Quest Diagnostics 2015 Annual Report Download - page 18

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Diagnostic Products.
Our diagnostic products business develops, manufactures and markets diagnostic products which can be used on a
variety of instrument platforms that enable healthcare professionals to make healthcare diagnoses. We offer these products to a
broad spectrum of customers in the United States and, through distributors, in other countries.
Healthcare Information Technology.
Our Care360® EHR product allows clinicians to generate a complete record of a clinical patient encounter, automates
and streamlines the clinician's workflow, and allows for rapid deployment and implementation with minimal workflow
disruption. The solution allows doctors to electronically create, manage and distribute patient encounter notes and allows for
patient communication via a patient portal. It captures lab and radiology results, provides clinical decision support tools and
allows doctors to send secure messages and clinical information to other practitioners and secure laboratory results to patients'
personal health records.
ChartMaxx® is our enterprise content management system for hospitals. Clients have contracted for its use at over
250 sites in North America to enable clinical and business workflows.
Interest in Joint Venture
In 2015, we contributed our business of central laboratory testing for clinical trials to a joint venture, Q2 Solutions. Q2
Solutions is the second largest central laboratory services company in the world and provides services to customers across all
segments of the biopharmaceutical industry. Clinical laboratory services are central to advances in genomics, precision
medicine and drug development.
Non-Commercial, Development State Drug Asset
The Company has an interest in a non-commercial, development state drug asset: an agreement with Merck & Co., Inc.
under which Merck has a license to our intellectual property for the development of, among other things, small molecule
inhibitors of cathepsin K. We do not control the development activities conducted by Merck. Merck may not successfully
develop or commercialize any compounds covered by the agreement, may not obtain needed regulatory approvals, and may not
sell any products that would generate royalty payments to us, and we may not receive any further payments under this
agreement. We are entitled to receive future milestone payments based on development progress for each potential product
under the agreement. We are also entitled to receive single digit royalty payments from the sale of drugs, if any, resulting from
the program. The obligation to pay royalties generally coincides with the life of the underlying patents. The Company is
evaluating options with respect to this asset.
THE UNITED STATES CLINICAL TESTING INDUSTRY
The U.S. clinical testing industry consists of two segments. The following table discusses how we believe the
industry is structured.
Table 17 - U.S. Clinical Testing Industry
Testing Approximate % of Total Industry
Hospital inpatient and outpatient testing 40%
Testing of persons who are not hospital
patients, including testing done in
commercial clinical laboratories, physician-
office laboratories and other locations, as
well as hospital outreach (non-hospital
patients) testing
60%
Consists of approximately:
35% - hospital-affiliated laboratories
53% - commercial clinical laboratories
Balance - physician-office laboratories and other locations
QUEST DIAGNOSTICS 2015 ANNUAL REPORT ON FORM 10-K