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September 23, 2019

Exact Sciences to acquire Genomic Health in cancer diagnostics space

While this acquisition exhibits a number of potential benefits, concerns have also been raised over the lack of commercial synergies between the two companies.

By GlobalData Healthcare

Exact Sciences has now entered into a definite $2.8bn agreement to acquire Genomic Health.

Exact Sciences is the manufacturer of Cologuard, a colorectal cancer (CRC) screening test that has been gaining popularity in the US.

This in-vitro diagnostics (IVD) device provides a more accurate non-invasive way to screen for CRC in average-risk individuals. Cologuard is more sensitive than other non-invasive CRC screening methods, such as guaiac-based faecal occult blood test (gFOBT) and faecal immunochemical test (FIT) devices, and provides an alternative to colonoscopy, which remains the most popular method for CRC screening in the US.

While Exact Sciences’ sales of Cologuard continue to increase, the company is not yet profitable. It is estimated that over 2.6m people have now been screened using the Cologuard product, but this only represents a minor portion of the potential market opportunity. Moving forward, Exact Sciences is aiming to maximise market penetrance and future revenue by recruiting new doctors to strengthen its market share, increasing physician reordering rates, maintaining a high patient compliance rate, and reduce test costs.

Genomic Health sells IVD products for cancer diagnostics within and outside the US, including the Oncotype DX brand. Unlike Exact Sciences, Genomic Health is profitable, with the company reporting $25.7m in profit in 2018. The Oncotype products help determine the appropriate treatment for a number of different indications such as breast cancer and prostate cancer. This deal will, therefore, expand Exact Sciences’ market coverage from cancer screening to cancer diagnostics, monitoring, and disease management. Additionally, it will provide Exact Sciences with access to Genomic Health’s oncology salesforce and an international presence in over 90 countries.

While this acquisition exhibits a number of potential benefits, concerns have also been raised over the lack of commercial synergies between the two companies. Specifically, it has been noted that the Exact Sciences’ Cologuard product is mainly targeted at primary care physicians, while Genomic Health’s Oncotype DX devices are targeted at oncologists, surgeons, pathologists, and urologists.

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In addition to an expanded commercial presence and product portfolio, the recently announced acquisition will create an extensive R&D team that Exact Sciences plans to leverage to develop innovative new cancer diagnostic products.

Overall, this deal will join two strong brands for cancer IVD devices. However, only time will tell whether it will lead to the development of new, disruptive products in the cancer diagnostics market.

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