) sales under the HBDC (high burden developing countries) program
are likely to get a boost from a $30 million funding approval from
UNITAID. The approved fund would go a long way to facilitate access
to Xpert MTB/RIF - a tuberculosis diagnostic test - and reduce the
cost of use.
UNITAID is a global health initiative established in 2006 by the
governments of Brazil, Norway, Chile, France and the UK to increase
access to medicines in 94 low and middle income countries.
The funds will be used to roll out Xpert-based programs in 20
countries. It targets to bring down the price of each Xpert MTB/RIF
cartridge from $17 to $10. This price reduction will enable an
accelerated rollout of the test. The test was endorsed by the World
Health Organization ("WHO") in December 2010.
In fact the Xpert test enjoys certain advantages over
traditional methods, which makes its geographical expansion all the
more significant. The Xpert test diagnoses tuberculosis based on
the recognition of the DNA of the tuberculosis bacillus, which is
more reliable than currently used microscopy in most
Moreover, results are available in only 90 minutes. The Xpert
test also detects resistance to rifampicin, one of the most
commonly used drugs for the treatment of tuberculosis.
Since the approval of Xpert MTB/RIF test by WHO in 2010, the
adoption of Cepheid's flagship product, the GeneXpert system, along
with the test continues to grow in the HBDC market. More than 61 of
the 145 eligible countries have since adopted, or are trialing, the
test. However, the company remains cautious about limited
visibility for HBDC sales due to the variability from quarter to
Cepheid's 33% growth in the clinical business during the most
recent quarter was driven by a 41% rise in clinical reagents sales
to $54.4 million (up 11% on a sequential basis) on the back of a
growing installed base and expanded test menu. Sales of clinical
reagents in the commercial business grew 32% with growth of more
than 30% in both North America and Europe while reagent revenue
from HBDC business remained flat.
With a broad portfolio of tests, the company remains one of the
leading players in the healthcare associated infection market. The
company is working on expanding its portfolio, which should drive
its top line going ahead. However, the competitive landscape
remains tough with the presence of players such as
We have a Neutral recommendation on Cepheid. The stock carries a
Zacks #3 Rank (Hold) in the short term.
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