The Challenge

Our Approach

L.E.K. delivered a comprehensive transformation of the client’s claims forecasting capability, combining deep insurance domain expertise with advanced analytical methodologies and an investor-oriented perspective on value creation.

The Results

The Challenge

The UK financial advice consolidation market has attracted significant private equity investment over the past decade, resulting in a crowded landscape of well-funded platforms pursuing similar buy-and-build strategies. In this environment, valuation at exit is no longer driven solely by scale, but by the ability to demonstrate a differentiated, scalable model and a credible long-term growth story.

A leading UK independent wealth management consolidator had built a scaled hub-and-spoke platform focused on acquiring and integrating small and midsized independent financial adviser firms, particularly those led by retiring principals. While the business had achieved strong growth in AUM and earnings, it needed to clearly evidence the sustainability of its model, the durability of its client proposition and its readiness for increasing regulatory scrutiny.

The key question for investors was whether the business represented a differentiated, scalable platform with a growth model that would remain durable beyond the point of sale. This required addressing critical risks around sustainability of M&A supply and the scalability of the operating model under increasing FCA scrutiny.

As the business evaluated a potential equity event, it engaged L.E.K. to deliver comprehensive commercial and operational vendor due diligence, supporting investor decision-making and validating growth potential, platform scalability and regulatory robustness.

Our Approach

L.E.K. delivered integrated commercial and operational vendor due diligence, combining deep Financial Services expertise with a rigorous investor lens to build an evidence-based view of market attractiveness, growth sustainability and operating model maturity.

We began by developing a structured view of the UK advice market, assessing the scale of the addressable wealth pool and the long-term growth trajectory of the sector. This included evaluating key structural drivers — such as demographic trends, pension reform and increasing advice penetration — alongside regulatory developments (e.g., Consumer Duty and the FCA Consolidator Review) to demonstrate how increasing scrutiny is accelerating consolidation and favoring scaled, well-governed platforms.

We then conducted a bottom-up assessment of M&A sustainability, developing a proprietary adviser stock-and-flow view using FCA data and L.E.K. research. This enabled us to quantify retirement-driven supply, assess replenishment dynamics and validate a multi-year runway of acquisition opportunities, while also evaluating the strength of the client’s M&A sourcing capability and competitive positioning.

On the operational side, we undertook a detailed assessment of the platform’s scalability, focusing on the effectiveness of the hub-and-spoke model. This included analyzing adviser productivity, retention dynamics, support ratios and cost structure, and applying a structured benchmarking lens across governance, management information and integration maturity. We complemented this with external benchmarking using proprietary L.E.K. data and industry sources to assess relative performance across adviser economics, back- and mid-office efficiency and pricing/yield.

Finally, we translated these insights into a clear investor narrative. We developed a high-level value creation bridge, explicitly linking AUM growth, EBITDA expansion and margin drivers, and stress-tested key assumptions — including M&A delivery, adviser retention and pricing harmonization — to validate the durability of the growth model. This also enabled us to identify the specific investments and milestones required to support a credible exit pathway and sustain value creation post-transaction.

Results

The integrated commercial and operational VDD enabled the client to present a differentiated, evidence-backed investment case and clearly position the business for a successful equity event.

• Sustainable growth platform: Validated deep and durable M&A headroom alongside strong M&A sourcing capability, supported by a large pool of retirement-driven opportunities and a proven acquisition model
• Balanced growth engine: Demonstrated a combination of continued M&A and a strengthening organic growth engine, underpinned by adviser productivity, client retention and pricing optimization 
• Operational outperformance: Demonstrated strong EBITDA margins and operating leverage driven by a lean cost base, efficient support structure and disciplined central cost management
• Durable client proposition: Evidenced the resilience of the client offering, supported by recurring revenue characteristics, strong client relationships and alignment with evolving customer needs
• Defined value creation levers: Identified actionable opportunities across pricing harmonization, vertical integration and operational efficiency, alongside ongoing process standardization and data-led operations
• Regulation-aligned positioning: Demonstrated strong alignment with evolving FCA requirements, with regulatory change acting as a catalyst for further consolidation and scale advantages
• Investor-ready equity story: Delivered a focused narrative grounded in AUM growth, EBITDA scalability and a clear runway for value creation through both inorganic expansion and continued organic improvement

With L.E.K.’s support, the consolidator was able to clearly articulate its differentiated positioning, operating strength and long-term growth potential — providing investors with confidence in the platform’s ability to scale and deliver sustained value in an increasingly competitive and regulated market. 

