Tracking Down the Superbug
By Rob Fannon, editor, The Medical Investor
July 27, 2007

Alexander Fleming discovered the first antibiotic – penicillin – in 1928.

A dozen years passed before drug companies could sort out large-scale production. Then, within months of the lucrative product launch, doctors observed bacterial strains resistant to the new drug.

And thus, the wicked cycle of antibiotic research began – discover a new antibacterial drug, only to witness resistant bug strains shortly thereafter.

Even as the world's antibiotic arsenal has grown substantially, more than 70% of bacterial culprits behind hospital infections are resistant to treatment. These infections account for 90,000 deaths per year, resulting in excess costs of $4.5 billion, according to the Centers for Disease Control and Prevention (CDC).

The most deadly infections are from the so-called "superbug," also known as methicillin-resistant staphylococcus aureus or MRSA. MRSA infections are deadly in about 30% of cases.

In the early 1970s, MRSA infections represented only 2% of hospital infections in the U.S. Today, that number has jumped to more than 60%.

One recent study concluded that about 50 of every 1,000 patients admitted to U.S. hospitals were MRSA carriers. MRSA infections cost about $40,000 per patient to treat. So clearly, it's in the economic interests of the hospital to catch MRSA carriers sooner than later.

But right now, the U.S. does not mandate such active surveillance programs. In countries like Denmark and Canada, where these mandates exist (and the tests have been commercially available), MRSA prevalence rates have been held down in the single digits range.

It's very likely, as this epidemic crisis escalates, the CDC will implement both mandatory reporting and surveillance programs for all health care facilities. The problem is that, right now, MRSA diagnostic tests can't deliver results for two to three days. Such delays can be deadly as carriers travel freely within the hospital before results are available.

That's about to change...

The FDA recently cleared a rapid-detection test for MRSA, that uses only a nasal swab and can provide results within hours. Even at $25-$30 per test, the savings for hospitals will be huge if screening every patient that comes in prevents just a few infections.

That's why I'm sure that the superbug legislation will be a windfall for the two companies that offer these rapid-detection tests...

And the bounty won't be limited to these two... Medical diagnostics is a booming industry. Diagnostics play a key role in the emerging trend of preventive medicine. Advances in molecular biology and genetics have created huge numbers of more sophisticated diagnostic tests.

Early disease detection means better outcomes... and cost savings for hospitals and insurers, who will be quick to adopt the new technology. Early investors in the makers of this new wave of products stand to make huge gains.

Good investing,

Rob Fannon