Cepheid fares well with sales of rapid TB test in developing countries

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A single-cartridge GeneXpert system. (Photo: Mazzotta/ScienceSpeaks)

Producer of the rapid TB diagnostic GeneXpert, Cepheid recently announced its 2011 second quarter profits in an earnings report and subsequent public conference call. Revenues for the quarter reached $67 million, an increase of 11 percent from the previous quarter and 35 percent from the second quarter of 2010. Cepheid is now projecting revenues of $265 to $270 million for all of 2011, $15 to $20 million above its previous projections.

The automated nucleic acid–amplification test was co-developed by the Foundation for Innovative New Diagnostics (FIND), who worked with Cepheid to drop the individual cartridge price by about $1.55 for high-burden developing countries (HBDC) to $16.68. If sales targets are met, the cassette will continually drop in price to an eventual $10.68 by 2014. The price of the Xpert machine also was negotiated down to about $17,500 (depending on the simultaneous cartridge testing capacity). The portfolio of HBDCs that are eligible for special program pricing for the machine and the test cartridges includes 145 countries, and Cepheid has made deals within[i] 30 of these countries so far, six of which were newly announced in their profit report and nearly 100 more are in negotiations to do so. In the first quarter of 2011, Cepheid reported ongoing negotiations with 50 countries, showing a dramatic uptick in either the number of countries expressing interest in the system or the intensity of donor interest.

Many advocacy groups fear the price reductions are a good start but not enough to make an impact on the epidemic, such as the South African advocacy group Treatment Action Campaign, which called on Cepheid to reduce the price of GeneXpert further in its 2011 World TB Day statement.

The GeneXpert System is available in one, two, four, or 16-module configuration, that work with mycobacterium tuberculosis (MTB)/RIF cartridges, which detect MTB and resistance to rifampicin in two hours or less. Other available testing for drug resistance can take more than four weeks, leading to higher mortality and the further spread of drug resistant strains, according to the World Health Organization’s 2009 Global Tuberculosis Control Report, and there may be more than 500,000 cases of multidrug-resistant TB (MDR-TB) worldwide.

Cepheid CEO John Bishop said the company sees significant value in its HBDC efforts outside of the purchase price. Thanks in no small part to the World Health Organization’s endorsement of the test, there are additional benefits the company accrues from their efforts in HBDCs, to include producing at a higher volume leading to overhead decreases, positive media coverage and brand recognition, and product placement in the for-profit sector of several prominent HBDCs like Russia, Brazil and South Africa.

Unitaid, a multilateral organization that works to decrease the price of medicines for priority diseases and to increase the supply of drugs and diagnostics through sustained and strategic market interventions, recently released a draft report on the tuberculosis diagnostic landscape, which discusses GeneXpert at length.

In terms of affordability, the report cites concerns about the high up-front device and on-going cartridge costs compared with traditional technologies like smear microscopy. “Although volume driven price reductions for GeneXpert MTB have been negotiated for high burden countries and [low-income countries] (and are be expected to be fully utilized in the near future), given there is only one supplier in the market this may limit competition and hence further potential price reductions,” according to the report. The lack of competitive products or generic equivalents on the market, and the potential for inherent cost-recovery and manufacturing inefficiency when producing prototypes of first generations of new technology were given as additional reasons that prices were likely to remain relatively high.

Later in the report, authors site other challenges with the product, particularly troublesome in rural settings, some of which were discussed at the 2011 International AIDS Conference in Rome, including:

  • The equipment needs adequate storage for the test device and consumables
  • Continuous power supply is necessary (an uninterruptible power supply is recommended)
  • Difficulty disposing of used test cassettes
  • Large costs associated with annual device maintenance ($500 to $1800 depending on machine model)

[i] Governments or government-funded institutions, non-government organizations and United Nations related organizations, not-for-profit (welfare and private) organizations, and donor agencies residing in these countries can apply for special program pricing for both the GeneXpert System and Xpert MTB/RIF test cartridges.

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