Senior leaders’ view of the trends, challenges and opportunities shaping UK financial planning

The second edition of the Financial Planning Growth Index Report provides a clear view of how UK financial planning firms are performing and where the sector is heading. Developed in conjunction with Saltus, the report draws on survey responses from 216 senior leaders across firms of varying sizes, offering a robust perspective on market dynamics and strategic priorities.

While firms report improving confidence, the findings highlight a sector operating under continued pressure from regulation, rising costs and evolving client demands. The research also examines how firms are adapting their operating models and investing in technology to support efficiency and scalability.
Key insights include:

• Confidence is improving, but operational and regulatory pressures persist
• Organic growth remains the primary driver of expansion
• Technology and AI are key to improving efficiency and capacity
• Client priorities remain focused on long-term planning
• Firms are prioritising operational improvements over major strategic shifts

Download the full report to explore the findings in detail.

Note: The survey was conducted in January 2026. Findings should be considered in the context of subsequent macroeconomic and geopolitical developments (see press release for further detail).

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC

After a sustained period of declining consumption, wine brands are reassessing how to engage consumers and stabilize the category. Gen Z is central to that recovery, as the first fully digital-native cohort to enter legal drinking age with distinct expectations around wellness, authenticity and convenience. Importantly, older Gen Z cohorts experienced COVID-19-related disruption during their formative consumption years, while younger cohorts are entering under more normalized conditions.

With the number of Gen Z drinkers projected to grow around 80% over the next five years, brands must sharpen their strategies to attract and retain these consumers. Realizing this opportunity will require navigating a structurally challenging environment.

Structural headwinds are reshaping wine demand

Consumers are increasingly associating alcohol with health risks. A recent Gallup poll suggests that 53% of Americans believe one to two drinks per day is harmful to health, up from 39% in 2023. Broader wellness prioritization, including the growing use of GLP-1 medications, is adding further friction to routine consumption. Since 2019, legal-age drinking incidence has declined by approximately three percentage points, with consumers participating on fewer occasions and with greater intentionality.

In parallel, wine is losing share of total alcohol consumed. Consumers are gravitating toward formats perceived as simpler and more convenient, including ready-to-drink cocktails, hard seltzers, ciders, hard teas, and low- or zero-ABV options. Spirit and cocktail alternatives are capturing demand through flavor innovation, single-serve convenience, accessible pricing and marketing that reinforces cultural relevance.

Against this backdrop, the wine industry must align with more intentional consumption patterns and must clearly differentiate from substitute categories in the years ahead. While these pressures are real, emerging data suggest the outlook is not uniformly negative.

Recent trends point to reasons for optimism

L.E.K. Consulting’s survey data indicate that Gen Z’s wine participation has increased meaningfully over the past two years, with 60% of legal-age Gen Z respondents reporting higher consumption. This challenges the narrative of permanent abstention among younger consumers. External surveys from IWSR and The Times suggest that monthlong abstinence behaviors such as Dry January may be losing momentum among younger drinkers, reinforcing the view that moderation trends may be stabilizing rather than accelerating. As Gen Z ages into the workforce, marriage and higher income, engagement is likely to move closer to that of older generations.

The divergence within Gen Z underscores the role of COVID-19 disruption during formative consumption years. Among legal-age consumers aged 21 to 24, 65% report higher wine consumption relative to three years ago, compared with 31% of those aged 25 to 29. Older members of the cohort experienced pandemic restrictions during their late teens and early 20s, a critical period for social habit formation and category experimentation.

