Los Angeles, CA — January 26, 2026. For a decade now, I’ve argued that the precision medicine revolution will be driven by tools and diagnostics more than therapeutics! 2025 finally made that argument feel less like a prediction and more like an observable reality.

‍

Specialty diagnostics had a breakout year in 2025

The 2026 J.P. Morgan Healthcare Conference (#JPM26) underscored how far precision diagnostics advanced last year. Specialty (genomics) diagnostics companies broadly beat expectations on the top and bottom line. And it was “quality growth”! Test volumes surged and average selling prices (ASPs) climbed as reimbursement improved. Payors are increasingly willing to cover advanced tests as clinical value is undeniable, allowing companies to move away from price compression and toward sustainable economics. It’s about time!

Several precision diagnostics providers (e.g., Natera, Guardant, Caris, Tempus, GeneDx) delivered standout performance, supported by familiar catalysts: coverage decisions, guideline endorsements, stronger clinical evidence, broader ordering comfort among physicians, and higher repeat utilization. Even multi-cancer early detection (MCED), a category that has had its share of debate, made headway. Grail’s Galleri volume grew ~35% to 185K+ tests, and Guardant’s Shield scaled from 6K tests 2 years ago (at launch) to ~87K tests. Advanced diagnostics are increasingly moving from “early adopter” behavior to “routine ordering” behavior. To quote one executive we spoke with at JPM: “Specialty diagnostics companies are having a moment.”

‍

‍

Tools companies are pivoting toward clinical and translational applications

This diagnostics momentum is colliding with a tougher research funding environment, making it clear for execs (and investors) where durable growth lives. As a result, life science tools providers are increasingly pivoting from purely research markets toward translational and clinical value pools. Historically, these companies were optimized for academic R&D cycles: grant-funded demand, research-grade requirements, and workflow flexibility that can support innovation. But the next leg of growth to support clinical settings looks different: different customers (clinical labs / hospitals, diagnostic developers, translational biopharma teams) that need streamlined workflow, higher throughput, standardization and reproducibility.

Announcements through 2025 (many timed around JPM26), reflect a concerted push beyond the “RUO-only” comfort zone. The proof points are now obvious:

• Illumina highlighted that ~60% of sequencing consumables revenue now comes from clinical customers, with clinical sequencing volumes growing 30%+ year over year. Illumina’s narrative has shifted from “enabling discovery” to enabling healthcare systems.
• 10x Genomics, previously associated with research-only single-cell and spatial workflows, made a decisive step toward the clinic, announcing collaborations with major medical centers (e.g., Dana-Farber) aimed at using single-cell and spatial profiling to identify biomarker signatures predicting therapy response. More notably, 10x plans to establish a CLIA-certified laboratory with a pathway to clinical-grade deployment of single cell analysis.
• Bruker’s acquisition of NanoString (2024) looks increasingly like a strategic wedge into spatial biology with translational (and eventually diagnostic) potential, where high-plex tissue profiling could migrate from research to pathology-adjacent use cases over time.
• Twist Bioscience used its core capabilities to move closer to patient impact, unveiling “MRD Express” aimed at MRD testing. Their messaging has increasingly emphasized personalized diagnostics as a growth vector vs. just research workflows.
• Agilent doubled down on clinical adjacencies from legacy pathology (Dako) to digital pathology, launching the S540MD slide scanner (co-developed with Hamamatsu) with positioning explicitly aligned to clinical pathology labs and Europe’s IVDR context, building a bridge between tissue, imaging, and regulated workflows.
• BD broadened access to advanced cell analysis through new BD FACSDiscover A8 configurations, bringing spectral flow and imaging to more labs, including translational teams. More telling: BD’s strategic reorg (including plans to spin off Biosciences & Diagnostics) reinforces how seriously large players are re-shaping around clinical and diagnostic value pools.
• Bio-Rad pushed hard into digital PCR as a platform spanning research and IVD uses, expanding its lineup and partnering to place clinically actionable tests on its instruments. The Biodesix collaboration on an ESR1 mutation assay for breast cancer (with FDA clearance ambitions) is a clean example of “tools-meet-diagnostics” becoming a business model.

Across these few examples, the narrative is clear: the line between “tools company” and “clinical diagnostics company” is blurring. Some are partnering with hospitals and diagnostics developers; others are launching CLIA capabilities; many are tailoring product roadmaps to clinical-grade requirements (e.g., automation, reliability, documentation, QC/QA, interoperability). The strategic goal is the same: capture more of the precision medicine value chain. A KOL we met at JPM put it well: “I don’t think there is a single tools company that hasn’t communicated a move closer to patient impact, even if only toward translational settings.”

‍

‍

“Clinicalization” is a different business model

Here’s the key point that gets missed when we describe this trend as a “pivot” or “adjacency”: Moving toward the clinic represents an operating-model shift.

Clinical adoption changes a lot: evidence bar, quality systems, product requirements, service expectations, sales cycles, procurement dynamics, and risk profile. The winners treat this pivot like a full strategy (and execution) problem early, before they place bets that are expensive to unwind.

Tools leaders and their boards are aware of this shift, and the decisions they are making include:

1. Where to play: Which clinical decisions will your technology influence (e.g., screening, diagnosis, therapy selection, monitoring, MRD, recurrence)? Who pays first (biopharma translational, CLIA labs, IDNs, specialty vs. large reference labs, pathology groups)?
2. How to win: What clinical-grade requirements are truly decisive (e.g., workflow time, automation, uptime, reproducibility, sample types, data interoperability, service model)? What’s the wedge product vs. the long-term platform?
3. Proof & pathway: What evidence (if any) is required for adoption (e.g., KOL-driven studies vs regulatory submissions vs guideline inclusion)? Where are you on the spectrum from RUO to  CDx?
   
   1. As a side note,  we probably need a more granular IVD gradient description, from RUO, TUO (translational use), IVD-adjacent (CLIA-grade), IVD-lite (or “PreDx”, utility-ready), IVD to CDx – maybe worth a separate post!
4. Go-to-market model: Are you selling instruments, enabling assays, bundling informatics, offering services, or operating a lab? Which channel strategy fits your product and regulatory posture?
5. Build / buy / partner: Which capabilities must be owned (e.g., software, wet lab, QA/QC, clinical affairs) vs partnered (e.g., labs, CROs, kit developers), and where does M&A accelerate time-to-scale?

‍

Looking ahead: 2026+ will reward execution, not ambition

Now it’s time to execute! A large share of Life Science Tools & Diagnostics companies pre-announcing Q4 results at JPM beat estimates, and multiple diagnostics players guided 2026 above consensus. The optimism is understandable: reimbursement tailwinds, expanding guideline support, new test launches, and international expansion are real growth drivers. This year, we expect to see:

• More cross-sector collaborations (including tools, labs, diagnostics, and biopharma)
• More end-to-end solutions (from sample prep to assay, informatics/AI, and reporting)
• More “clinical-grade by design” product roadmaps
• Continued regulatory evolution that shapes what scales

‍

Precision diagnostics had a killer year in 2025. Tools companies are responding, and doing it with strategy, not just enthusiasm. If you’re navigating this pivot, we’d be happy to compare notes!