Ladies and gentlemen, good afternoon, welcome to this DiaSorin event, where we are going to discuss the next 3 years. Let me say, you're going to see 4 presenters today. I'm going to give you a broad overview of what is the DiaSorin strategy. We'll go behind the plan that is going to be discussed later on. Then I have Chen Even, the Chief Commercial Officer, who is going to talk about the implementation of strategies for the plan. What stands behind the numbers. Then Esther Shihabi, who is responsible. She just joined the company. She is the Vice President of Marketing for the diagnostic products. She will spend lots of time to talk about molecular, the strategy, and what we intend to do there.
Then finally, our Chief Financial Officer is going to drive you through the main numbers, and then we're going to have a Q&A session. Okay, what do we do? I think everybody should know about it. We sell products to labs. Every time a patient feels sick, goes to the doctor, the doctor is pretty much ordering a series of blood tests. The blood is collected, sent to a lab, tested with our products, and then the doctor get the results. With the results, then is able to assess the disease treatment and so forth. I think that it is very important to understand that this company went through 2 cycles, and what is opening today is, I believe, a third cycle of the life of DiaSorin. The first 2 cycles are between 2000 and 2016.
For those of you who have been following the company, our mantra has always been one segment, one technology. We said we need to focus all we have in immunoassay, since it is a very competitive environment, and then put our resources to excel in the immunoassay. Between 2000 and 2008, we acquired the CLIA technology, and we converted all our product from older technology, RIA and ELISA, to chemiluminescence. We developed lots of products in the infectious disease segment. Also we got very lucky with vitamin D. You know, in DiaSorin, there is a joke. Whoever claims that have anything to do with the success of vitamin D gets fired on the spot, because we got very lucky when it comes to the vitamin D. Once vitamin D was there, then we surf the wave extremely well.
From 2008 to 2016 is a very important cycle because we have, for the first time, developed a system. The LIAISON XL was actually designed, and it was developed by DiaSorin. The LIAISON, if you remember, was coming from an acquisition that we made in 2002. We have proven the ability of this company to design an instrument and have it manufactured by our partner, that is STRATEC, a German company. We expanded the menu into unique specialties, between 2008 and 2016, we developed 45 products, enriching the menu and the differentiation of the company. Because of that, Menu and XL, we were able to sign very relevant strategic alliances with Roche and with Beckman, to name 2. Last but not least, we have invested over EUR 400 million in acquisitions.
The biggest acquisition certainly was Focus, as mentioned by the Chairman. We also bought other three companies providing us content or market access. Okay. Very successful cycle between 2008 and 2016. I feel that in 2017 and behind, we are going to start a new cycle. This new cycle is actually important because we left behind the concept one segment, one technology, and we started to challenge the company with molecular diagnostics. The way we look at the business is we have an immunoassay company, and we have a molecular diagnostics company, and we kept the molecular diagnostics company well-separated from the immunoassay. When it comes to strategy in the next few years, for the immunoassay, I believe that there are two things that are going to be very relevant for us.
First one is the launch of the LIAISON XS, which is what you see in the room. This is a system that is allowing the company now to go after a different market segment, which is the segment of the smaller labs and the physician office lab. In the next hour or so, you're going to hear a lot about this segment. The second one, which is, I think, new and if you have seen last week, we have announced a partnership with QIAGEN, is related to the fact that we believe that our technology, our product, our customer can provide a very nice base for products and technologies that may come to other companies. The QIAGEN alliance is, I think, is one of the first endeavors that we started in this segment. Again, we're going to cover it later.
When it comes to molecular diagnostics, certainly we decided to get into it, buying a very nice company, very nice technology. I don't want to anticipate anything. Fundamentally, we see molecular as an opportunity to provide more and more innovation to our platform and to our company. If you allow me to go back to 2015, when we presented at the stock exchange at the last plan. We are at the end of that cycle, so 2015-2017. I'm very glad to see that whatever we promised, we pretty much delivered. From a financial point of view, all the indicators actually were overachieved. From a technology development point of view, we developed products, we brought to the market the XS, and we did whatever we said this company was going to deliver in three years.
From product development, needless to say, we added six new products per year to the catalog. I have to say, when it comes to the last plan, mission accomplished. Let's look at strategic settings. I'm going to discuss about immunoassay, and I will discuss immunoassay not necessarily looking at the next three years. All the comments I'm going to make may go behind the plan, but it's very important for shareholders and stakeholders to understand how we view the mid, long-term future of this company. If you look at immunoassay, which started in 1970, so it's almost 50 years old. If you look at the ability of this industry to innovate, fundamental innovation in immunoassay was achieved following three different concepts. The first one was automation, right? Simply because labs did require simple system to address increasing volumes.
This industry went from benchtop radioactive small analyzer to the very complex, what they call total automation labs, which is what you see to the far right. My point today is that this industry, when it comes to its ability to innovate more in automation, pretty much we reach what the customer wants. I honestly don't see, for the industry, the ability to innovate more on the automation spectrum. Second one has been technology, which has been stepwise. Everybody in the industry started from using radioactive labels, phenomenal labels, but too complex. We moved to ELISA colorimetric, which is simple but still cumbersome. Finally, we got to chemiluminescence. Chemiluminescence has been with us for almost 15 years. Today, there is nobody in the industry making any effort to change technology.
From a signal technology, pretty much we are where we are. We cannot innovate more. What is left to innovation is menu and content. This is why DiaSorin has been significantly investing in product development. By the same token, this is why being so successful in product development, we've been so successful as an organization, and we are perceived by customers as a very innovative company. You will continue to hear us talking about product innovation. We've been, I think, very good in that. If you think about it, this is a very interesting slide. Starting from 1998 to 2017, almost 20 years, 45 times DiaSorin has been first to the market or first with a product.
For 45 times in our life, we have launched a product in a new market as first company, or we have launched first a product on the market. Okay. This track record, which is phenomenal, is illustrating the ability of this company to continually 20 years is a lot of time, but continually in the DNA of the company, there is this ability to be innovative and introduce new products to the market. How do we see ourself vis-à-vis our products? We believe that our products can be actually clustered in four main clusters. We see me-too tests. The definition is products that everybody has, not much differentiation. High volume specialties, which means that we're not unique in our ability to launch these products. Differentiating specialties, these are the unique products we carry and nobody else has. We have the so-called investigational markers, which means products that, they're not products yet. No, they are idea concepts, and we need to prove clinical validity. I'm going now to go through each of these bucket and explain to you how do we see growth in each bucket.
Let's start from me-too. If you look at me-too, I think to no surprise of everybody, vitamin D became a me-too. It is hard to admit, but when you have seven competitors having an FDA-approved product, and you have now in Japan three companies carrying vitamin D and 10 companies in Europe, differentiation over vitamin D clearly is not there any longer. What's a me-too test? No research and development effort, no menu differentiation, everybody has it, and no marketing cost required because everybody pretty much is aware of the product.
How do you grow with a me-too? Difficult, but we plan to grow into two different segments. We grow with this product when the market grows, and that, I think China is a vivid example of a market that is still growing 15% because adoption by doctors is increasing. Even a me-too company can grow in China with this product, just following the market. India is another good example. When it comes to market share, you can grow getting market share, which is more difficult because you've no differentiation. But in this case, for us, LIAISON XS is a differentiator. We bank on growing in the U.S. not necessarily because we have differentiating products, but because we have a differentiating system. Carrying those products.
The POL strategy that is going to be discussed by Chen later on, it is actually gaining market share with me too products in the U.S. We move to the following bucket, which is high volume specialties. High volume specialty in our definition means those products where you're not alone as a company. Other companies may have it, may have some of it, but none has the multitude of products that we have. What makes it unique, DiaSorin in this sense, is the fact that we carry all of them. Certainly, there is a limited research and development effort required. Most of the menu has been already developed by DiaSorin. There is menu differentiation here simply because we have it all, and there is a limited marketing effort required to support this because these products now have been known to clinicians.