Younger Gen Z consumers, who entered legal drinking age under more normalized conditions, also express stronger forward intent, with a net 27% expecting to increase wine consumption over the next three years, versus 2% among those aged 25 to 29.

Looking ahead, approximately 30% of Gen Z wine drinkers expect to increase their consumption, citing primary drivers like wine’s perceived natural and healthier profile relative to other alcohol categories, overall enjoyment, and strong fit with social occasions (see Figure 1a).

Importantly, nonconsumers of wine, particularly within Gen Z, also signal future interest. Motivations center on learning more about wine, participating in more food-led and social occasions, and engaging in tastings and winery visits.

Together, these signals point to a tangible opportunity for the industry to reengage the next generation of wine drinkers (see Figure 1b).

How brands should approach the Gen Z opportunity

As moderation trends stabilize and more Gen Z consumers enter legal drinking age, the priority is twofold: defend loyalty among core consumers while recruiting the next cohort into the category. Wine’s path forward rests on reinforcing its structural strengths. The category remains embedded in social ritual, closely linked to food occasions, and perceived as more natural and better aligned with wellness than many alternatives. Sustained focus on these advantages should position wine to capture incremental engagement as younger cohorts mature (see Figure 2a).

At the same time, brands must address perceived barriers to consuming wine. Wine can feel inconvenient to carry, less socially visible than competing formats, expensive, misaligned with taste expectations and complicated to choose. Reducing these frictions will be essential to translating interest into sustained participation (see Figure 2b).

1. Expand convenience through accessible formats

Increase availability in formats that lower commitment and that travel across occasions, including smaller bottles, multipacks, cans and resealable options. Innovation should focus on pack sizes that reduce trial risk; formats that are easy to transport; and offerings that fit casual, on-the-go and single-serve moments.

2. Broaden relevance across everyday occasions

Wine remains strongly associated with formal settings, yet stated consumption intent is rising in more casual contexts, including regular at-home meals, entertainment venues such as festivals and sports events, and unwinding or relaxing at home (see Figure 3). Brands should create clearer permission for wine in these moments through targeted messaging, partnerships and occasion-led product positioning.

3. Simplify messaging and invest in consumer education

Labels, menus and digital touchpoints should more clearly articulate taste profiles, sweetness cues, pairing shortcuts and occasion-based recommendations. Making wine easier to understand reduces intimidation, supports discovery and builds confidence among newer consumers.

4. Align marketing with Gen Z discovery behaviors

Gen Z is discovery-led and digitally native, relying on creators, peer reviews and social platforms to validate choices. Brands should prioritize social proof, culturally relevant partnerships and community-based engagement. Physical touchpoints such as wine bars and tasting rooms remain important entry points, and wine clubs can serve as structured on-ramps for guided discovery and repeat engagement, with Gen Z now accounting for approximately 20% of wine club membership, up materially from recent years. Ensuring the category shows up where Gen Z socializes, both digitally and in person, is critical to sustained relevance.

5. Lean into premium resilience

While total category demand has declined, premium segments, particularly bottles priced at $15 and above at retail, have shown relative resilience (see Figure 4).

As consumers drink more selectively and shift toward fewer, better-quality purchases, brands in the premium price tier that deliver clear quality cues, differentiated positioning and cultural relevance are better positioned to sustain demand and capture share.

About the research

This report draws from a survey of 1,000 wine consumers we conducted in February 2026, supplemented by secondary research and trend analysis across generational cohorts. The research assesses how consumer discovery, purchase and consumption, and perceptions of wine have been evolving, and what these shifts imply for wine participation going forward.

For more information, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC

Healthcare logistics market dynamics

Healthcare logistics, a market valued at roughly $140 billion in 2026 and expected to surpass $200 billion by 2030, has long been one of the most demanding and high‑stakes environments across all supply chain verticals. What has changed is not the underlying criticality of healthcare supply chains, but rather the convergence of structural pressures that are pushing logistics performance from a back‑office consideration to a strategic priority.

