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Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:

Drug Tests: Spitting Into the Wind by Jim McTague

Summary: Millions of American workers undergo drug testing each year, by submitting a urine sample. The oral swab, a cheaper, faster, and less invasive mode of testing, has been developed by several companies, hoping to introduce a blockbuster new procedure. These are rapidly losing ground and valuation, however, as federal regulations, which dictate urine testing only, fail to change as predicted. Two companies have learned the difficulty of changing the estimated $400 million drug testing market: American Bio Medica's (OTCQB:ABMC) stock has dropped to under $1 from $2 in 2005, while Avitar's (AVTI.PK) plunged to 3 cents from $17.50 in 2004. In better shape are urine-testers Medtox (MTOX), with a gains-justified P/E ratio of 20 times estimated earnings for the next year, and OraSure Technologies (OSUR), an HIV tester with a market value of $375 million and an oral swab waiting in the wings. Should the Department of Health and Human Services prefer the cost savings that swabs offer, as well as their credibility (products offering 'clean' urine samples abound on the Web), investors may have something to salivate over eventually.
Related: ABMC Launches New Innovative Test System for the Rapid Detection of Drugs of Abuse in Oral Fluids

MTOX vs. OSUR 1-yr chart
mtox osur chart
Source: Oral Swab Makers Drowning in Regulation - Barron's