LaingBuisson has published the third edition of their Diagnostics UK Market Report.

Highlights include:

  • The diagnostic ‘wholesale’ market is valued at £9.3 billion – demonstrating solid growth from £8.5 billion in 2021 (a 9.4% increase), according to the latest research by industry experts LaingBuisson. This is the cost to NHS and independent sector providers of running image generation and reporting (i.e. MRI, CT-scan etc) services, as well as pathology testing and reporting.
  • Of the £9.3 billion, £8.4 billion is generated from NHS-funded services and a further £946 million generated from private hospitals and clinics.
  • Constraints on the NHS are limiting in-house productivity. Despite workforce growth across many medical specialities, there remains a shortage in radiologists which has limited the ability to drive elective activity growth. Scanning levels per capita remain well below comparator countries, and NHS machines are older and at the end of their life cycle.
  • The diagnostic ‘retail market’ – covering people paying out of their own pocket for diagnostic tests or making use of health insurance or cash plan coverage – is valued at £1.4 billion. The bulk of this is derived from imaging – which is estimated at over £1 billion.
  • The number of NHS-funded scans carried out every year has grown by over 15 million since 2012 – reaching an estimated 59 million by 2024. The independent sector is estimated to be carrying out around 2.5 million scans of these scans on behalf of the NHS.
  • Plain film and ultrasound make up the bulk of NHS-funded imaging (over 40 million scans annually), but the volume growth has been driven by rapid expansion of MRI, CT and PET-CT scans (nearly 16 million in 2024, up from under 7 million in 2012). There are a further c.3 million images for private patients.
  • NHS patient pathology test volumes grew to c.780 million tests/profiles by 2024, with a further c.8 million undertaken for private pay patients. Growth in pathology volumes is overall estimated at 2.2% CAGR.

The diagnostics market has grown in value, driven primarily by an increase in outsourcing by the NHS and supported by steady volume growth underpinned by increasing demand for both imaging and pathology diagnostic testing. The overall wholesale value (which is defined as the cost to hospitals of running their imaging departments, outsourcing services, or sending away tests for reporting) is in excess of £9 billion, with the NHS accounting for the bulk of this (£8.37 billion). The private hospital/clinic wholesale market is estimated at £946 million.

The diagnostic ‘retail’ market comprises a further £1.4 billion. This is defined as the value of the market generated through health insurance coverage, international patients and those paying out of their own pocket for diagnostic testing. The bulk of this spend is derived from demand for diagnostic scans – and the higher cost of scans relative to pathology tests – that has driven the imaging segment of retail diagnostics to over £1 billion.

The market value growth is supported by a rise in demand, including in the direct-to-consumer segment of the pathology segment of the diagnostics market. Although the market for b2c pathology testing is still relatively small, c.£70‒80 million p.a., our estimate for this market has almost doubled since 2021, driven by patients who need regular routine tests and don’t want to wait for weeks to see their GP as well as a growing awareness of using tests to monitor health among all age groups.

NHS productivity, a key reason behind the closure of NHS England and a key criticism point in Lord Darzi’s report on the state of the NHS, has also lagged behind in the field of diagnostics. Per capita, the UK undertakes 50% fewer MRI scans and 40% fewer CT scans than the US, Germany or France. The UK has much worse five-year cancer survival rates in key tumour types than these countries, and late diagnosis is seen as a key difference. The UK also has around half the level of radiologists per capita than the US, Germany and France, with little sign this will be reversed in the next decade, given the time required to train these professionals. The UK also has very high utilisation of MRI and CT scanners that are, on average, older and more liable to require repairs that further reduce productivity and increases maintenance costs.

The development of Community Diagnostic Centres (CDC) has begun to change the way diagnostics are delivered. This may improve productivity, but may also lead to further volume growth, as diagnostic testing becomes more accessible to the population. As of September 2024, NHS England stated that 165 CDCs were operational, although LaingBuisson industry estimates suggest 50-60 are fully operational – of which around half are operated by private providers.

Author of this year’s report and LaingBuisson consultant, Hugh Risebrow said:

“Better diagnostics should result in lower treatment costs and better patient outcomes. In the two years since our previous report, we have seen a predictable growth in diagnostic volumes and workforce shortages. The role of the private sector has increased, and there have been some successful new entrants. Large investments in AI, digital pathology and genomic technology are gaining traction. Our report aims to provide a data driven and qualitative insight into what is happening in diagnostics, likely future trends and the key players in delivering services and providing technology.”