Supply chain disruptions during COVID‑19 exposed fragilities across global pharma, medtech and diagnostics networks, while ongoing geopolitical tensions and capacity volatility have further increased the cost and risk of moving regulated healthcare products across borders. At the same time, sustained pricing and margin pressure on manufacturers and providers has elevated supply chain optimization from an efficiency lever to a source of competitive advantage. Together, these forces have created an inflection point for healthcare logistics companies able to deliver resilience, transparency and cost discipline at scale.

Compared with other logistics verticals such as consumer goods or industrials, the items being transported carry consequences that go far beyond financial loss (which can still be significant for some products). A delay in shipment or a temperature deviation can directly affect patient outcomes, clinical integrity and even survival rates.

Consequently, healthcare logistics companies operate under stringent service‑level agreements, which are only intensifying as healthcare providers consolidate into larger, more sophisticated organizations with centralized procurement, standardized operating models, and heightened expectations for performance and transparency. Especially after the COVID‑19 pandemic, providers are less tolerant of delivery uncertainty, inventory disruption and service variability from their logistics partners, and they increasingly view logistics as integral to their clinical and financial performance.

Furthermore, specialized handling — including cold‑chain management and chain‑of‑custody control — is becoming more critical with growth in biologics, cell and gene therapies, radiopharmaceuticals, and other products with greater logistical complexity (and per‑unit cost). For example, vaccines, cell and gene therapies, and tissue samples must be maintained within narrow temperature ranges, and radiopharmaceuticals require delivery within specified time horizons. Even minor deviations can render a product unusable and create liability. The pharma sector is estimated to lose around $35 billion annually due to temperature‑controlled logistics failures, and up to 50% of vaccines globally are discarded because of temperature faults. These losses underscore not only the operational risk embedded in healthcare logistics, but also the growing economic incentive to deploy AI, sensor technology, and predictive analytics to anticipate disruptions, prevent excursions and reduce waste.

While the combination of rising operational complexity, external shocks and economic pressure is exposing inefficiencies across the healthcare logistics ecosystem, advances in AI, sensors and data infrastructure are making it increasingly feasible to address them. This backdrop is unlocking opportunity for specialized, high‑reliability service providers and technology‑enabled platforms to capture share, deepen customer integration and, ultimately, create defensible niches at the intersection of logistics and healthcare.

AI disruption and opportunity

AI offers a rare opportunity to leapfrog into a new era of operational maturity for a market segment historically characterized by paper trails, manual interventions and opaque vendor relationships. Beyond efficiency gains, AI has the potential to transform the structure of healthcare logistics itself, redefining how products are sourced, monitored and delivered, and how logistics providers interact with manufacturers, distributors and providers. Early adopters are already demonstrating that the integration of AI into logistics management can yield measurable improvements in performance, resilience and profitability. For investors, this evolution marks a shift from logistics as an asset‑ and labor‑intensive service to a data‑ and insight‑driven platform play. For strategics, this is both a threat and an opportunity.

Below are several case studies bringing to life real‑world application of AI in healthcare logistics.

Rewiring logistics operations: AI-driven freight brokerage and automation

Freight brokerage has traditionally been a high‑friction domain marked by manual documentation, opaque pricing and inconsistent communication.

Flexport is demonstrating how AI can rewire this operating model. In its 2025 product release, Flexport unveiled AI‑driven automation across customs automation, document management and predictive routing. The company’s platform now uses natural‑language interfaces to allow shippers to query shipment data in real time (e.g., “show me delays in Asia‑to‑U.S. ocean freight this week”) and allow machine‑learning algorithms to match carriers to loads based on performance history, cost and compliance.

The impact is tangible. Flexport’s AI‑based customs and duty‑drawback tools have delivered up to 40% higher refund recoveries than manual methods, while automated freight optimization has been shown to reduce shipping costs by around 10% in early pilot programs. These capabilities have helped Flexport grow beyond the bounds of a traditional broker into a partner that sits at the intersection of logistics execution and data analytics.

