology] systems. In all instances, the goal of both vendors and end users is to interconnect the laboratory with the rest of the enterprise,” explained Chris Cherrington, research analyst at Frost & Sullivan.

The market, which comprises laboratory information systems (LIS) for the hospital sector and laboratory information management systems (LIMS) for the nonhospital sector, has entered a period of dynamic change. However, the challenge for suppliers is the dearth of end-user funding. In spite of the long-term savings resulting from the integration of hospital software and the introduction of electronic patient records with access to laboratory and radiology data in real-time, the initial investment is cost-prohibitive. In an era of tightened budgets, especially in the public-funded hospital sector, the sacrifice of long-term gains for short-term cost savings has stifled implementation of hospital LIS.

"Just 30% of European hospitals have some installed base of software, with a potential to treble the current market if other establishments were to adopt computerization,” observed Cherrington. Those vendors able to prove a strong case for updating or purchasing new LIS are therefore in line to reap sizeable profits.”

The use of new technologies as healthcare delivery vehicles is a promising trend. The UK government has committed large sums to healthcare IT as part of its program to modernize the UK National Health Service. The first large contract has been awarded to the supplier of a software booking system designed to shorten the politically sensitive waiting lists that have plagued the United Kingdom for years. Such changes are likely to improve the total cost of treatment.

The demand for LIMS in nonhospital settings is derived mainly from the pharmaceutical sector. The need to manage increasing data load, replace outmoded operating systems and hardware platforms in existing LIMS installations, and boost enterprise interconnectivity will expand this market. The most rapid acquisition of new LIMS is expected to originate in the proteomics and genomics sectors.

The competitive landscapes in both the LIS and LIMS segments are in flux. In the former, most smaller independent LIS vendors are likely to either leave the market or be acquired, leaving the field clear for domination by major healthcare information systems vendors or systems integrators. In the LIMS segment as well, smaller vendors are likely to exit the market, with mergers, acquisitions, and new entrants poised to redefine the competitive environment. As LIMS buyers move to integrate laboratory systems with enterprise IT, growth prospects improve. Nevertheless, vendors need to be cautious as such change is likely to evoke a typical "wait and watch” end-user approach, which has limited past development.

To leverage growth opportunities in the laboratory software and systems market, vendors will not only have to tackle the issue of end-user budget deficits but will also have to overcome the skepticism caused by prior bad experiences, while ensuring regulatory compliance.




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