How do we plan to grow? Again, we plan to grow with these products where the market grows. China, again, another good example. We plan to grow where still these products are adopted in older technology like ELISA, for example, China, India, U.S., still countries where these products are used but are used with aging technologies. We plan to grow exploiting the customer base. We have over 3,200 LIAISON XL installed. Lots of these XLs are installed with customers that are running this product, and every time we add a new product, we then go immediately to the customer base and the adoption is very simple by customers. The third bucket is the one that is unique. We have 25 products that are unique to DiaSorin. Nobody else carry it.
In this case, this product require relevant research and development, but they provide lots of differentiation to the market. Here is where quite usually we are first to the market. Require marketing cost because we need to promote the use of these products. How do we grow here? Again, we push for more adoption. A good example is calprotectin. Chen is going to talk about it, is a marker for inflammatory bowel disease, known but not used enough. We carried it. We're going to be the only one having it available in the U.S., and is an assay that is unique to DiaSorin. We plan to grow through technology conversion. Vitamin D125, very good example. It existed like an RIA assay, very cumbersome. We went from in 24 months, we capture 100% market share as soon as we made it available.
Last but not least, we grow here because we develop more unique products. Zika is a good example. First one to the market, first one to be approved. We have been financed by BARDA. We have been asked to develop it by the CDC and the FDA. We are enjoying today the launch of this product to the U.S. market. The last bucket is, if you are looking at the company in the next 2 to 3 years, don't waste your time looking at this because this is a long-term investment. We are talking about investigational markers, which is a bet in our industry. Markers where there is no clinical use or very limited. What we do here, we invest research and development money in order to create these products. When we succeed, we get lots of differentiation, and we get IP protection.
Certainly, there is a very high cost when it comes to marketing and clinical studies. I think it is very obvious from a regulatory point of view, we start in Europe. We follow in the U.S. If you remember 3 years ago, we said CKD, so kidney disease, is an area where we want to invest and be recognized as number one, is a EUR 100 million market today. We enjoy 25% market share. It is clearly an area where physicians lack the ability to use diagnostic products to diagnose the progression of the disease. We identified 5 products that we need. We launched already 3, and there are 2 in the pipeline. We are investing significant amount of money in clinical studies to support this. What you're going to see in the plans and financials is cost but not revenues.
If you look at the companies 5, 10 years from now, one of these products can become a blockbuster, okay? It's not nothing you should bank on because it's a bet. Where do we plan to invest R&D money? If we follow the same logic and you look at the slide, you see the 4 buckets of products. Let's start from the one to the right, the me too test. Certainly, the gray bar, just for explanation, is what top competitors can provide. Take Roche, Siemens, Abbott, this is what they carry on their box. The top competitors, which are focused on me too, they have 62 products on their box. We have 43. We still plan to invest in R&D and develop 4, which is very important for our U.S. strategy in the physician office lab.
Certainly, this is not an area that is distinctive when it comes to DiaSorin. If you move to the left, the second bucket is the high volume specialties. Here is where we have differentiation. 42 products versus 29, 6 more coming in the next 3 years, right? This is where it makes sense to put R&D money for the company. Third bucket to the left is the differentiating one where we are leader. 24, we're going to add 3 in the next 3 years, and everybody else has nothing. 2 products just carried by some of the competitors. Here is where we will continue to invest and continue to enrich the menu. Finally, the investigational ones, which we covered before. In the next 3 years, we're going to develop the last 2 remaining, and then we have a full panel for CKD testing. Okay.
I'm going to cover four strategic projects before I turn to Chen. He's going to talk about implementation. First one is LIAISON XS. You heard it many times. Now I continue to repeat it. It is a phenomenal instrument. It's a phenomenal instrument for a very simple reason, that it's taking us to a market segment where the other people don't go. It's very reassuring when we meet Roche, which happened two weeks ago, or we meet Beckman, we ask them, "What is your strategic direction?" They keep saying, "Big, big, big. We're going to be bigger.
We're going to make bigger systems. We're going to go after consolidation." I think that when they ask us, "How do you guys put together your strategy?" I always say with Chen, first we hear what you do, we go the opposite direction because competing with Roche and Siemens, you lose from the get-go. Data on XS represents exactly that. It is allowing us to differentiate our company going medium low. Fundamentally in two main markets, U.S. In the U.S., there are today 75,000 labs. These are physician office labs. They are CLIA-waived. They cannot operate the LIAISON XS. There are 16,000 that are CLIA certified. They can operate a LIAISON XS. What is happening in the U.S. because of PAMA and complexity is that these physician office labs that are not CLIA, that are CLIA-waived, are consolidating.
Too expensive for a physician to run its own lab. Consolidating, creating more CLIA-certified labs. This is where we plan to go with the LIAISON XS. There is a market. We estimate that there is a market of 4,000, 5,000 of these labs where we can go with the LIAISON XS. These customers have not seen innovation in years because they've always been considered by all the big companies as secondary tier. The second geography we're going to be covering is China. China is even more phenomenal because it's going through a transformation, as you know. The transformation means you have hundreds of million of people that are moving from villages to cities. If you've been to China, it's the only place where you go and they build cities. We rebuild cities usually.
Actually what we're seeing in Europe is a complete different phenomenon now where people are also trying to move out from the city because it's too expensive. China is exactly the opposite. Today, one of the problem of the Chinese government is that there are smaller hospitals that they build in smaller city or in the periphery, there are no systems because these labs, these hospitals cannot afford a very large, fully automated system. That is where we envision the LIAISON XS opportunity. We are talking about 20,000 hospitals, very, very large opportunity. Just for reference, in Italy, there are 800 hospitals decreasing by the day because we are consolidating. We cannot afford all these hospitals. The second strategic element for us, which is partially new, is certainly the fact that, as we said before, we want to develop differentiating products.
What is new is that we have always been banking on our research and development team to come up with new products, and Zika is a very good example. Was all developed in-house. We decided that since we have an install base, we have 3,000 customers, very happy customers, that on a daily basis are asking us if they could use more of specialty products because you walk in these labs and Roche, Siemens, Abbott are not taking care of their needs, are taking care of their company needs, pushing for automation and consolidation. We decided that we can speed up and leverage on the install base through alliances. QIAGEN, which was announced two days ago, is a perfect example of this. What is a good alliance for us?
It's an alliance that allows DiaSorin access to a product that can generate between EUR 25 million and EUR 50 million of revenues. We decided that we can dedicate time of our commercial people, marketing people, and R&D people only if that is the opportunity. When it comes to QIAGEN, was simply an alliance made in heaven because they do have very nice products, immunoassay products. They are ELISA based. They are very successful with these products, but they're not an immunoassay company. QIAGEN is a molecular diagnostic company. Their customers are asking for, "Give me a platform that can actually automate all these assays." It was very simple to discuss, come to an agreement. Chen has been very important to this because he's been driving all the negotiation with QIAGEN.
Eventually last week, we shook hand, and we've initiated a relationship where we're going to be launching few products on the LIAISON XS. Extremely differentiating and extremely high value to customers. Stay tuned because we're going to do more of this. Last but not least is Beckman and the U.S. Look, I understand that you guys, you're not in this business, and you cannot appreciate what it means to take an HIV product for a company of our size to the U.S. through the FDA. It's a humongous effort. It's an effort from an R&D point of view, it's an effort from a quality point of view. It's an effort that companies of our size have not achieved before. In fact, if you see just for HIV, the big guys have it, and then there is nobody else.
