Quest Diagnostics 2008 Annual Report Download - page 16

We significantly strengthened our anatomic pathology services offering through our May 2007 acquisition of
AmeriPath Group Holdings, Inc. (“AmeriPath”). We provide a full-range of cancer diagnostic services to all
specialties including: dermatopathology, gastroenterology, hematology, urology and oncology. We have
approximately 700 board-certified pathologists, including luminaries in their field, with a passion for and
dedication to serving patients with the highest quality service.
We have a strong history of leadership and innovation in cancer diagnostics. We introduced the Leumeta
family of tests for leukemia and lymphoma. These proprietary plasma-based molecular tests may some day
eliminate the need for painful bone marrow biopsies. We offer Pap testing using liquid-based technology in
addition to conventional Pap testing and provide physicians the option of computer assisted Pap screening. We
were one of the industry leaders educating physicians about molecular testing for human papilloma virus
(“HPV”), the leading cause of cervical cancer. During 2008, the National Cancer Screening Service of the
Republic of Ireland selected the Company to provide cervical cancer screening testing for women age 25 to 60
participating in Ireland’s first nationwide cytology-screening program.
Gene-Based and Other Esoteric Testing. Gene-based and other esoteric tests increasingly are ordered by
physicians to assist in the diagnostic process, to establish a prognosis and to choose or monitor a therapeutic
regimen. Esoteric tests include procedures in the areas of molecular diagnostics, protein chemistry, cellular
immunology and advanced microbiology. Commonly ordered esoteric tests include viral and bacterial detection
tests, drug therapy monitoring tests, autoimmune panels and complex cancer evaluations. Esoteric tests typically
require professional “hands-on” attention from highly-skilled technical personnel, generally require more
sophisticated technology, equipment or materials and may be performed less frequently than routine tests.
Consequently, esoteric tests are generally reimbursed at higher levels than routine tests. It is not practical, from a
cost-effectiveness or infrastructure perspective, for most hospitals, independent laboratories or physician office
laboratories to develop and perform a broad menu of esoteric tests, or to perform low-volume esoteric testing in-
house. Such tests generally are outsourced to an esoteric clinical testing laboratory, such as our Nichols Institute
or Focus Diagnostics, which specializes in performing these complex tests.
We are the leading provider in the United States of gene-based and other esoteric testing, with net revenues
of over $1.4 billion, or 20% of consolidated net revenues, in 2008. We conduct complex and specialized testing,
including molecular diagnostics, in our two world renowned Nichols Institute laboratory facilities (one on each
U.S. coast), and in a number of other locations.
Our esoteric laboratories provide reference testing services to physicians, large academic medical centers,
hospitals and other commercial laboratories. Our esoteric testing laboratories perform hundreds of complex tests
that are not routinely performed by our regional laboratories, including but not limited to the following fields:
•endocrinology and metabolism (the study of glands, their hormone secretions and their effects on body
growth and metabolism);
•genetics (the study of chromosomes, genes and their protein products and effects);
•hematology (the study of blood and bone marrow cells) and coagulation (the process of blood clotting);
•immunogenetics and human leukocyte antigens (HLA) (solid organ and bone marrow transplantation;
eligibility for vaccines; selection of pharmacotherapeutic agents and immunotherapy);
•immunology (the study of the immune system, including antibodies, cytokines, immune system cells and
their effect, receptor systems and autoimmune diseases);
•microbiology and infectious diseases (the study of microscopic forms of life, including parasites, bacteria,
viruses, fungi and other infectious agents);
•oncology (the study of abnormal cell growth, including benign tumors and cancer);
•serology (a science dealing with body fluids and their analysis, including antibodies, proteins and other
characteristics); and
•toxicology (the study of chemicals and drugs and their adverse effects on the body).
We believe that offering a full range of gene-based and other esoteric tests strengthens our market offering
and market position and enhances our reputation as the nation’s leading test provider.
Scientific Innovation. We are a leading innovator in the clinical testing industry, with the ability to develop
technologies from the earliest discovery stage to a commercially validated clinical test. We develop tests at our
laboratories, such as Quest Diagnostics Nichols Institute and Focus Diagnostics, and develop innovative
techniques in anatomic pathology. We are a leader in transferring technical innovations to the market through our
relationships with technology developers, including the academic community and pharmaceutical and
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