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“If an imaging IT vendor is going to enter the digital pathology market, now is the time to begin doing so,” emphasises Imogen Fitt, the co-author of Signify Research’s Digital Pathology – World – 2021 report. “Since the COVID-19 pandemic hit, the market has seen real momentum build, causing adoption to accelerate much more quickly than previously anticipated. Keeping track of market changes will be increasingly challenging for new entrants, so they need to arm themselves with as much information as possible. However, they also need to think about how they are going to approach the market.”
According to Fitt, there are several ways that a vendor could make this approach. One is the approach taken by Sectra, one of the more pioneering imaging IT vendors in exploring digital pathology. The Swedish vendor took it upon itself to develop its digital pathology solutions in house. This is a strategy that requires a lot of investment over a long period of time, and so represents a long-term commitment. A second approach sees imaging IT vendors acquiring digital pathology vendors, but this is expected to be a relatively unpopular approach.
“We haven’t seen many acquisitions, and while it is possible we could see more, I don’t think it’s likely,” she comments. “A lot of best of breed digital pathology vendors have grown quite considerably over the last few years thanks to the jump in the market. This makes acquisition quite costly compared to what it would have been a few years ago.
“It’s also a passion project for a lot of digital pathology vendors, so they have their sights set on the longer term. This isn’t true for all vendor types however, as AI vendors for instance see the best route to market as becoming integrated into other solutions, and making acquisition an attractive exit strategy.”
The third approach an Imaging IT vendor could take is partnering with existing digital pathology vendors. This approach has been adopted by several firms including Fujifilm which has partnered with Inspirata. This, more cautious approach, allows imaging IT vendors to take advantage of digital pathology solutions and engage in enterprise imaging deal for lower levels of investment and commitment.
“We are expecting many more of these partnerships to come forward in the coming years,” comments Fitt, “at the moment this approach makes the most sense.”
“There is also one more approach currently being pursued by vendors in the digital pathology market which holds some promise,” she adds, “and that’s vertical solution integration, service provision.
“There are companies such as ContextVision which are evolving their digital pathology department into a laboratory service. Another company, Diagnexia, is a spin-off of a UK company called Deciphex, while Cyted.ai is another. This approach essentially capitalises on the acute deficit of pathology personnel that is available and offers outsourcing services, using the technologies that it, itself has developed.
“Partnering with those types of companies could be an interesting approach that would differentiate an imaging IT vendor, but I don’t really expect them to take it, because it requires a significant change to business models. Noticeably, none have yet done so in radiology.”
While comparisons with radiology can be useful in some such situations, imaging IT vendors would do well to remember that despite some similarities, digital pathology is still a very different discipline, so what works in radiology will not necessarily have the same impact. One of the key differences, for example, is the comparative lack of digitalisation.
“Over 2020, the market grew enormously, by around 45%,” explains Fitt. “That was primarily down to shifts in working patterns, when remote diagnosis became necessary in the wake of the pandemic.”
There was a spike in 2020, but revenues are still experiencing healthy growth
“So, whereas the market was in a period of almost stasis, where digital pathology wasn’t really taking off, we are now in a period of unprecedented enthusiasm, engagement and investment.”
Despite this recent interest, parity has not yet been reached with other departments.
“Pathology operates in much more of a silo, and is typically much less well funded than radiology,” Fitt continues. “This gives key advantage to some imaging IT vendors when approaching these kinds of digitisation efforts, because, by offering an enterprise imaging deal which also includes pathology image storage, pathology departments can ‘piggyback’ of the larger budgets of radiology. Vendors focused solely on pathology don’t have access to that kind of advantage.”
There are other differences too. Chief among them is the levels of digitisation within pathology. Radiology is, in many markets, approaching 100 % digital maturity, however in pathology, that figure sits at around 15-20%. The lack of budget is one of the reasons for this low uptake, but another factor is that in radiology, the transition to digital often ultimately implied a cost saving. In pathology, where a slide still needs to be prepared pre-digitalisation, the cost saving component isn’t there. Making a case for adoption based on the return on investment has therefore been much more difficult.
Differences Within Pathology
An approach into digital pathology will also vary based on where in the digital pathology pathway vendors will target, with there being three broad areas. The first is primary diagnosis, in which pathology is supporting pathologists’ primary reading and reporting. There is secondary use, which includes clinical consult, tumour boards and medical education, and finally in preclinical use, in research, clinical trials and drug development.
“Approaching the preclinical research market and the primary and secondary clinical use markets is very different,” opines Fitt. “Vendors are approaching markets at very different phases of maturity with regards to many trends.
“The research market is much more open to things like cloud storage and AI adoption, because there are fewer restrictions, such as only being able to use solutions that are CE marked or FDA approved. This has meant that there has been much greater adoption, particularly in fields like drug development.
“This is in contrast to the clinical markets, which saw most implementations starting from scratch, or a very low level of usage, with secondary reading much more common than primary. But, with the pandemic, primary use suddenly became much more attractive to pursue which has led to a number of vendors which are now entering the clinical market and pursuing primary reading capability.
“Over time,” she continued, “I expect secondary reading to evolve into more of a consultative or telepathology role, for tertiary hospitals, for example, or in less economically developed markets that need to outsource their staffing requirements.
“This will see deal sizes increase, but will also allow data to be centralised and be more usable. In addition, the preclinical submarket is starting to interact with the clinical world, with examples of projects looking at companion diagnostics becoming much more common.”
Data is playing an increasingly important role in other ways too. AI is among the technologies set to have the most significant impact in digital pathology as it is beginning to also have in radiology and in other areas. There is some overlap, and some vendors are looking to target both markets, Harrison.ai for example announced its ambitions in pathology following its most recent funding round. However, capability isn’t as directly transferable as might be expected.
“One of the key things to remember, is that a radiology vendor would be approaching a completely different kind of market, where budgets are much smaller,” Fitt states.
“This begs the question of who will pay for it, and how is the cost justified? Regardless, before these questions can be answered, and before there can be any meaningful use of AI, pathology as a discipline needs to get its feet off the ground and become digitised.
“There are arguments that see the two go hand in hand, that the potential of AI will drive the digitalisation of pathology. Arguments centred on the workflow and making manual processes such as cell counting and measurements automated would help any cost savings become much more obvious.
“And while there may be an element of that, the question is still ultimately, ‘what is the real benefit of this AI?’, how does a vendor prove that it isn’t going to cost a provider more money that it saves them.
“That is a question that is yet to be sufficiently answered.”
The Time is Now
Digital pathology, as highlighted in our 2022 predictions Insight is destined to play a far more significant role in both the strategies of imaging IT vendors, as well as the purchasing decisions of providers. There are still many considerations that will have an impact on these facets, from file sizes that are magnitudes larger than many radiology images, to the lack of standardised image formats in digital pathology and the expensive up-front cost of many scanners, particularly compared to the budgets of pathology departments. These factors don’t exist in isolation either, with broader considerations like enterprise imaging strategies and cloud adoption strategies all intersecting the deployment and use of digital pathology.
“These are ancillary concerns, but they need to be considered before a provider buys in to a solution,” Fitt concludes. “The market is developing very quickly at the moment. It is a very interesting and engaging place. There are opportunities, but imaging IT vendors need to appreciate the differences compared with the radiology market and pay close attention if they are to keep up.”
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This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify Research. To view other recent Premium Insights that are part of the service please click here