Genomic Health Targets Middle East

In an attempt to further expand its international footprint, Genomic Health (GHDX - Analyst Report) has entered into an exclusive agreement with Dubai-based NewBridge Pharmaceuticals to provide its Oncotype DX test in its strategic areas of operation. This test will be targeted at patients with early-stage, estrogen-positive (ER+) invasive breast cancer, DCIS (ductal carcinoma in situ of the breast), as well as colon cancer patients with stage II and stage III disease.

NewBridge is a specialty therapeutics company focused on pharmaceuticals, biologics, diagnostics and medical devices targeting the AfMET (Middle East, Africa, Turkey & Caspian regions) region. This agreement can be of immense benefit to a large patient base as breast cancer is the most common cancer in women in the Arab region, representing up to 42% of all cancers in women. These patients would benefit from the Oncotype DX test to decide on the correct treatment option.

We believe that the agreement with NewBridge Pharmaceuticals is in sync with Genomic Health’s focus to expand in the international market, having established a strong foothold in the US. Following its success on the reimbursement front in the international market, revenues from this region jumped 21% during the second quarter of 2012, representing more than 10% of total product revenues. This trend is expected to further improve in the second half of the year.

Securing reimbursement outside the US continues to be the major factor in driving growth of the international business. With 30 new international contracts, reimbursement for the Oncotype DX breast cancer test has been extended to an additional 1.8 million lives in Ireland, 1 million lives in the Canadian province of Saskatchewan, and 6.3 million lives in the Catalonia region of Spain. Based on these contracts, the total number of covered lives for the Oncotype breast cancer test in the international market exceeded the 80 million mark.

Armed with several distribution agreements, Genomic Health provides its Oncotype DX breast cancer tests in 86 countries and the colon cancer test to patients in 75 countries.

However, the expansion plans involve higher expenses, which in turn will adversely affect the margin. The company faces tough competition from players such as Myriad Genetics (MYGN - Analyst Report), among others.