Quest Diagnostics 2000 Annual Report Download - page 29

9
Sales and Marketing
We market to and service our customers through our direct sales force sales representatives, customer service
and patient service representatives and couriers.
Since 1996, we have focused our sales efforts on pursuing and keeping profitable accounts that generate an
acceptable return. We have an active account management process to evaluate the profitability of all of our accounts.
Where appropriate, we change the service levels, terminate accounts that are not profitable, or adjust pricing.
Most sales representatives market routine laboratory services primarily to physicians and hospitals. The
remaining sales representatives focus on particular market segments or on testing niches. For example, some
representatives concentrate on market segments such as hospitals or managed care organizations, and others concentrate
on testing niches such as substance-abuse testing.
Customer service representatives perform a number of services for patients and customers. They monitor
services, answer questions and help resolve problems. Our couriers pick up specimens from most clients daily.
Strategic Growth Opportunities
In addition to expanding our core clinical laboratory business through internal growth and pursuing our strategy
to become a leading provider of medical information, we intend to continue to leverage our network in order to capitalize
on targeted growth opportunities both inside and outside our core laboratory testing business.
•Selective Regional Acquisitions: The clinical laboratory industry is still fragmented. Historically, regional
acquisitions fueled our growth. We expect to focus future clinical laboratory acquisition efforts on laboratories
that can be integrated into our existing laboratories without impeding the integration of SBCL's operations
such as our acquisition of the assets of Clinical Laboratories of Colorado in February 2001. This strategy will
enable us to reduce costs and gain other benefits from the elimination of redundant facilities and equipment,
and reductions in personnel. We may also consider acquisitions of ancillary businesses as part of our overall
growth strategy.
•Genomics and Specialty Testing: We intend to remain a leading innovator in the clinical laboratory industry
by continuing to introduce new tests, technology and services. We estimate that the current United States
market in gene based testing is approximately $1 billion per year. We believe that we have the largest gene
based testing business in the United States, with more than $225 million in annual revenues, and that this
business will grow by at least 25% per year over the next several years. We believe that, with the unveiling of
the human genome, the discovery of new genes and the association of these genes with disease will result in
more complex and thorough diagnostic testing. We believe that we are well positioned to capture this growth.
We intend to focus on commercializing diagnostic applications of discoveries in the areas of functional
genomics, or the analysis of genes and their functions, and proteomics, or the discovery of new proteins made
possible by the human genome project.
•Medical Information: We believe that we have the largest private clinical laboratory results database in the
world. This database continues to grow as we perform tests related to over 100 million requisitions involving
approximately 80 million patients each year. We believe that this database has substantial value since a
significant portion of all healthcare decisions and spending are impacted by laboratory testing results. Large
customers of clinical laboratories are increasingly interested in integrating our clinical laboratory data with
other healthcare information to answer quality, marketing and financial related questions. In addition,
pharmaceutical manufacturers are increasing their use of the data to expand their marketing efforts as well as
to promote disease management. In order to meet these emerging needs for medical information, our Quest
Informatics division has developed a portfolio of information products including Internet-based health and
information services that provide customers secure access to our extensive database, along with medical and
analytical expertise. We also provide customized services for pharmaceutical and health product companies to
support the development and implementation of their business strategies. We intend to maintain the trust of
patients and providers by ensuring the security and confidentiality of individual patient results.