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Arrayit - Capitalizing On A Rise In Spending On Genetic Tests

|Includes: Arrayit Corp. (ARYC), MYGN, UNH

U.S. spending on genetic tests is set to see explosive growth in the next decade. One of the reasons why gene and molecular diagnostic tests are seeing increasing interest is because they have the potential to improve care across a range of health problems going forward. Now, this could definitely bring down healthcare costs, which is something the U.S. desperately needs to do.

Spending on genetic testing set to grow exponentially

Insurer UnitedHealth Group Inc. (NYSE:UNH) conducted a study on genetic testing through its Center for Health Reform & Modernization. According to the study, U.S. spending on genetic testing stood at $5 billion in 2010. More importantly, the study showed that spending on genetic testing will rise to $15-$25 billion by 2021.

As I said before, genetic testing has the potential to improve healthcare for a range of problems. This will be the main driver for genetic testing demand.

The UnitedHealth Group study expects spending growth rates over the next decade to be in double digits annually, which is twice the rate of growth for the overall in vitro diagnostics market.

More consumers aware about genetic testing

The future of genetic testing will depend to a large extent on consumer awareness. If the study from UnitedHealth Group is to be believed, then there is already widespread awareness about genetic testing even though not many consumers have had genetic tests themselves.

The study notes that 71% of the consumers it surveyed were familiar with genetic testing. Still, only 6% have had genetic tests themselves, according to survey. More importantly, the survey results showed that U.S. consumers have positive attitude towards genetic testing. This is an encouraging sign.

Capitalizing on anticipated growth in genetic testing

While genetic testing has the potential to bring down healthcare costs, the question investors are asking is how to capitalize on this opportunity. There are several players of all sizes in this field at the moment.

One of the major players in the field is Myriad Genetics Inc. (NASDAQ:MYGN), a Salt Lake City, Utah-based molecular diagnostic company focusing on the development and marketing of predictive medicine, personalized medicine and prognostic medicine tests. Just last week, MYGN reported its financial results for the fiscal year ended June 30, 2013. The company's revenue for the fiscal year 2013 rose 24% to $613.2 million, while net income registered an increase of 31% to $147.1 million.

While MYGN is one of the bigger players in the field, investors looking for emerging players can consider Arrayit Corp. (OTCPK:ARYC). Based in Sunnyvale, California, ARYC seeks to capitalize on its patented microarray manufacturing platform and revolutionary VIP™ genotyping technology. The company is led by Dr. Mark Schena, Ph. D., who is considered as the founder of microarray technology.

ARYC has also been decent progress on the operating front. In June, the company signed an exclusive three-year distributorship agreement with an India-based company, DHK Medical Products, to sell its genomic tests in India.

Disclosure: I am long OTCPK:ARYC.