In the not-so-distant past, the preferred exit ramp for young health-tech companies in Wisconsin was to be purchased by a bigger firm in California or elsewhere.
The planned acquisition of Genomic Health by Madison-based Exact Sciences Corp. has altered that pattern, with intriguing possibilities for the combined company, Wisconsin’s status as a health-tech leader and, most important, the fight against cancer.
Exact Sciences is coming off a robust quarter in which its DNA-based testing kit for colorectal cancer, Cologuard, was used to screen 415,000 customers and sales generated just under $200 million in revenue. On the same day those figures hit the markets, Exact Sciences jointly announced the $2.8 billion Genomics Health deal.
It’s a match that makes sense for both companies. Exact Sciences has focused on colorectal cancer detection so far while pursuing plans to combat other forms of the nation’s second-leading killer, with strategic partners near and far.
Genomic Health, based in Redwood, Calif., has a workforce of 900 compared to 2,300 for Exact Sciences, with a specialty that fits neatly into Exact’s cancer-fighting plans. Genomic Health targets treatment decisions by medical professionals, helping to take much of the guesswork out of what therapies are best for patients with breast, prostate and colon cancer.
Genomic Health’s lead product, Oncotype DX, is a prime example of “precision medicine,” which helps physicians predict how an individual patient will respond to chemotherapy.
Exact Sciences’ acquisition of Genomic Health has been approved by both boards but needs regulatory and stockholder approval to become final. Even then, there are solid competitors elsewhere in the cancer-detection space. However, the planned purchase already illustrates how Wisconsin health-tech firms are building networks and supply chains that span the state and well beyond.
There are business relationships in place involving three of the Madison area’s largest health-tech firms, Exact Sciences, Promega and Epic Systems. Exact Sciences also works with the Mayo Clinic and Pfizer, both of which have international reach. Epic has hundreds of major customers and a majority market share for electronic health records, especially with hospitals with 500 beds or more. Promega has about 4,000 products it sells around the world.
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It’s not just a Dane County game. Exact Sciences, for example, has a long supply chain that extends from New Richmond in western Wisconsin to Green Bay to southern Wisconsin.
GE Healthcare plants in the Milwaukee area and Madison employ about 6,000 people. GE Healthcare’s strengths are medical imaging, monitoring, biomanufacturing and cell therapy technology, with a supply chain that includes many component manufacturers. It’s a major reason why electromedical equipment ranks high on the Wisconsin export list.
Wisconsin is also home to two of the nation’s potential leaders in the safe and clean production of medical tracers and cancer treatment elements, such as molybdenum-99. Both SHINE Medical Technologies and NorthStar Medical Radioisotopes are based in Rock County.
Not to be overlooked: Major firms from around the world have been drawn to Wisconsin through their acquisition of Wisconsin-bred companies, with examples over time including Fujifilm, Mallinckrodt, Roche and Johnson & Johnson.
The combination isn’t lost on market analysts, who tend to follow coastal tech firms more closely because the industry has grown accustomed to expecting to find most action clustered there. The Exact Sciences deal attracted broad attention within the financial world, including from analysts who are known to people beyond Wall Street.
“You’ve got a gigantic diagnostic machine going now for one of the most terrible diseases ever known to man,” said Jim Kramer, the CNBC “Mad Money” analyst, in an interview with Kevin Conroy, the CEO and president of Exact Sciences.
Much work remains before that “gigantic” machine is humming as Conroy and others envision, but the ongoing process of building and fine-tuning it is putting Wisconsin on a bigger map.