Diagnostic Labs Market Research Report and Outlook by 2028

The diagnostic laboratories sector is anticipated to expand from US$ 297.06 billion in 2021 to US$ 514.28 billion by 2028, reflecting a compound annual growth rate (CAGR) of 8.3% from 2022 to 2028.

This growth is driven by several factors, including the rising incidence of chronic illnesses, the increasing adoption of point-of-care diagnostics, and escalating healthcare expenditures. Furthermore, advancements in diagnostic laboratory technologies are expected to be a significant trend influencing the market from 2022 to 2028. However, the shortage of qualified professionals poses a challenge to the overall growth of the market.

A diagnostic laboratory is defined as a facility equipped with the necessary tools and reagents to conduct diagnostic tests for human diseases. Compared to traditional methods, modern medical facilities offer enhanced capabilities for disease insight, enabling the application of appropriate treatment strategies. Consequently, the efficiency and effectiveness of disease management have improved significantly. Diagnostic laboratories are crucial in mitigating the widespread effects of various diseases, with skilled professionals in pathology labs delving into the intricacies of underlying health issues. As diagnostic networks and insurance coverage expand, clinical laboratory tests are becoming increasingly prevalent, driven by the demand for early disease detection and timely therapeutic interventions. The COVID-19 pandemic has notably impacted laboratory operations, with many facilities halting other diagnostic procedures due to the overwhelming demand for COVID-19 testing. During the initial wave of the pandemic, diagnostic labs adapted by providing at-home sample collection services to accommodate the surge in cases.

According to the World Health Organization (WHO), chronic diseases account for approximately 41 million deaths annually, representing 71% of all global fatalities. This rise in chronic conditions intensifies the demand for robust healthcare systems. Clinical diagnostics have proven invaluable in regions with high chronic disease prevalence, aiding in disease prevention, detection, and management. They facilitate the identification of early warning signs and individual risk factors, creating new avenues for preventive measures and early interventions. Thus, the increasing rates of chronic diseases are expected to further stimulate the diagnostic labs market. The United States, in particular, is projected to experience significant growth due to its substantial burden of chronic diseases, necessitating support from clinical laboratory services for effective patient care. For instance, data from the National Center for Biotechnology Information (NCBI) indicates that in 2018, 45.0% of the US population, or 133 million individuals, were affected by at least one chronic disease. The Centers for Disease Control and Prevention (CDC) reports that four out of ten adults in the US have two or more chronic conditions, while six out of ten have at least one. Major chronic diseases, including cancer, heart disease, and diabetes, are leading causes of mortality and disability in the US, driving the demand for enhanced treatment and management solutions, thereby propelling the diagnostic labs market.

The surge in COVID-19 cases has led to increased funding and testing, further accelerating the growth of the diagnostic labs market. Numerous tests were conducted globally to identify infected individuals and curb the spread of SARS-CoV-2. Various testing laboratories entered the market, significantly contributing to its expansion. A survey conducted by Brenda Silva in 2020 revealed a 26-51% increase in demand for clinical diagnostics. According to the Atlantic Monthly Group, the number of COVID-19 tests skyrocketed from 760,441 in September 2020 to 964,792 by October 2020. This ongoing increase in testing, driven by rising patient numbers and government funding, is expected to further boost the demand for diverse disease testing and significantly enhance the overall diagnostic labs market.

The diagnostic labs market is categorized based on lab type, testing services, and revenue sources. In terms of lab type, the market includes single/independent laboratories, hospital-based labs, physician office labs, and others. It is projected that the hospital-based laboratories segment will hold a larger market share during the period from 2022 to 2028. Hospital-based laboratories utilize patient fluid or tissue samples to detect signs of diseases or disorders. They encompass various sections, including anatomic pathology, clinical chemistry, hematology, genetics, microbiology, phlebotomy, and blood banking. Typically, hospital-based labs conduct more tests than all other laboratory types combined. The competition between independent and hospital-based labs is significantly influenced by government regulations and insurance policies. With the integration of electronic health records, hospital-based labs enjoy a competitive edge in delivering test results more swiftly to healthcare providers and patients.

Opportunities within the diagnostic labs market are expanding, particularly due to the digital transformation occurring in laboratory settings. Life science companies are increasingly leveraging digitalization in research and development, as well as in quality control laboratories. The modern laboratory environment has evolved dramatically, enhancing the efficiency of test procedures and the manufacturing of biopharmaceutical products. As technology continues to advance, there is a growing necessity for a modern, quality-driven digital approach to laboratory operations, providing consumers with unmatched convenience, innovative solutions, and reliability. Innovations in technology have made point-of-care testing (POCT) devices more portable and improved sampling techniques, resulting in minimal disruption. The user-friendly nature of these technologies is largely attributed to advancements in disposable test cartridges and microprocessor-based analyzers. Several innovations are set to transform the testing landscape through enhanced speed, quality, efficiency, and scalability, ultimately guiding patient care.

The ecosystem supporting the growth of smart laboratories is evolving, with numerous technology startups and established commercial entities developing products and solutions targeting pre-and post-analytical processes, including smart procurement, remote monitoring, and predictive maintenance. The increasing volume of tests, cost pressures, and the rise of distributed labs are compelling traditional players to adopt converging technologies such as robotics, artificial intelligence (AI), big data, the Internet of Things (IoT), and cloud computing. This shift is moving operations from static, fragmented practices to dynamic, value-driven methodologies, resulting in more accurate and timely diagnostic results. The smart lab market encompasses proprietary robotic platforms, automated tools, software-as-a-service (SaaS), mobile applications, and other digital solutions that enhance operations, data management, and analytics across the diagnostic lab value chain, thereby fostering market growth.

Key organizations such as the World Health Organization (WHO), Centers for Disease Control and Prevention (CDC), Food and Drug Administration (FDA), Department of Diagnostic and Interventional Radiology (DIR), Centers for Medicare and Medicaid Services (CMS), United Nations Development Programme (UNDP), American Society for Microbiology (ASM), Italian National Health Service (INHS), International Agency for Research on Cancer, American Clinical Laboratory Association (ACLA), and American Association for Clinical Chemistry (AACC) are among the primary and secondary sources referenced in the analysis of the diagnostic labs market.