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Chiron's Blood Screening Gambit: Checkmate or Stalemate?

Executive Summary

Chiron's HCV patents have given it enormous clout over the blood banking market. HCV screening is essential in blood testing. Chiron's leverage makes blood screening a cash cow that is protected from competition in a guaranteed market for at least another six years. Plus, Chiron has effective control over access to the only new and growing portion of the market--NAT, a DNA-based probe methodology that can be used for earlier detection of hepatitis and retrovirus. The question for Chrion is not whether it can benefit from the opportunity in NAT, but how to maximize its returns to generate revenues it can use to fund its long-term gene therapy and genomics programs.

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Blood Brothers: Chiron and Gen-Probe

The FDA's approval of Procleix HIV-1/ HCV combination assays all but cemented Chiron and Gen-Probe's dominance of DNA-based screening of the US blood supply. The approval changes the economics of providing HIV/ HCV screening to blood banks. The blood banks had been using Procleix or two separate tests supplied by Roche under IND status, paying at cost. Now, they have to pay commercial prices for Procleix. The hike is stretching budgets, but, for a variety of reasons, still more than 70% of US blood banks use Procleix, which is a combination of two assays on one sample.

Safe Blood At Any Cost?

With AIDS and HCV under control, companies large and small are looking to protect the blood supply from a range of known and as yet unknown pathogens, which pose potential threats. Near-term attention is focusing on emerging pathogen inactivation technologies, which are moving closer to the clinic, even as questions linger about their cost effectiveness and toxicity.

Another Layer of Safety for the Blood Supply

Cerus has received European regulatory approval for a pathogen inactivation system that its president describes as the first "prospective" approach to blood safety. Cerus and marketing partner Baxter plan to launch the device in Europe by year-end. The device inactivates all pathogens in platelets, in contrast to existing blood screening tests, which look for specific infectious agents and don't address the risk of emerging pathogens. The partners have a long series of hurdles to overcome, not least of which is the difficulty of convincing potential buyers to pay more for a technology that addresses theoretical risk.

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