This endeavor, what it does, forcing the company to go to the U.S. through the FDA and developing all these products, is changing the DNA of the company because the requirement by the FDA are so high that you need to invest in talent, in automation, in quality, in education, in know-how. The net effect, which is an intangible of this project, is that the company improves. Improves in the way it does business. This is why we decided to do this. It is a EUR 500 million market. It's a big market. You require lots of muscles in the U.S., and this is why Beckman is a very good company to work with. There is a strategic interest. We can fit very well together.
Certainly, this is a project that you're not going to see the results in the next three years, but you're going to see that this will change perception of U.S. customers of DiaSorin. As you know, strategically, we said many times, we want to grow in the U.S. because the U.S. is the market at the end of the story. We gave ourselves the objective to have 50% of our business in the U.S. Today, it's 33%, 34%. Then the rest split between Europe and the Far East. One slide for molecular, and simply not because I'm shy about it, but because Esther is going to cover it for you. Let's go back to the three axes. Very different from what we have seen for immunoassays. These are much more recent business.
If you think about it, PCR, which is at the base of this technology, was discovered in the mid-'80s. The guy who invented it, he invented it while he was smoking marijuana, got a Nobel Prize. Okay. If you look at how you can be innovative in molecular, same thing. Automation, it is just moving. New platforms are coming to life, and you go from the left side, where you have very small portable system designed for the doctors. You have center field, where you have products like ours that are bench top, designed for mid-size hospitals. Then you go to the far right. Actually, we should correct this slide because you can see to the far right two system. One belongs to Roche, just launched. The other one belongs to Beckman. They just killed it. They announced last week that after the Cepheid acquisition, they're going to stop any activity on this one.
Still, when it comes to automation, there are plenty of things you can do in this space. When you look at the second axis, and at this point, you have just the technology. Technology is plenty. We tried with LAMP, we tried compete with PCR, but at the end of the story, PCR is the winning technology. PCR has been used initially for single target detection, and then multiplexing like BioFire, and then sequencing technologies, which are PCR-based. We don't foresee that as far as technology is concerned here, you can really innovate more. PCR is as good as it gets. Then the last axis, which is where everybody competes for, is menu development. Here, we are at the beginning of the story. Think about it.
We have 115 products. Cepheid in the U.S. has 23. We are talking about lots of research money going into targeting therapy, identifying genetic targets, and all this basic research, which is fueling then diagnostic, is going to generate a lot of target opportunity. Why did we get into molecular exactly for this? Because we see an opportunity to innovate with platform, and we see lots of opportunity to innovate with menu. Esther is going to cover this. I'm done with my speech, and I turn the microphone to Chen Even, who's going to take you through the three years implementation plan. Thank you.
Thank you, Carlo. Thank you, Chairman. It's always exciting to present after the chairman and after the CEO. They usually take all the good stuff, but I assure you that Esther and myself and PG still have a lot to share with you. I will start my presentation. Ladies and gentlemen, good afternoon and welcome to the commercial segment of our presentation. I will focus on the immunodiagnostic part, and Esther will follow with the molecular piece. There you go. DiaSorin focus its commercial efforts within three strategic geographical markets, North America, namely U.S., Europe, and APAC, namely China. North America represents about 34% of our group sales, with additional 42% in Europe and 17% in APAC. Starting with the U.S. markets. The immunoassay part of this IVD market was $5.6 billion in 2015, is estimated to grow to $7.5 billion by 2020, representing 6% CAGR.
Looking at the pie chart, the market is segmented with two very large reference laboratories, LabCorp and Quest, capturing 14% and 30% respectively. Smaller regional labs with 27% of the market, hospital labs with 35%, and POLs with about 11% of the market. Following the pyramid of customer segmentation and the table that demonstrate where DiaSorin is participating today, our strategy for the future, and the relevant menu. Sorry. Again, following the pyramid of customer segmentation and the table that demonstrate where DiaSorin is participating today, our strategy for the future and relevant menu is deployed, you can see the following. Starting from the top, DiaSorin has high penetration into the large reference laboratory segment. We have strategic relationship at corporate level with the top two laboratories in the U.S. with long-term agreements for a selected menu.
You already know about the ID and infectivity that we have in LabCorp and Quest. We intend on continuing with this relationship and extending them with the launch of Zika assay and about to be launched calprotectin, both differentiating specialty assays, which typically are sendouts from hospitals and smaller reference laboratories to the largest reference sites. In addition, we now have our molecular leg with ASRs, which are now a part of our offering to the large reference laboratories. Within the segment of hospitals and smaller reference labs, we have lower level of penetration. We intend to accelerate our presence there by targeting the 1,000 hospitals with more than 300 beds, and by continuing to turn ELISA ID users to CLIA technology with opportunity, which we estimate to be around $100 million.
The key assays to allow this effort are calprotectin for the diagnostic and follow-up of inflammatory bowel disease, IBD, and PCT, procalcitonin, which is used in the diagnostic of sepsis and the follow-up of antibiotic treatment. An additional aspect of our strategy is to initiate cross-selling to customers, which until recently purchased only one part of our menu. We're targeting about 100 customers in the U.S., which until now purchased other DiaSorin products or only MDx products and now can be offered both. Historically, the LIAISON and LIAISON XL had a marginal presence in the wide segment of the POLs, which is where we are willing to enter with our new LIAISON XS, which has a smaller footprint and a targeted me-too menu, as Carlo mentioned. We plan to focus on three main additions to our specialty menu in the U.S., let's review their market opportunity.
Calprotectin testing with automation and clear guidelines is projected to grow by 30% per year from current value of $5 million to $30 million. Zika, which came upon us two years ago, is now representing about $2 million, with experts guiding for market potential value north of $60 million. As you recall, DiaSorin has the first, the only fully automated FDA-approved Zika IgM test. In addition, we have developed this test with support of BARDA, government agency, and now is considered by the CDC as best-in-class assay. With our long-term collaboration with B·R·A·H·M·S, DiaSorin was a pioneer with PCT, with PCT automation in Europe, and we are now poised to enter the U.S. market as well. Current PCT testing in the U.S. is around $40 million. With automation, a new clinical indication can get to $300 million.
PCT fits well with our high volume specialty strategy and with our fully automated ID menu. Let me talk a little bit about calprotectin and then Zika. Unfortunately, there are over 1.7 million Americans which are suffering IBD, inflammatory bowel disease, with over 70,000 new cases per year. The matrix for the test is stool. It is done in large reference labs and hospital laboratories. The current testing uses manual labor-intensive ELISA. As we stated in our previous slides, the opportunity with full adoption of IBD testing can reach $30 million annually. For reference laboratories, which will experience higher volume, we offer automation and consolidation of technology. In hospital labs, we offer automation and increasing efficiency, which allow them to keep in-house testing.
It allow us to reach the gastro, the GI labs, where stool is normally handled and where competitors are smaller companies competing with manual ELISA technologies. Zika, there is almost no day without news related to mosquito-borne infections and Zika. As the case for all emerging disease, CDC testing guidelines take time to develop and are currently cumbersome. Today, the market is about $2 million. As experts recommend increased testing, and if this becomes part of the prenatal screening panel, it will grow rapidly by additional testing of 4 million annual pregnancies in the U.S. to over $60 million. Our plan. The test is currently done in large reference labs and in the public health labs. We are first to automate the test, which fits perfectly the CDC guidelines, already locked deal with the two main lab chains in the U.S.
We are now following the smaller reference laboratories. In parallel, we now can enter the 100 public health laboratories in the U.S. with both automated Zika and with other tests from ID menu. Turning to Europe. The market conditions are flat since several years. Lab consolidations and pressure on volumes are seen in all countries. For example, France reduced the number of testing labs by 69% in the last five years, with Italy reducing it by 31% during the same time. Following the pyramid. In the segment of large labs where full lab automation is needed, we form strategic alliances and connectivity relationship with all the major companies which have the ability to provide full lab automation. We currently have already over 100 such automation projects implemented in Europe. We plan to continue exploiting those opportunities by leveraging on our fully automated ID and specialty menu.
