This audio is auto-generated. Please let us know if you have feedback.

Next to big-name brands like Abbott Laboratories and Becton Dickinson, a swath of lesser-known companies are selling COVID-19 tests to schools, hospitals and corporations.

Buoyed by the pandemic, these small firms and startups have seen their revenue multiply from selling the tests, but as large institutions wind down mass testing programs, many of these companies are having to rapidly change the way they do business in order to survive.

With the need for over-the-counter antigen tests unlikely to wane soon, according to public health experts, some firms are teaming with drugstore chains and distributors to target consumers. Others are leaning into diagnosing other diseases.

All of them are considering what will happen at the expiry of the U.S. Food and Drug Administration’s emergency-use authorizations for most of the tests once the public health emergency ends.

“The paradigm for testing has shifted most definitively to the home right now,” said Bala Raja, CEO of Clip Health, a testing firm created in 2014 with funding from Y-Combinator and the National Institutes of Health. 

“There is a slowdown in demand across all of these segments — not to say that it doesn’t exist, but over the last several months, it’s been a gradual waning demand in traditional healthcare settings or where somebody has to go out and stand in a line, or go to a drive-thru and get a swab collected and get results,” Raja added.

The Silicon Valley-based company’s tests are used in doctors’ offices, urgent care settings and some pharmacies, as well as by companies that have a license to provide testing for events and employers. Now, seeing demand for testing shift to the home, Clip Health plans to seek authorization for an at-home antigen test with a reusable reader.

“We see COVID being a meaningful part of our business for at least the next couple of years” despite the shift, Raja said.

Onus for testing shifts to the home

Nate Hafer, assistant professor of molecular medicine for UMass Chan Medical School, said most testing programs run by schools and businesses for employees have ended, at least in Massachusetts. 

“With the availability of over-the-counter testing being much more commonplace these days, I think people are passing that [responsibility] to individuals,” Hafer said, adding that classic market forces seemed to be a driving factor in people’s test choices.

“The tests people can get for free are obviously very attractive,” he added. But when those are not available, “the tests at the best price point at the supermarket, or drug store … tend to be what people are grabbing.” 

Companies also face less funding from the U.S. government to expand testing capacity, after Congress reached an impasse on a COVID-19 funding deal last month. The Biden administration said it would repurpose about $10 billion in funding from testing to buy more COVID-19 vaccines and treatments. 

Ashish Jha, who leads the White House response to COVID-19, said in a June press briefing that as a result, domestic testing companies are laying off workers, shutting down production lines and may even sell off equipment. 

Small companies in particular face a challenge as many of the large government and corporate testing contracts have already been signed.  As rapid tests became more prevalent starting in February, smaller companies needed to provide some kind of niche product or position themselves differently, said Tinglong Dai, a professor of operations management and business analytics at the Johns Hopkins Carey Business School in Baltimore. 

Time for a pivot?

“They could pivot to other tests — flu tests — a lot of other kinds of tests,” Dai said. “The whole idea that people can test for disease at home, I think it’s incredible. Before the pandemic, it was unthinkable.”

LumiraDx, a London-based startup founded in 2014 and whose tests are made in the U.S. and Great Britain, also counts pharmacies and U.S. health systems among customers for its COVID-19 antigen test. 

Chief Product Officer Pooja Pathak said that while demand for screening for events and travel has been getting smaller, the company is seeing steady demand from its healthcare customers.

The firm names CVS as its biggest customer, which doesn’t sell the tests over the counter but offers rapid tests administered by a pharmacy technician.

Topics #Analysis #Benefits #company business #company ideas #company store