For healthcare logistics, the implications are significant. AI‑driven brokerage could dynamically allocate time‑sensitive shipments such as temperature‑controlled biologics or surgical equipment, ensuring optimal routing across carriers while maintaining compliance with chain‑of‑custody standards. Smaller healthcare‑focused freight brokers that have long been constrained by scale and manual processes could leverage similar technology to operate as AI‑first digital platforms, enhancing both reliability and margin performance.

Predicting and preventing failures: AI in cold-chain monitoring

Cold‑chain logistics is among the most complex and unforgiving segments of the healthcare supply chain. Even a brief temperature excursion can render a shipment of biologics unusable, resulting in financial loss and clinical disruption. Logistics leaders are applying AI to anticipate and prevent these failures.

Large global logistics providers such as DHL are increasingly applying AI to healthcare-relevant challenges within cold‑chain logistics. Rather than focusing solely on labor productivity, these efforts center on predictive analytics platforms that fuse sensor telemetry, weather data and vehicle diagnostics to identify emerging risks in temperature‑controlled transport. In practice, these systems enable proactive interventions, such as rerouting shipments, recalibrating equipment or dispatching technicians, before a temperature excursion compromises product integrity.

Similar approaches are being adopted across the sector. UPS Healthcare has expanded its Global Control Tower capabilities to provide real‑time visibility, risk scoring and exception management across temperature‑controlled pharmaceutical shipments, while Kuehne+Nagel, through its PharmaChain platform, is applying advanced analytics to lane qualification, temperature monitoring, and deviation management across air and ocean. This momentum suggests that the combination of AI with sensors and large datasets is transforming what can be expected from cold‑chain partners.

Competitive dynamics and investments in healthcare logistics

The convergence of structural market changes and AI enablement is driving rapid consolidation, strategic expansion and the emergence of technology‑driven, high‑value operators. M&A activity is accelerating as buyers compete to secure high‑quality, specialized operators capable of delivering reliability, compliance, and technology‑enabled performance that translates into predictable cash‑flow generation while supporting the build‑out of end‑to‑end service capabilities.

Private equity driving consolidation

Private equity has increasingly targeted specialized pharma and healthcare logistics providers, recognizing the combination of recurring revenue, regulatory barriers to entry and attractive margin profiles. Sponsors are focusing on operators with deep domain expertise in temperature‑controlled logistics, clinical trial services and time‑critical transportation. The industry’s continued high level of fragmentation enhances its appeal to private equity, as investors can deploy proven buy‑and‑build strategies, with global 3PLs and larger funds well positioned to scale and support these platforms. Recent transactions illustrate this trend:

These investments reflect a broader strategy of building scaled, compliance‑oriented platforms capable of serving pharmaceutical manufacturers, laboratories, hospitals and medtech providers with increasingly complex service requirements.

In parallel, healthcare‑focused private equity funds are increasingly moving downstream into logistics to control product delivery, integrity and patient access within the value chains they already invest in. Examples include:

• Water Street/GlobalMed Logistix (2026)
• Water Street/MedSpeed (2024)
• Assured Healthcare Partners/Pharma Logistics (2024)
• Archimed/Bomi (2019)

This strategy reflects a recognition that logistics performance directly impacts clinical outcomes, regulatory risk and brand reputation. Controlling or influencing the logistics layer enhances value creation across broader healthcare portfolios.

Global strategics expanding healthcare logistics footprints

Large global integrators and strategics are aggressively expanding their healthcare verticals, viewing the sector as structurally higher margin and less exposed to the cyclical volatility of traditional freight markets. Healthcare volumes, driven by biologics, diagnostics and chronic disease demand, provide defensible growth relative to industrial and consumer goods logistics.

Notable examples include:

These transactions demonstrate a strategic push to acquire specialized capabilities in cold chain, final‑mile healthcare delivery and regulatory compliance rather than building them organically over extended timelines.