The mid-size lab is our core bread-and-butter segment in Europe, where we continue to expand the LIAISON XL base, leveraging on menu differentiation. Starting this year, we also have the ability to add molecular solution to our customer base. Key drivers of our menu will be QIAGEN infectious disease, the exciting agreement that was announced on Thursday, the full stool panel with stool-based elastase, and the addition of anemia panel. Like in the U.S., we have limited presence in the small labs, which we would like to improve on. The strategy include hub and spoke, the emerging need of lab chains to have same technology in their main and satellite location, consolidation of ELISA and CLIA technology, and upgrading LIAISON customers to the LIAISON XS once launched. The menu driver of those strategies are the specialty ID and GI stool with elastase. A bit on TLA with Roche.
Our main strategic partner for total lab automation in Europe is Roche, as part of our best-in-class initiative. Our aim is to be connected to 50 of their systems in Europe within 2019. Currently, we are validated and are connected to their cobas 8100, which is positioned in large hospitals. We have extended our agreement to also include connections to their CCM, cobas connection modules, for larger privates, which is more flexible, scalable, and includes front-end and back-end modules. As part of differentiation specialty, our strategic decision to enter the world of stool testing by automating this complex matrix have resulted in tremendous success and the expansion of our customer base. Customers appreciated the easy-to-use, fully automated solution and the expanded menu of nine assays with calprotectin as its latest addition. To support better guidance, standardization, and increased testing adoption, we initiated a large multi-center European study.
As you can see from the graph, the number of stool customers more than doubled between 2014 to 2016 to over 250. From the table of GI infections, you can see our first-in-class automated menu with stool elastase under development and is next to be launched. Last but not least, China. As always, the Chinese market is never short of news, and the latest involve the concept of two-invoice policy. I would like to first explain the policy and its possible implication on the market. The objective of this government initiative was to control distribution channel and curtail cost to the healthcare system. As in many cases of new government initiatives in China, two provinces were chosen for early implementation and to study the implication.
In Shanxi province, the policy affected the number of distributors and the requirement to show the two invoices between the manufacturer and the distributor, and between the distributor and the end user. In Heilongjiang, there is no limit on the number of distributors, but the two invoices must be presented. The implementation of the full policy is projected to be sometime in 2018, but it is not for certain. The implication may result in the creation of GPOs, group purchasing organization, and consolidation of dealers into a small group of key suppliers that can adapt to the new requirement. Time will tell, and we are following closely. The Chinese market. The IVD market in China was EUR 2.3 billion in 2016 and estimated to reach EUR 4 billion in 2020, showing 12% CAGR.
Following the pyramid of hospital segmentation into class 3, 2, and 1, 64% of our revenue in China are in class 3 hospitals, which are the largest and most completed and complex in their services, showing 25% growth on revenue year-on-year. In such hospitals, we plan to leverage our TLA collaboration with Beckman Coulter and continue to push conversions from ELISA to CLIA technology. Main assays are hepatitis and HIV, which are part of the Beckman relationship. Our new HEV, which represent a solid opportunity in China, and our specialty testing of ToRCH, EBV, and Parvo. Class 2 hospitals represent 29% of our revenues and are growing at 25% year-on-year. Our strategy is to continue addressing the maternity and children hospitals and pushing for further conversion from ELISA to CLIA. Again, the main drivers are hepatitis, HIV, HEV, and the full ID offer.
Class 1 hospitals are now emerging as a new opportunity. They currently represent 1% of revenue, growing by 9% year-on-year, but will present a new opportunity in China in the mid to longer terms. An interesting development in China are the private labs. The segment, which was already worth EUR 870 million in 2015, is expected to double by 2020 with a CAGR of 20%. The top 4 players representing 70% of these segments are KingMed, Dian, Adicon, and Da An Gene. The number of such labs are growing rapidly with 100 newly created in 2015 alone. As we have achieved in the U.S. and Europe, our strategy is to strike corporate-level collaboration with the main private players with a focus on high volume and differentiation specialties. We've already started to make the rounds. I've mentioned in my previous slides our plan with infectious disease and Hep/Retro CLIA technologies.
When it comes to ID, the Chinese market is worth EUR 45 million, but it is still 62% ELISA and only 33% CLIA. We have 28% of the CLIA market, which has 18% annual growth, so there is still plenty room to convert and grow. We plan to continue pushing ELISA conversion by CLIA by leveraging our install base of 130 LIAISONs at maternal and children hospitals with add-on assays such as EBV and Parvo. PCT and Mycoplasma will be launched in China as soon as the registration clear. For Hepatitis and Retrovirus, the IVD market ex blood bank is about EUR 400 million. As a reminder, the U.S. is about EUR 500 million, showing you that the Chinese market is growing rapidly. Again, only 31% of this market is CLIA technology, with 62% still ELISA. Our share of this market is 2%, and this market is growing at a 15% annual rate.
Clearly, also here, we have room to grow. We continue to push conversions from ELISA to CLIA with both Beckman Coulter TLA solution and with standalone LIAISON XL. As mentioned before, a new differentiation assay, which will be added to our Hepatitis CLIA menu is HEV, which is currently available from local manufacturers and only in ELISA format. In summary, our bag is full, our strategy is clear. So with this slide, I conclude the section of our planned immunodiagnostic execution and turn the podium to Esther with our molecular execution plans. Thank you.
Chen is quite a bit taller than I am. Thank you, Chen. Good afternoon. When we speak about molecular, we're actually going to be referring to the kits, the reagents, and the instruments that are utilized for clinical testing. Worldwide, molecular diagnostics is one of the fastest-growing segments within the IVD market, and there are multiple applications of testing that we see generally spread across six different categories, collectively worth approximately $6 billion. As Carlo mentioned, some of the technologies actually include PCR or nucleic acid amplification tests for single targets such as HPV and hepatitis C, tests that include multiple targets that have been combined together into mini panels or large 20 to 25 target multiplex panels, and next-generation sequencing for complex genetically rooted diseases such as cancer. DiaSorin's focus, of course, will be in the first two technology categories.
When we look at strategic considerations, the molecular market actually contains different geographic, regulatory, reimbursement, and testing dynamics that actually influence assay selection. Factors that could actually enable a particular strategy in one region may actually wind up being a limiting factor in another. Therefore, this has led to us actually intentionally developing two distinct strategies, one for the U.S. and one for the international market. We will be discussing each of these factors and how they actually influence strategy in more detail later on in the presentation. Differences in the market have also led to different geographic opportunities for kits and ASRs, or analyte-specific reagents. As you all know, kits are tests that have all the components that are packaged together, whereas analyte-specific reagents are sold as separate components into the marketplace.
We believe that there is geographic opportunity in both the U.S. and EU market for kits. However, there's a much greater opportunity for ASRs in the U.S. market. This is due to the fact that the U.S. is one of the leading industrialized nations in terms of wide utilization for laboratory-developed tests. The reason for this is because you have certain instances where there actually isn't an approved test available on the market, or you may actually have an assay that, for whatever reason, is unable to go through a regulatory approval process because it has, for example, low volumes in the case of rare diseases. It may simply be because there is an approved kit that is actually available out on the market, but it just simply doesn't meet the laboratory's needs.
Therefore, we will actually continue to develop and manufacture analyte-specific reagents, as we know that there are LDT or laboratory developed test assays that have a really high regulatory burden, so it's less likely that they will actually go through a clearance or approval process. In addition, we will also bring ASRs to market for rare targets or those analytes that have been found by research. Once those analytes have actually been established and well-known within the medical community, we do have also the option of commercializing and bringing them through a full FDA regulatory path, once they actually surpass a certain volume. We are actually well-positioned for growth in the molecular market. We already have 11 approved kits available worldwide and 57 ASRs that actually span multiple clinical testing categories.
