Myriad Genetics Inc.
) fell 12.2%, following the Dec 27, 2013 announcement by the
Centers for Medicare & Medicaid Services (CMS) to cut
reimbursement rates on the former's popular breast cancer test,
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The CMS lately announced its final plan to pay $1,438.14 to
Myriad for each BRACAnalysis test conducted by the company. The
new rate proposed by the CMS is considerably lower than the
previously proposed amount of $2,795. The reduced reimbursement
rate is now effective starting Jan 1, 2014.
BRACAnalysis is a popular breast cancer test used to identify
people who are highly susceptible to developing breast and
ovarian cancer. The revised reimbursement rates are expected to
heavily burden MYGN, affecting revenues to a certain extent.
CMS' decision carries forward its intentions to make the test
affordable for women in the country. The cost of the BRACAnalysis
test, as offered by Myriad Genetics in the United States, is
quite expensive, varying in the range of $3,000 to $4,000. The
CMS also took into consideration the Supreme Court's decision to
invalidate some of MYGN's patents, which stated that genes are
products of nature and thus cannot be patented.
The genetic testing industry welcomed the ruling of the apex
court as it opened up avenues for other players to enter into
this market wherein Myriad Genetics enjoyed monopoly rights. The
entry of new players is expected to deter growth in the
BRACAnalysis market, thereby exerting pressure on Myriad's
revenues. As one of Myriad's prime offerings, the BRACAnalysis
test accounted for almost 74% of the company's total revenue in
the first quarter of fiscal 2014.
We acknowledge that MYGN has several competitive advantages based
on its solid experience, highly efficient laboratory network and
brand recognition. Nonetheless, the company is poised to face
market erosion in the forthcoming quarters due to increased
competition from companies such as
), as well as privately-held entities including Ambry and
Currently, Myriad Genetics carries a Zacks Rank #3 (Hold).
Investors interested in the Medical Biogene industry may consider
a better-ranked stock
, Heska Corporation
) which carries a Zacks Rank #1 (Strong Buy).