By Syamala Ariyanchira,
November 22, 2015
“CE marking is not good enough. In fact, we would prefer a rapid test with FDA approval.”
I was exploring the interests of a medical device distributor in Malaysia to expand their portfolio. One of my clients is looking to expand operations in Malaysia and I am assisting the company to identify a suitable distributor for exclusive distribution in Malaysia.
“FDA approved a rapid test for dengue? Are there any in the market?” I tried to confirm I heard it right. It didn’t make sense that a company will invest in one, considering the cost, time, and the struggle involved to get FDA approval, particularly for dengue, which has a low incidence in the USA.
“The market is tough. If your client has a superior dengue product, we are confident to consider taking all the rapid tests they have. If dengue test is not good enough, the brand will never get the momentum to grow in Malaysia.” Explained the sales director of the company.
Walk in with a good dengue test. If you do not have one, don’t waste time. The market entry strategy for Malaysia is simple and straightforward.
However, for a small developer of rapid tests, registering the product in the USA is a major decision. Even though it will open the door to a large market and also will ease the market entry challenges in other countries, many companies opt to enter into international markets before launching in the USA.
Invest in CE marking or FDA approval? This is a major dilemma for medical device companies in general. I learnt that it is a factor to consider even for IVD products targeting tropical diseases while developing commercialisation strategies.
Dengue: The Decisive Factor
Dengue incidences in Malaysia have already crossed 100,000 as of October 2015. Reported deaths from the disease so far are close to 300 this year. The statistics are now comparable to countries with traditionally high incidences of dengue, such as Philippines and Thailand. The government is keen to improve access to reliable tests and control the epidemic.
There is an increasing demand for tests that can facilitate early and accurate diagnosis of dengue in Malaysia. Even small clinics in Malaysia conduct a minimum of 25-30 rapid tests on a regular basis per month.
Differential diagnosis against infections from cross-reacting flaviviruses prevalent in a region has always been a major challenge in accurate dengue diagnosis. As the alternative molecular diagnostic tests are costly, there is a demand for rapid tests for initial screening. And it is critical to avoid false positives.
False negatives are much more serious since outcomes can be fatal. It is tricky to select suitable tests to avoid false negatives since the amount of targeted biomarkers will depend upon the stage of infection. For instance, the amounts of NS1 antigen and IgG/IgM antibodies in the blood depend upon the number of days after infection.
The Dengue Duo test, which detects NS1, IgG/IgM simultaneously, is currently high in demand.
The market size for dengue rapid tests is over $1.2 million in Malaysia, the total population of which is, just about 30 million. The public sector accounts for 65% of the market. However, this segment is exclusively reserved for companies having Bumiputra status, who get to bid for government tenders.
The private sector, which accounts for the remaining 35% of the Malaysian dengue market, is still significant, but the competition is tough.
Currently, the market leader in Malaysia’s rapid tests market is Standard Diagnostics, now owned by Alere. The company was able to crack the market with its dengue rapid tests, which had higher sensitivity and specificity compared to competing brands. Though these are not FDA approved, validation by the Institute for Medical Research (IMR) helped the brand to increase market shares in a short time.
All the above factors make dengue test the decisive factor of success for a rapid test developer in Malaysia. Brands offering good dengue tests get immediate recognition by physicians, which normally spills over to other tests of the same brand.
CE Marking or FDA?
For a rapid test developer, the goal is to reach the market as fast as possible. Due to the higher costs associated with FDA approval, IVD companies with tight budgets strategically choose CE marking over FDA approval.
Speed is another major factor leading to the prioritization of CE over FDA by many companies.
However, market acceptance is not guaranteed if one selects CE-route, as evident from the reaction of Malaysian distributors. Additional investments and time needed to gain approval by local regulatory agencies and enter the public sector segment of Malaysia may make the whole process as exhaustive and costly as FDA approval.
For instance, in addition to investing time and resources for CE marking, a company needs to invest in IMR validation in Malaysia. This is mandatory for products without FDA approval to be eligible for bidding government tenders. IMR validation is often a slow process, which can take 6-12 months. The fee for IMR validation of each product is in the range of $1,000. If the product fails IMR validation, one has to start the process all over.
The parameters considered in CE marking and FDA approvals are comparable to a large extent. For instance, safety is given highest priority in both systems. Claims of the supplier are also checked and ensured.
What is making FDA approval much more costly and uncertain is the other additional factors considered by the agency. For instance, FDA analyses the relevance of a new test against the existing products in the market since medical insurance coverage is attached to FDA approval.
The declining efficiency of FDA has also been highlighted as an important factor adding to the uncertainty. The high turnover at FDA impacts the quality of reviewers, institutional memory, and loss of efficiency. The CE marking process, in comparison, is clear and straightforward.
This scenario may change soon, though. In 2016, EU is expected to replace the current In Vitro Diagnostic Medical Devices Directive 98/79/EC (IVDD), which establishes requirements and conformity assessment procedures for IVD companies to ensure safety, efficacy, and quality of the IVD products. The new directive is expected to raise the standard requirements expected from IVD companies.
For the time being, distributors are taking the CE marking route. The strategy of many companies is to target initially the private sector demand in Malaysia. IMR validation is sought for moving to the next stage, to target government sector demand. No one seems to be trying for FDA approval for rapid tests for dengue at present.
It is early to assess what will be the impact of the implementation of the new EU directive in 2016. It is reasonable to expect that the cost and speed advantages of CE marking over FDA approval can become much less.
For a dengue test maker, however, the new regulation could be advantageous if the market perceives the standard of CE-IVD products in the same levels as that of FDA approval.