When we look at instruments, these platforms can actually be segmented into three categories, as Carlo mentioned earlier. You have, number one, your point of care systems, number two, your benchtop systems, and number three, your high throughput systems. Your point of care systems typically run your CLIA-waived assays, generally one assay at a time, and they have currently today a limited menu. Whereas your benchtop systems are able to run single target, dual target assays, as well as the multiplex assays. And your high throughput systems offer total lab automation, but currently have very targeted menus for viral load and for women's health. Where we fit with our LIAISON MDx is squarely within the benchtop system category. We are able to run single target, dual target, and three target mini panels on the Direct Amplification Disc.
We are currently in the process of developing a multiplex disk to handle multiplex assays or larger panels, and we are able to handle higher volume assays on the Universal Disc. And I am sure, as you all saw a few days ago, we have entered into a collaboration with Tecan, to adapt their newly launched Fluent platform to be able to add automation to pre-analytic sample processing for high volume assays. The LIAISON MDx was actually developed by 3M. It currently utilizes, as we mentioned, the two disks, the Direct Amplification Disc and the Universal Disc. The Direct Amplification Disc is an eight-well consumable that runs mid to low volume assays. It is sample to answer with no extraction required, whereas our 96-well Universal Disc accommodates high volume assays.
And the instrument itself is truly versatile in that it can actually accommodate low to high volumes by simply swapping out just the consumable. It is truly the flexibility of the instrument that our laboratory customers appreciate today. In addition, with it being as scalable as it is, because you are able to just swap out the actual disk, our customers appreciate that the instrument can grow with them as they themselves grow and their volumes grow. With the flexibility and the actual menu that is currently already available, we are in use across multiple lab segments. This is just a snapshot of some of the customers that we already have today. We are present in national reference laboratories, small regional reference labs, have a presence in academic medical centers, in addition to children's hospitals.
And our sweet spot really is the 300-plus bed hospital segment going to the small regional reference labs. As we look to strategy for the U.S., the main driver for growth will be test menu expansion. In an approximately $3 billion U.S. molecular market, we will be expanding our content by driving forward and delivering both ASRs and kits in parallel. As mentioned previously, there are several factors that actually contribute to pipeline strategy. Taking a look first at market dynamics and trends. The molecular market within the U.S. has actually decentralized across multiple lab segments, meaning that molecular testing is actually run all the way down through your physician-owned labs and clinics. And that is due to the fact that you have small benchtop instruments that have come, and in the U.S. market, you do have a mechanism for coding coverage and payment.
Hence why the actual availability of molecular tests has actually decentralized across multiple different segments of labs. You have, in regards to kits and ASRs, kits are typically run generally in all labs, and the kit that is selected is based on the laboratory's complexity and specific needs. For ASRs, they are typically utilized in high complexity labs, your reference, and hospital labs. The bottom line is, within the market, there is a mix of testing. Laboratories need a system that have the capability in order to do both. Secondly, as we look at where assays are actually run, you have clinical categories of tests that wind up clustering into certain different laboratory locations. In your core virology or core microbiology lab, you have your high automation instruments and their targeted menus of viral load, women's health, transplant, STI.
Within the hospital segment, we see it's an extremely competitive environment with multiple vendors, a ton of instruments, and different assay menus on each instrument. These hospital labs actually run a variety of infectious disease assays, ranging from your respiratory assays all the way to your large multiplex syndromic testing panels. Whereas the regional reference laboratories actually run a combination of the menus found in the core lab and in the hospital lab. The third consideration for pipeline strategy would be the regulatory landscape, which is a critical component because differing regulatory pathways are accompanied by varying levels of cost and time to clearance and approval.
As we look across the scale on the different regulatory pathways, ASRs as a product, and then 510 and De Novo pathways would actually be the most appropriate option for us to bring these assays to market quickly and experience growth in the quickest amount of time. As we look across all of the different categories of assays that we could actually include in our pipeline, it becomes very clear when we take into consideration all of the factors that we just spoke about. Viral load monitoring, transplant, HAIs, and certain women's health assays have a high regulatory cost burden or market dynamics or pricing implications that would make it very limiting for us to actually include that in our pipeline menu.
However, there are certain women's health assays and other infectious disease assays that offer a lower regulatory burden, an acceptable price point, and differentiation that would be beneficial for us in our menu. Our path forward in terms of our pipeline is actually listed on the screen in front of you. We know that there is a competitive intensity within the hospital and reference lab segment, and therefore, there are me-too assays that we do need to develop in order to have menu parity. In addition, you see in the green, differentiating specialties in terms of assays and categories of assays that we will also be driving in parallel. Our first priority will be to deliver those assays that are in blue and that are also in green, because our strategy is to first protect the core and then expand our specialties.
In terms of our ASRs, because we know that ASRs in the U.S. market are still a viable segment for us, we will be actually leveraging our current 57 ASRs that we have already available and adding to the pipeline by adding targets that are additive to those 57 targets that we already have available. These targets will be able to be used in combination with the current reagents today. As we look to Europe, in an approximately $2.5 billion European molecular market, we will have a distinctly different strategy in terms of a post-transplant strategy. As we look at the actual factors or dynamics, in contrast to the U.S., the EU has one common regulatory directive that will allow clearance of multiple kits through the CE-IVD clearance pathway.
However, reimbursement dynamics have actually now driven cost containment measures where your laboratories are actually looking for efficiencies, and therefore, you have more consolidation, and molecular testing actually driven to centralized services in Europe as opposed to the decentralization that we see in the U.S. market. Your central service laboratories actually run not only your high volume parameters, but they also run specialty testing as well, and need system capability to do both. In order to actually grab a foothold and growth in the European market, we know that we have to establish our presence within these central core laboratories. As we look at the options of menu for these core laboratories, for the high volume parameters, they are viral load monitoring, women's health, and post-transplantation. Due to market dynamics and pricing considerations, viral load monitoring and women's health would not be appropriate for us.
However, the post-transplantation assays actually offer a path to entry. This is the reason why. If you look at the actual competitive market landscape for post-transplant, you'll see that there's no clear owner. It is fragmented. You have multiple different vendors that are offering different instruments, but they don't actually offer a full total solution. You may actually have your newest competitors that are over to the left as you go up the actual automation line that do offer full automation. However, they do lack a full post-transplant menu, and also lack the ability to be able to accept multiple different sample types that come into the lab from post-transplant patients. However, you do have those competitors that do actually have a larger post-transplant assay menu, as noted by the size of the circle on the graph.
However, those competitors that do actually have post-transplant menu are limited in their throughput capacity. The post-transplant strategy will be one in our collaboration with Tecan to bring automation for extraction PCR setup, have the LIAISON MDx for amplification, and provide a complete transplant menu of 11 different transplant assays that will go through CE-IVD approval or clearance. Our solution will offer not only automation, consolidation, flexibility in terms of multiple different sample matrices, it will offer a full transplant menu and the ability to standardize results. We believe that this strategy can be executed very well, and that in the market, you do have that centralization and consolidation. Therefore, the same labs that actually run immunoassay actually also run molecular post-transplant testing.
We will be able to leverage our current strengths and relationship and existing customer base in order to actually cross-sell the molecular post-transplant assays as well. In conclusion, there are two distinct strategies. What we affectionately like to call our three in three strategy in the U.S., which will expand our position by developing menu content on three discs in three segments, and in the European market, a post-transplant strategy for targeted expansion into the core central lab with automation and full transplant menu. Thank you. At this point, I am going to bring up our CFO for financials.