Emergence of bootstrapped technology-driven operators

Alongside sponsor‑backed consolidation, a new class of attractive, founder‑led assets is emerging. These companies differentiate themselves through deep healthcare domain expertise, operational discipline and, increasingly, proprietary technology platforms that enable visibility, compliance and AI‑driven supply chain orchestration. Examples include:

• DeSpir Logistics
• Langham Logistics
• BioRelo
• Alom/Yourway

Often built organically, these businesses combine strong customer relationships with institutional-quality operations, making them highly attractive acquisition or partnership targets.

For more information, please contact us.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC

China’s medical device industry is entering a new phase of globalization in which international expansion is no longer optional but a strategic imperative for sustained growth. As domestic pricing pressure intensifies and policy reforms reshape the competitive landscape, leading companies are accelerating the shift from volume-driven growth to innovation-led, globally diversified models. Developed in collaboration with the Singapore Economic Development Board, this report draws on frontline perspectives from Chinese medtech companies operating in Singapore and across Southeast Asia.

Against this backdrop, Southeast Asia is emerging as a natural first location for international expansion. The region offers a compelling combination of strong demand growth, improving healthcare infrastructure and relatively accessible regulatory pathways, which creates a pragmatic entry point for companies building global capabilities.

Within Southeast Asia, Singapore stands out as a critical anchor for regional and global strategy. Its integrated ecosystem — spanning regulatory efficiency, advanced manufacturing, R&D capabilities and strong international connectivity — enables companies to centralize regional operations, streamline market entry and scale more effectively across multiple markets.

At the company level, the path to globalization is increasingly differentiated. Leading medtech players are adopting a range of operating models, from distributor-led approaches to fully localized platforms, depending on product complexity, service requirements and long-term strategic ambition. The ability to align operating model choices with capability development is emerging as a key determinant of success.

This report provides a practical lens for executives navigating this transition, with clear implications for how to prioritize markets, design operating models and allocate resources in building a sustainable global footprint.

Download the full PDF and gain deeper insights into the key opportunities and practical pathways for Chinese medtech companies expanding in Southeast Asia and globally.

Background

L.E.K. Consulting had recently finished supporting a mid-cap specialty biopharma company in developing a credible growth strategy. After years of operating as a largely single-product company, the client was expanding into a more therapeutically diverse portfolio with ambitions to grow both its U.S. footprint and its international reach. The risk was a common one in specialty biopharma: The strategy outpaces the organization, and what should be a growth phase becomes an execution bottleneck.

Coming out of the strategic work, the client asked for additional support to transform the organization so it could deliver on the company’s new growth ambitions. To support a more growth-oriented and therapeutically diverse future, the organization needed to build new capabilities, enable growth and strengthen governance to manage a broader portfolio and operate efficiently both in the U.S. and internationally.

Approach: Identifying where growth would stall without intervention

The starting point was a rigorous benchmarking of peer organizational scale, structure and operating-model choices. We used this analysis to identify which structures had effectively supported growth and where others had been constrained by underinvestment, fragmentation or complex models.

Four main recommendations emerged.

Centralize selectively as you scale

As additional assets and therapeutic areas were added, the cost to operate parallel infrastructure across business units would increase sharply. Select activities (e.g., finance and learning and development) can be consolidated without negatively impacting their effectiveness.

Invest ahead of the portfolio

Business development, corporate project management and procurement were underpowered relative to where the portfolio was heading. These are capabilities with long lead times to build and are essential for driving the planned growth.

Streamline governance

Even before the addition of more assets and therapeutic areas, the compliance-driven culture had created bureaucracy that slowed down decision-making. Streamlining governance structures and pushing routine decision-making deeper into commercial and finance units would recover capacity without sacrificing oversight.

Standardize and automate tasks

Repetitive manual processes and the absence of a single source of truth across business insights and analytics, procurement, and logistics meant skilled people were spending significant time reconciling data rather than using it. Automation and standardization would redeploy that capacity toward growth-enabling work.

