With multiple coronavirus vaccines having gained emergency use authorizations (EUAs) by the Food and Drug Administration, it seems likely that COVID-19 testing will peak sometime in the near future. Nevertheless, companies continue to gain authorizations for new tests. In this video from Motley Fool Live, recorded on Dec. 21, Corinne Cardina, bureau chief of healthcare and cannabis, and Fool.com contributor Brian Orelli discuss the advantages of new at-home tests and what investors should look for if they’re thinking about investing in the space.
Corrine Cardina: The FDA has given out several EUAs over the past couple of weeks. Actually, just one today was from Quidel (NASDAQ:QDEL). But last week, the FDA gave an EUA to the first fully at-home diagnostic test that was made by an Australian company called Ellume. The test is called the Ellume. That can be bought at drug stores, no prescription needed. Another EUA for testing last week went to Abbott Labs (NYSE:ABT). That one, you do need a prescription. It’s done under the supervision of a telehealth provider. What impact could these new testing options have on the testing landscape, especially when you consider that the major lab companies have been more backed up with all the samples that do come to them?
Brian Orelli: I think that obviously more testing is better. I’m not sure how quickly they’re going to be able to roll out enough test to make a dent in the total number of tests that we’re running. There’s a couple 100 authorized tests, so adding one or two extra tests is not going to probably do that much, especially as they’re going to take a while to ramp up production of their tests, but definitely at-home testing are easier and if they’re available, would be helpful for patients.
Cardina: Definitely. Do you have any thoughts on investing in any of these companies that do make tests?
Orelli: I think the ones where the tests have to be run on a machine and the amount of machines that people have been buying, either small machines that go into doctor’s offices or large machines that go into laboratories. A lot of these companies are working under the razor-and-blade model, so you can think of the machine as the razor, and then the test as the blade. But each razor can use a whole bunch of different blades in different kinds of tests. So I think any company that is able to expand the number of machines that are in their customers, then that’s going to result in those customers using those machines for other tests; flu tests or other infectious STD’s. So all of these companies would add these machines, selling them for other tests. So anytime that you can get your products into your customer then they’re are more likely to use it once they’re used to using it for the COVID-19 test.
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