Okay. Good afternoon, everybody. In the next few slides, I am going to walk you through our long-term guidance. Let me please remind you that some of the programs that have been presented so far will have an impact on our P&L over the three years, whereas for some others, the economic benefit will kick in after 2019. In the next slides, I will try to clarify which is which, and I will also share with you some major assumptions on our financials. Please let me start from the top line. Let me remind you once again, that these numbers are expressed at 2016 exchange rates. This is an important assumption to us to keep in mind since the DiaSorin sales are exposed to currencies different from the EUR, and mainly US dollar and Chinese RMB, which together represents 50% of total DiaSorin sales.
On the left-hand side of the slide, you can see the revenue guidance by technology, whereas on the right-hand side, we have a pictorial qualitative summary of how these initiatives will hit the three years covered by the plan and beyond. Since the presentation, what we have seen so far also cover programs that will start hitting our P&L beyond 2019. We have thought to add this graphical representation to summarize and help you understand what is covered by our revenues guidance and what is not. Let's now move to the numbers. We forecast to close 2019 at about EUR 735 million, with a compounded growth at constant exchange rate over the period covered by the plan of 9%.
CLIA sales, let me be clear here, we include both vitamin D and CLIA X vitamin D in this category, should deliver a compounded growth for us of about 8%, reaching EUR 500 million by 2019, accounting for us 70% of our total sales. On top of the ordinary course of business, we will have the contribution of the Roche and Beckman China deal, whereas, as we saw, the Beckman U.S. deal will start to kick in in 2019. We foresee additional revenues coming from the QIAGEN partnership and the U.S. gastrointestinal program starting from 2018, with an increasing impact as time goes by. Lastly, revenues from the accession instruments will start in 2019, year in which we will launch the platform to increase and have the full effect beyond the three years covered by the plan.
ELISA sales, which will represent almost 10% of the total sales at the end of the period covered by the plan, will decrease at a compounded rate of 3% to reach EUR 70 million by 2019. This trend is similar to what we have experienced in the last few years. Let me please remind you that in this number, we are including the sales of the serology products coming from the Business Focus acquisition, which was completed in May 2016. Molecular test sales at about EUR 90 million in 2019 will grow over the period of the plan at a compounded rate of 40%. Let me please remind you that this increase is enjoying the fact that we completed the Focus acquisition last year. The normalized growth for full year 2016 would have been 18% on 2016 full year revenues of about EUR 50 million.
The impact of the initiatives described by Esther a few minutes ago, I am referring in particular to the post-transplantation strategy in Europe and the multiplex disk program, will start to kick in beyond 2019. By the end of the plan, molecular sales will represent 12% of total DiaSorin sales. Lastly, instruments and other should grow over the three-years plan at a compounded rate of 6% to reach EUR 80 million. Now, before we move to the three-years P&L and free cash flow guidance, I'd like to share with you some major assumptions, in particular, how we see the CLIA technology pricing developing over the period covered by the plan and all the initiatives we are implementing to safeguard our EBITDA margin.
In this slide, on the left-hand side, we represent what we believe will happen to the prices of our CLIA products using the clusters described by Carlo at the beginning of our presentation. We think me-too products will be subject to a reduction of 3%-6% per year as a combined result of price pressure and different mix. Let me remind you that in this cluster, we also account for vitamin D. We see high volume specialty prices declining by 2%-3% per year, we believe we are not going to see any material price pressure on differentiating specialties cluster. All of these elements will push our margins downwards across the three-years plan, we are planning some initiatives to offset this pressure in order to safeguard our EBITDA margin.
We are listing these programs on the right-hand side of the slide, in particular, we are going to focus on industrial processes optimization, supply chain streamlining, and services efficiencies. We have identified an internal team led by a senior executive to drive these initiatives, which will span across the whole group. The project was kicked off during 2016 after having spent some material time and effort in assessing and planning, with the help of an external consultant, how to best move forward. All of these efforts should allow to save cost, all the rest being the same, for about EUR 10 million-EUR 15 million in 2019 compared to 2016. Besides, industrial and supply chain initiatives should also allow us to reduce our inventory ratio to turnover of about 1.5 percentage points, again, compared to 2016.
As we will see in the next slide, all of these initiatives, together with the increased focus we are going to put in managing our operating leverage, will allow us to basically offset at the EBITDA level all the price pressure that I've just described. We can now move to the P&L and free cash flow guidance, which is the last slide of my very short deck. As we just said, revenues will grow at a compounded rate of 9%, and the same will true for our EBITDA. Therefore, allowing us to maintain a margin, an EBITDA margin, at around 38.5% of our revenues, and to deliver in 2019, EUR 280 million to EUR 285 million EBITDA.
We believe the group tax rate will go down to 30% as a result of the recent Italian corporate tax rate reduction and of the different geographical composition of the three pre-tax profit coming from our geographies. Please note that this guideline does not consider any potential tax benefit coming from any potential tax reform in the U.S. Let me remind you that a 1% reduction of the corporate income tax rate in the U.S. would mean for us about $1 million less taxes. All of this will bring us to a net result in 2019 of about EUR 155 million to EUR 160 million, which means a compounded growth over 2016 of about 12%, increasing the net result ratio of our revenues to 21.5%.
Moving to cash now, we believe we will be able to generate over the three years covered by the plan, a cumulative free cash flow of about EUR 450 million. This is net of all the extra efforts that we'll have to put in place to finance and to fund the initiatives that have been described so far by my colleagues. This confirms once again our ability to keep on generating a very healthy, a very strong free cash flow. This was the last slide of my deck. We turn the microphone now to Carlo to summarize the main takeaway of our presentation, and then to open the Q&A session.
Thank you.
Thank you.
What did we say today? We said that we have a very solid growth in immunoassay, and we're going to add lots of differentiating and innovative products. We said we're going to launch a new system, the DiaSorin XS, and we're going to address with this system, a different segment of the market, the small POL office labs. We said that we are open for partnerships, QIAGEN is a very good example of that, and we will continue to pursue partnership that provide content to this company. We said that molecular diagnostics is a second leg of the company, and we said that you have seen from Esther that we have lots of expectations in terms of new products and specialty products that we will add, especially in the ID segment.
We said that there is a strong financial performance, and we will continue to guarantee strong margins to the company. Last but not least, what we said, and we have shown with the support of our shareholders, our board of directors and the chairman, Mr. Denegri, that we are committed to targeted bolt-on acquisition to strengthen our product portfolio and also to give us access to new customers in a consolidating market. At this point, the presentation is over, and we open up for Q&A and questions. Please.
Thank you for taking my question. This is Maja from Kepler Cheuvreux. I would like to start with the financial plan. It's great and highly appreciated that you give us the indication on what you are expecting coming forward and what kind of cost savings you see. You've also told us that certain of the partnerships and initiatives that you're starting today are actually only going to come through in 2019. I'm going to ask you something about 2019 and beyond. Is the kind of pricing pressure that we're seeing here to stay, and therefore, the initiatives will help you to keep the kind of growth pattern that we're seeing today? Or do you think it could slow down? It could be getting easier for you, and you could start to see an acceleration in top-line growth and possibly a margin expansion.
I don't think that price will ever improve.
Good.
Right. Simply because reimbursement will continue to decline. If you see pharma in the U.S., very good example. If you would have a chance to, I think, walk down a few floors in this building and talk to the guy that is responsible for healthcare in Lombardy, he's going to tell you that he's running out of money, right? There is a very strong pressure on the system to decrease cost. We don't foresee that price pressure will decline. However, as you have seen, there are different levels of price pressure. Vitamin D is a vivid example of a situation where all of a sudden market becomes competitive and boom, you lose up to 50% of your original market price. However, we are developing lots of new products, and as you have seen there, you don't see price pressure.
QIAGEN Alliance is another very good example of a unique partnership where you develop products which are unique, protected by QIAGEN IP. Both companies don't expect price pressure there. Looking behind 2019, I think eventually it's a combination. You will continue to see a good chunk of our business under pressure, emerging new products not under pressure. Fundamentally, we will need to continue to implement initiatives to control cost, to maintain margins.
