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Quest Diagnostics: Expanded Use of HCV Test Services

In an attempt to bolster its footprint in the multi-million dollar infectious disease diagnostics market, Quest Diagnostics Inc. DGX is making meaningful efforts to offer advanced diagnostic test services. In sync with this strategy, the company recently announced expanded use of its chronic hepatitis C virus (HCV) test services.

This expanded use will help in determining whether affected patients have developed a resistance against antiviral drugs, particularly Merck’s Zepatier and Bristol-Myers Squibb’s Daklinza. More specifically, the new clearance for the tests will allow physicians to regulate the type, dose or duration of treatment for HCV patients with direct acting antiviral agents (DAAs) therapies – which attacks- the NS5A protein that influences HCV mutation.

Notably, almost 3.9 million Americans suffer from this chronic infection. Unfortunately, HCV is highly subject to mutation, even during drug therapy and is mostly caused by hepatitis C genotype 1 and 3; of the total 6 existing genotypes. Patients with these two genotypes are more prone to develop a resistance against antiviral drug. Encouragingly, Quest Diagnostics has introduced molecular testing to identify all six HCV genotypes as well as NS3, NS5A (for Genotype 1) and NS5B resistance, in recent years.

In Jul 2015, the FDA approved Daklinza for treating HCV patients with genotypes 1 or 3; while Zepatier got the regulatory nod in Jan 2016 for the treatment of patients with genotypes 1 or 4. Naturally, Quest Diagnostics’ new test services, which take into account both these drugs, will help in cure majority of the HCV patient population.

Recent guidelines from the American Association for the Study of Liver Diseases (AASLD) and Infectious Diseases Society of America (IDSA) advice HCV patients to undergo HCV genotype and subtype and quantitative HCV RNA (viral load) testing, prior to the initiation of antiviral therapies. No doubt the expanded use of Quest Diagnostics’ HCV test services will allow physicians to follow these guidelines and avoid unnecessary as well as untimely administration of antiviral drugs.

This in turn will help physicians suggest accurate medicines for a particular genotype present in a HCV patient, thereby facilitating improved healthcare treatment at reduced cost.

We believe the introduction of these new test services reflects Quest Diagnostics’ progress in the emerging precision medicine space, which was recently in the headlines, given the escalating healthcare costs as well as the diverse pattern of diseases.

We are also upbeat about the fact that in the last reported quarter, the company witnessed notable improvement in its infectious disease franchise.

With the infectious disease diagnostic (IDD) market estimated to grow at a CAGR of 7.9% to reach $18,156.2 million by 2019, we expect the expanded HCV test use to help Quest Diagnostics gain better traction in this market, going forward.

Currently, Quest Diagnostics carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical sector are Orthofix International N.V. OFIX, LeMaitre Vascular, Inc. LMAT and Baxter International Inc. BAX. While Orthofix sports a Zacks Rank #1 (Strong Buy), LeMaitre Vascular and Baxter hold a Zacks Rank #2 (Buy).

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