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General Investing

Personalized Medicine Changing the Game in Life Sciences

January 25, 2010

The emergence of a new field of diagnostics is changing the way both patients and doctors view pre-treatment initiatives, according to Northland Securities Senior Analyst Stephen D. Simpson. This move to so-called “personalized medicine” may result in increasing opportunities for life sciences companies who research treatments for specialized diseases, and for those larger companies who will wish to acquire them.

“Personalized medicine is the idea that you can use genetic information about a patient to better diagnose and treat them. For example, there is a range in how people will respond to blood thinning drug like Coumadin, and you can predict that through genetic testing,” said Simpson, explaining that such genotype studies could lead to more appropriate prescriptions and dosing recommendations based on a patient’s susceptibility to certain medicines.

“The more we know about patients’ individual conditions, individual diseases, the better you can diagnose them and the better you can fine tune that therapy to get maximum effect and minimum side effects,” he said.

As smaller, more innovative companies in the life sciences space move toward genetic diagnostics and personalized medicine, Simpson predicts the bigger industry names, such as Abbott (ABT), Life Technologies (LIFE) and Millipore (MIL) will be on the prowl for attractive acquisition targets.

“If you have a test, a very good test that has good clinical use but for a relatively small application in terms of patient population, more likely than not you’re going to be acquired,” said Simpson, citing Genzyme (GENZ) and Alexion (ALXN) as two possible acquisition targets going forward.

“I just don’t see those companies staying independent for a particularly long period of time because Wall Street constantly demands growth, constantly demands the new things,” he said. “So many times it’s a path of least resistance to take a lucrative bio bid from a pharmaceutical company or a larger health care company that looks at acquisitions as a way of substituting their own slowing organic growth.”


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