As a summary, you will feel comfortable with saying that margins should be flattish. You'll be able to balance high-value tests facing pressure in me-too tests.
I feel comfortable with nothing.
Okay
because I'm an overanxious guy. Yes, I feel comfortable with the ability of the company to put together actions to fend off.
Okay
Declining in price. We cannot make any statement behind 2019, as you can imagine. However, you have seen what happens with vitamin D. At that point, the company was highly exposed to one product. I remind you that, I think it was 2010 or 2011, vitamin D was 44% of our revenues, 45%. Big pressure on one product meant a lot to the company. Today, the good thing about this company is that vitamin D has been diluted out. Still relevant for us, but not to that level. If you look at the portfolio of DiaSorin, without disclosing anything, but if you look at a product sales contribution after vitamin D, next in line is less than EUR 25 million in revenues. We don't have that exposure any longer to a single product that goes under attack by competition.
Yeah, please consider also the 21.5% net earnings, I think is one of the best, if not the best net earnings in the industry.
Right.
Right.
It is.
Right.
Good. Yeah.
Do you want to finish up?
No.
Maybe you want to-
Yeah
actually finish up.
I have a list of questions, but I'll forward afterwards. On the partnership with QIAGEN, particularly when you were looking at the slide where you were showing the different kind of competition in post-transplant, QIAGEN was pretty nicely around and pronounced there. Are you going to partner up in post-transplant with QIAGEN, or are you going to compete with them?
No, we will compete with them. Don't forget, the two companies were very clear. This is nothing to do with molecular, which is their core business, and it is our business for the future. As far as molecular is concerned, we are competitors. This has to do with immunoassay, their products, and our technology.
Hi, thank you. This is Roma Zana from Exane BNP. Three questions, if I may. First, if you can just clarify, should we exclude the scope effect from the Focus acquisition if we should rather expect a 6% organic growth average over the period? How should we look at the phasing, given that many business opportunities will only kick in in 2019? Should we expect a back-end loaded or are they also front-end loaded opportunities? The second question is on the QIAGEN partnership. If you can give us more details about the economics. For example, will you sell the QuantiFERON on LIAISON, and how will it fall in your P&L? I have more basic question on the tax rate then.
Why don't you take the financial part.
Does it work?
Yep.
Yeah.
Okay. Hi. In terms of basic growth like for like, without including the Focus acquisition, our growth is between 6% and 7%. We have seen in Q1 6.7%, and that kind of growth is also give or take built in in the plan. A different speed because we will have different initiatives kicking in. One of them is QIAGEN, one of them is the gastrointestinal project in the U.S. which are going to kick in later on. If I blend over all the numbers, I would say between 6% and 7% is a right ballpark number. I believe you have
Do you want to ask the tax question?
Yes, which is more basic. I was just wondering because you mentioned that it was not including any potential tailwind from the U.S., but does it include any potential tailwind from the patent box in Italy? Neither.
It doesn't.
Okay.
We filed for our patent box back in 2015. We started talking to the tax authorities in the past few months. We are hopeful we will be able to finish up our negotiation because it is a ruling. We are hopeful we will be able to finish up our negotiation by the end of this year. Since the patent box allow you to have a rollback mechanism, if we will be able to get it, as I hope, by the end of the year, we will have in 2017 the sum of three years, 2015, 2016, and 2017, which can be up to six, seven million EUR. It all depends on how the negotiation will kick on. We will have in 2018 and 2019 the additional uptake coming from, again, two million ballpark number of less taxes coming from this patent box.
The patent box is a five years elective tax regime. We would have to apply for it again before the end of 2019. It's not in. It's not built in.
Okay. Thank you.
Now we go to the QIAGEN one. You know you ask a question I cannot answer, right?
I know.
Let me just tell you, we have not agreed, or better, we have agreed how we are going to serve the market. It's very obvious that when it comes to XL customers, because this is the basis of the alliance, DiaSorin will certainly have the responsibility to serve those markets. Keep in mind that when it comes to some of the products, you have different components. You have an immunoassay component, but you also have other components that make some of those specific products of QIAGEN. Both companies will address the market together. Certainly we're going to exploit our LIAISON customer base as well as existing customer base of QIAGEN.
I cannot be more specific because, as you can imagine, we are one year away from commercialization, and then with QIAGEN, we're going to be much more specific when time comes to commercialize the product in Europe, which as you know, we expect is going to be second half of next year.
Will it be possible to have some QIAGEN tests like QuantiFERON compatible on your instrument?
Again-
Conceptually, I mean, could be possible or?
Conceptually, everything is possible.
Okay.
Let me just say that the LIAISON XL, as you know, is not a molecular platform.
Okay.
The products that will go on the LIAISON XL are immunoassay-based products. We're going to be much more clear closer to launch.
Okay. Thank you.
Good afternoon. Massimo Vecchio from Mediobanca. First question is on the LIAISON XS. I remember when you were launching the LIAISON XL that there were some critical factors in the launch. Which customers you would have gained, the instruments, the full depreciation of the old instruments, several factors which were critical in the implementation. What are the critical factors now with the LIAISON XS that we should monitor to understand exactly how you will release?
Look, when we launched the LIAISON, the critical factor was to avoid cannibalization.
Right.
We had an extensive base of LIAISON, and we did want to keep growing the company. We were putting together a mechanism for the salesforce to go after new accounts.
Okay.
Right. That was, if you remember, phase one. Today, the LIAISON XL-- well, first, we built a LIAISON XL base, which certainly is not target for the LIAISON XS, right? Completely different customer. We have left an extensive base of LIAISON, which is aging. As you have noticed, we've not been replacing this LIAISON base since few years. We expect that as a rule of engagement, the LIAISON XS, when launched in Europe, will pretty much provide an opportunity to cannibalize LIAISON, guaranteeing continuity of life to some of these very important customers that the residual part, we could not really tackle with the LIAISON XL because it's too big. Okay. In this case, cannibalization will be directed and is not going to be a threat. This is how I see fundamentally the main difference.
Don't forget, strategically, in the U.S., and we're talking about U.S. and China, completely different market segments. We're talking about smaller labs. The challenge that we will need to address is the fact that in China or the U.S., we need to put together a distribution network that is able to take the access to these accounts. This is going to be the investment for the company. How do we go after that segment of the market?
I was looking at the slides, and you have a very high market share in the big labs. You will enter the small labs, the POL. Do you need a mid-size instrument to attack the mid-size labs, or you will stretch the two segments down and out?
Massimo, that's the XL. I mean, what I think Chen was saying is that the XL was designed for a mid-size lab, and the vast majority of placements are there, right? The XS, the XL, boy, we should change names. The XL LIS, which is the connectable. No? The one with the big nose. The LIAISON XL with the big nose goes to the very large labs, and that is through alliances. Chen showed a very interesting slide. I don't know if you picked up on that. Eventually, we have Roche and Beckman, but today in Europe, we have more than 100 installations and 140 installations worldwide, projects which are also done with all the other companies in the space, Abbott, Siemens. Every time there is a track system, we connect. We connect with LIS.
For us, the LIS version of the XL was the one that was intended for the very large labs. Large labs, LIS, mid-labs, XL, small lab, XS.
Second and last question. Some of the pharmaceutical companies that I cover, which operates in rare diseases, they say that there are more than 3,000 rare diseases with no cure, which are under-diagnosed. Do you share this view? Do you see an unlimited growth potentials for you in launching specialty tests? Do you see it more in immunoassay or in the molecular diagnostics?
