Qiagen's KRAS RGQ PCR Kit

Courtesy of Qiagen

Everyone pays lip service to companion diagnostics these days, but Qiagen ($QGEN) and its assay for mutations in the KRAS oncogene demonstrated that embracing diagnostics can mean big money for Big Pharma.

The FDA approved the KRAS RGQ PCR Kit the same day it approved an expanded indication for Erbitux, a cancer drug from Bristol-Myers Squibb ($BMY) and Eli Lilly ($LLY), and analysts hailed the pairing as a victory for personalized medicine.

Erbitux was already approved for head and neck cancer, but with Qiagen's assay identifying the colorectal cancer patients who would respond to the therapy, BMS and Lilly were able to persuade the FDA.

The test IDs patients with so-called "wild-type" KRAS genes, about 60% of whom benefit from Erbitux, according to Qiagen. Weeding out patients who won't respond to the drug could save about $600 million a year in the U.S., the company says, and that's music to the ears of payers.

While the Erbitux-KRAS test combo stood out in 2012, many in the life sciences world say the blockbusters of the future will come hand-in-hand with companion diagnostics. "Twenty years ago, the paradigm was that for every 100 cancer patients treated, 10 benefited," UBS analyst Gbola Amusa told the Financial Times. "If you could instead only treat those 10 patients, you get the same result without putting through 90 who don't benefit, and society gains. Ten years from now, this will be standard."

Qiagen's KRAS RGQ PCR Kit