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Impath's Informatics Play

Executive Summary

Impath's unorthodox step into the cancer information business has made it attractive to Wall Street, but will its vast, specialized databases allow it to reap benefits from pharmacogenetics? The real value to Impath of its databases resides in their ability to promote work on targeted therapeutics, whose use in patients will depend on critical markers. But targeted therapeutics are a controversial concept that requires pharma companies to make basic changes in the way they operate. There's no guarantee Impath can get the pay-off it wants from its new initiatives.

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Anatomic Pathology: Aggressive Buyers or Anxious Seller?

LabCorp.'s proposed purchase of Dianon Systems, followed by the announcement of Welsh Carson's bid for AmeriPath, reflect different paths taken by two fierce competitors.They are also the inevitable consequence of rapid laboratory consolidation at the national level. LCA wants Dianon so that it can expand its position in cancer testing. Welsh Carson, in contrast, is a financial buyer who would have to "clean up" AmeriPath, which has run into difficulties due to its physician practice management business model.

Lab Relief

Reference laboratories, which have suffered for most of the past decade from ever-declining reimbursement rates, had a welcome piece of good news this year--as of Jan. 1, Medicare reimbursement for many anatomic pathology processes is slated to increase. The increases vary by procedure, but some of the biggest categories--biopsies, for example--will rise by as much as 33% over the next three years. Reimbursement for Pap smears is doubling, although Medicare is responsible for only a small portion of pap smears. The reimbursement hike caused Dianon to restate its revenue projections for this fiscal year from a 30% increase to a 40% increase.

Dako Ponders the Expanding Universe

Dako AS, has always been known for its technical acumen and has a strong following in niche laboratory segments, such as immunohistochemistry and in-situ hybridization. But as competition increases, regulations get tighter for research reagents, and customers demand integrated systems, Dako has had to change. It is becoming more focused on clinical products, necessitating major shifts in regulatory and sales and marketing functions, with an aim on achieving global coordination. HercepTest, its first clinical product, is a success, and it hopes to capitalize on a growing interest in pharmacodiagnostics. But it faces tough competition in the systems business from Ventana Medical Systems, a one-time small competitor that now dominates the IHC systems market. Dako is also gambling on a move into flow cytometry.

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