No, I see that when it comes to the immunoassay, it's going to be more directed toward some of the infectious disease. I mean, Zika is a very good example. There are some regional infectious disease that today are underserved. Dengue is a good example where we should be developing some of the specialties. What you're referring to, I see it much more for molecular because usually is today molecular targeting, they need either companion diagnostic or they need assays to identify the targets. This is why we decided, having a long-term view, to get this 3M technology. What Esther said, and we're not shy about it, is that the technology is phenomenal, not because it's been developed by Focus. Focus was a relatively small company.
Because 3M, which is a $40 billion company, developed that technology and developed it especially for the Army, as it quite often happens in the U.S. Right? The idea was you have a Humvee, you throw in a small cycler, the disc, and off you are in Iraq testing soldiers, right? Actually, 3M got lots of money from the U.S. government to develop that. When it was done and over, they decided to move somewhere else, right? This great technology developed by 3M was left there, was optimized by 3M, and then was, in partnership with Quest, launched. They really needed a diagnostic company to know how to do with it.
Today, the basis of the acquisition, the reason why we spent $300 million, yes, it is customers, it's the technology that will allow us to develop these assays you're talking about.
Okay. Thank you very much.
Thank you. Alessandro Poggi from Banca Akros. My question is on what you just mentioned on building a network that might convey your offer of XS to the markets. When I say markets, I'm talking about the U.S. and China. Since the XS is in the plan year 2019, could you please give us a clue of what you are planning to do, more or less, to hit the market with XS? Thank you.
Okay. In China, everybody, including us, operates through distributors because you're not allowed as a foreign company or local company, in fact, to sell directly to the hospital. There, the solution, it's easier because there is an existing network of distributors that we will need to use in order to disseminate the LIAISON XS in the smaller accounts. I don't see a change there in the way we do business. When it comes to the U.S., the POL is a complete different ballgame, because in the U.S. today, we don't serve physician office labs. Actually, today, these labs are served through distributors, big ones. Cardinal was a very good example, an EUR 80 billion company, plus other franchises, which are more specialized in serving that market.
In my opinion, it's a combination of using the distributors in the U.S., but I think the differentiating factor is going to be that in certain pockets of the country, in certain states, where you do have a lot of POLs, we will have to go direct. The idea would be to make the investment in adding some reps in order to regionally serve the market, and where it's more dispersed, use a distributor. We do have an experience with Cardinal because 40% of our LIAISON at the good times of vitamin D were placed by Cardinal. Okay? We've been historically working with them.
It's okay.
Sorry. Oh, yeah. I can. Roma Zana again from Exane. Just a clarification on the PCT, sorry if I missed that during the presentation, but do you have any timing for the launch, and on which instrument will it be performed? Will it be XL, XS?
The PCT will be launched within Q2 of next year in the U.S. Right. I think we're doing the clinical studies as we speak. It's a fairly simple regulatory because it's been downgraded, it's a regular 510(k), and you can use very simple samples. It's commercially available. It's going to be available on the XL first, and then on the XS. Okay? You know that market leader today is bioMérieux. I don't know if your question is more chauvinistic or what, but it's a French company.
I've heard about it.
Yeah. You also know that very recently, Roche got approval in the U.S. The monopoly became a duopoly. There is a line of companies that are getting access to the PCT market in the U.S. Notwithstanding that, the market is still growing 20%-30% per year because there is lots of adoption. Right? In the case of PCT, it would not be unique for us. It would be more participating on our install base to a market that is growing very fast.
Yeah. You fairly expect some heavily price pressure going from, let's say, kind of a monopoly to a much more diverse-
Today, the price for PCT, if I'm not mistaken, is $20-$30 per test.
It's quite expensive.
It's very expensive. Yes, in our model, we envision a dramatic price decrease, for once, we are going to be the new entrant.
Fair point.
We're not going to be the one suffering from the price pressure.
Thank you.
We have some questions from the web.
Okay.
Okay, the first question. How long do you expect it will take until a lab internally validates your ASRs?
All the 57 ASRs are validated. Typically, it takes 90 days for a lab to take the ASR validate. Then there is no filing, obviously. There is no regulatory path. It's all internal documents. This is why the adoption is extremely fast in the U.S.
Because of the huge free cash flow you plan to generate, do you consider additional potential acquisitions in the next 12 months?
That's a question that we cannot answer to. As we said, we are quite committed to, and we've been acquiring a few companies in the last few years. We are always paying lots of attention to opportunities. If they materialize within 12 months, I don't know.
Which, if any, of the immunoassays may be affected negatively by potentially new, better molecular tests entering the market?
I believe none, simply because the two technologies are very complementary. The immunoassay is the cheap technology that allows screening and patient identification, whereas molecular, which is much more expensive, is used for patient monitoring. Typically, cannibalization doesn't happen. Zika is a very good example. Today, the FDA protocols. Sorry, the CDC protocol and guideline for Zika testing is that within the first 14 days from symptoms, the pregnant woman should be tested with a molecular product. Then after 14 days, it should be tested with an immunoassay. The two technologies are always complementary.
Is it 20% of DiaSorin's tests with, for example, the oncology tests like CEA being at risk, or which immunoassays are potentially at risk from new molecular tests?
Very confusing question. Okay, let me give a generic answer. As I said before, I don't believe that there is any risk of any of our products being cannibalized by molecular testing. Complete different technologies. Complete different use.
Okay.
How many do you have?
I have a few more.
Okay.
Sorry. It's a popular webcast.
Right.
How important is Europe in achieving your 18% molecular growth targets? Is your European molecular strategy more risky than the U.S., given how concentrated Europe is on post-transplantation only?
Is it more risky? No. It is different because Focus was a U.S. company, what we bought was a U.S. base, U.S. R&D, a company that think U.S. Therefore, it's very clear that the company was able immediately from the get-go to exploit the U.S. market. When it comes to Europe, we are building our network, we are building our infrastructure, we are hiring people in different countries. The post-transplant products will come to market after 2019. I would say the next two years are there for us to build the franchise in Europe in order then to be very successful at launching the post-transplant. Something Esther said that probably was not picked up, today, DiaSorin has a 30% market share in Europe for products immunoassay, which are used in the transplant centers. These are not new customers.
They're customers that we serve with our existing products, and we have access to for molecular.
Should we expect further acquisitions to supplement your strategic objectives? What would be a reasonable and efficient capital structure for DiaSorin?
I think we already answered this.
Just have a few more. What is the risk that MDx in the U.S. increasingly shifts to point of care from bench top, effectively becoming bifurcated to high throughput or patient bedside?
I see no risk because when it comes to point of care, there is a clear limitation. Point of care testing is very good only when a disease can be tested with one product. Glucose testing, for example, was a very good example because you had patients that had to be followed up just with one parameter. When it comes to molecular, there are really few products where you can have point of care testing. Flu is the biggest market today in the U.S., and it's very typical of the U.S. and not in Europe. I don't believe in bifurcation. I believe that there is an opportunity to go after the POL business with CLIA-waived molecular, but I also believe that in an expanding market, there is an opportunity in the mid-size segment. All the hospitals are doing molecular testing today and will continue to do molecular testing.
Okay, the final question.
Is?
Europe seems to be the biggest market for low throughput immunoassay, with bioMérieux dominating here. Can you remind us why DiaSorin has decided not to take LIAISON XS into Europe?
Well, that was a miscommunication. We are going to take LIAISON XS to Europe, certainly. I think that bioMérieux was dominating in Europe, and especially in France, when France had 5,000 private labs doing immunoassay. The problem, as we have shown, is that since then, the 5,000 became 800, therefore, we don't believe that strategically there is place in Europe for a small system. The reason why some of our competitors like bioMérieux are very successful is because they were able to take the small system out of Europe into U.S. or China. In Europe, I think everybody with small system in a consolidating market is suffering. Thank you.
Thank you.
Okay. Ladies and gentlemen, thank you for coming, I think the day is over. Thank you.