Result: A roadmap the board could act on

The result was a strategy-aligned operating model that addressed capability gaps and enabled cost-effective growth. We helped management translate its revised growth agenda into a more scalable organization with a clear set of priorities across structure, governance, processes and systems, as well as a transformation roadmap that could be taken to the board of directors.
The engagement reinforced the learning that getting the organization design wrong at the point of strategic transition is one of the most expensive mistakes a specialty biopharma company can make.

Clinical next-generation sequencing (NGS) has been evolving from a specialized capability to a routine part of clinical decision-making. For NGS suppliers, capturing the next phase of growth will require understanding which lab segments are insourcing and why, what is driving instrument refresh and vendor selection and how sample-to-answer platforms fit into the near-term adoption curve.

L.E.K. Consulting’s U.S. Clinical Diagnostic Lab Survey captures perspectives from 100-plus executives and directors across hospital-based and multispecialty reference labs on near-term NGS testing demand and instrumentation purchasing expectations, to identify key market trends and spending opportunities.

In this edition of Executive Insights, we share key trends in the U.S. clinical NGS market and implications for suppliers.

Key trends

Material growth expected for in-house NGS test volume, with significant new adoption among large community hospital labs

Approximately 90% of academic medical center (AMC) labs and 60% of reference labs surveyed run at least some clinical NGS testing in-house today (see Figure 1). Adoption is meaningfully lower in community hospitals, with around 40% of large community hospital labs and roughly 5% of small community hospital labs offering in-house NGS today.

Among labs that already run NGS in-house, material growth in test volumes is expected, driven primarily by expanding oncology testing and, to a lesser extent, hereditary genetics testing. Nearly two-thirds of labs currently performing NGS in-house anticipate double-digit growth in such testing over the next three years, including approximately 10% that are expecting volume to increase by more than 50% over the period. Additionally, labs with a mix of in-house and send-out volume expect the share of in-house tests to rise from an average of around 50% today to about 70% within three years.

Notably, NGS has the strongest overall growth outlook among all major testing modalities surveyed (see our previous Executive Insights  on this topic for cross-modality comparison). This insourcing trend reflects growing confidence among labs that they can successfully operationalize NGS workflows in-house, versus a diminishing role for centralized testing. Specialty and reference labs offering laboratory developed test menus remain integral to the clinical NGS landscape, particularly for more complex assays (e.g., personalized minimal residual disease testing).

Continued adoption of NGS by new labs is also expected to drive growth, with large community hospital labs representing the most significant incremental adopter pool. Nearly 30% of those without current capability are likely to pursue it within three years, suggesting that their expected volume scale and clinical demand can justify investment. In contrast, small and midsize community hospitals remain constrained, with more than 80% expected to continue fully outsourcing NGS over the next three years.

The adoption outlook creates two distinct demand pools for suppliers: labs already running NGS seeking greater throughput flexibility as volumes scale, and new adopters, led by large community hospitals, prioritizing implementation support to reduce operational risk during ramp-up. Each will require a different commercial approach.

Capacity expansion is driving the next wave of instrument purchases, with meaningful vendor switching in play

Survey respondents anticipate NGS instruments to have the shortest replacement cycle among all major clinical lab instruments, averaging roughly 5.5 years. About 75% of current users expect to purchase a new sequencer within the next five years, including approximately 50% within three years (see Figure 2). Roughly 70% of expected purchases are tied to increasing capacity or expanding menu, with more than 70% of respondents anticipating moving to instruments with higher-performance specifications (e.g., higher throughput).

Surveyed lab experts show a clear split in NGS vendor stickiness. Among respondents planning a purchase within the next five years, about 30% are “not at all likely” to switch vendors — the highest “no-switch” share across all instrument types tested — signaling a defensible installed base that will be difficult for new entrants to displace. At the same time, roughly 40% are open to switching, suggesting meaningful unmet needs (e.g., pricing flexibility, throughput scalability).

