Spurred by comments, I decided to dig into the reasons that COVID-19 tests aren’t as plentiful as we might like. The reasons are actually pretty simple: the reagents are niche products, supplied by a handful of small to medium-sized companies. According to Thomas the suppliers are:
- Integrated DNA Technologies
- Biosearch Technologies
- BEI Resources
The largest of these is a medium-sized company. The rest are small. Just to remind you of how I use the terms a small company has revenues up to about $200 million annually; a medium-sized company has annual revenues from $200 million to $1 billion; above that is a big company.
Contrary to the impression you might have received in economics classes the difference between a small company and a big company isn’t just revenue. Said another way small companies can’t expand their production rapidly even if you give them more money. The small company that can do that is rare, indeed. They just don’t have the management time.
Given enough time and persistent demand major players will get into the business but they’ll wait and see—they won’t gamble on it. The most likely major player is Baxter due to its present relationship with one of the top suppliers (disclaimer: although Baxter is an old client of mine I haven’t had anything to do with them for years). Intellectual property is probably a barrier to entry as well.