For suppliers, this dynamic cuts both ways. Incumbents will need to demonstrate continuation value, while challengers have a real opening, though winning conversions will require competitive economics, flexible instrument configurations and a low-friction transition plan that reduces migration risk.

Sample-to-answer NGS platform adoption remains limited, with a subset of labs signaling near-term demand

Automated, sample-to-answer NGS platforms (e.g., Ion Torrent Genexus) are designed to make NGS implementation easier for labs by simplifying workflows, reducing hands-on time and reducing reliance on highly specialized personnel (e.g., bioinformaticians).

While adoption of sample-to-answer platforms is still limited today, there is strong near-term adoption interest among AMCs, large community hospitals and reference labs. AMCs show the strongest purchase intent, with approximately 40% indicating likely adoption within three years (see Figure 3). Nearly 30% of large community hospital and reference lab respondents are likely to adopt within three years, pointing to demand among lab settings that may face greater challenges with staffing and specialized expertise relative to AMCs. In labs with established high-throughput NGS workflows, sample-to-answer platforms are likely to serve as a complement rather than a replacement, enabling faster turnaround for targeted panels (e.g., rapid solid tumor or hematologic malignancy profiling) while existing platforms continue to handle broader, higher-complexity assays.

Beyond clinical impact and operational benefit, which are the leading motivations for adoption, respondents also cite reduced outsourcing and more flexible capacity as key drivers (see Figure 4). Separately, the Food and Drug Administration’s proposed reclassification of certain nucleic acid-based companion diagnostics from Class III (premarket approval) to Class II (510(k) with special controls) could provide an incremental catalyst by simplifying new platform launches and content update cycles for sample-to-answer NGS platforms (e.g., adding biomarkers, updating reportable variants).

The most common barriers to sample-to-answer NGS adoption are up-front and ongoing costs, coupled with concerns about low utilization (see Figure 5), while performance and integration are less frequently cited. Notably, reimbursement pressure, previously a common concern for labs running NGS, is no longer among the top five barriers to adoption, reflecting improvements in coverage and payment for NGS-based testing.

Addressing these cost and utilization concerns through contracting models and commercial positioning will be central to accelerating adoption.

Implications for suppliers

Clinical NGS is entering a new phase of growth, with in-house testing expanding beyond AMCs and reference labs into a broader set of hospital settings. Capturing that opportunity requires aligning products, services and contracting models to the distinct needs of different adopter segments.

Compete on delivered economics, not instrument specs

For labs with established in-house NGS volume, winning refresh and expansion decisions hinges on quantifying delivered outcomes (e.g., throughput per full-time equivalent, turnaround time, uptime, cost per reportable), not on instrument specs alone. Incumbents should defend share with measurable continuation value (e.g., predictable performance, low disruption) and credible upgrade paths that improve capability without destabilizing operations. For challengers, a structured switching toolkit (e.g., validation templates, data comparability plans, workflow transition support) addresses the operational risk that deters labs from changing vendors.

Winning the next wave of community hospital adopters

Among labs beginning to build in-house NGS capability, large community hospitals represent the most actionable near-term growth opportunity, but their needs differ from those of AMCs. Onboarding packages should address their specific constraints: limited bioinformatics staff, tighter budgets and lower initial volumes that make capex-heavy models difficult to justify. Ramp-friendly economics (e.g., reagent rental, volume-linked pricing) and turnkey implementation support will be important deciding factors.

Make a clear return-on-investment (ROI) case for sample-to-answer platforms

AMCs and large community hospitals are the primary near-term addressable market for sample-to-answer NGS platforms. A menu of validated assays with clear clinical benefits is table stakes; suppliers will also need to demonstrate operational ROI (e.g., hands-on time saved, staffing additions avoided). Volume-linked pricing, shifting the decision from capex to opex, addresses the utilization concern for labs taking their first steps toward in-house NGS.

To discuss these findings and translate modality-level growth into commercial actions across products, services and informatics, please contact us.

Note: Artificial intelligence was used to support the drafting of this article.

L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC