Question-and-Answer Session
Operator
Thank you sir. (Operator instructions) And we will take our first question from Greg Bolan with Wells Fargo. Please go ahead sir.
Greg Bolan - Wells Fargo
Thank you. Good morning gentleman. So Joe, just thinking about your continued strength out of your central lab business, so how are you feeling about central lab capacity at this point? Are there any plans to expand or are you just able to facilitate demand with existing capacity?
Joe Herring
Greg, we have actually the most scalable capacity in the company as in central labs. If you think about it, a big part of that is logistics, and the freight carriers that we use can put many more kits in the bellies of those jets, so that is really not a problem. The automation investments that we have made in our kit production line as well as on the IT systems, where we can accession kits and get them into the laboratory, expand our capacity significantly.
The overwhelming majority of the tests that are time sensitive for our clients are run in almost wiped out fashion on very modern testing platforms, and so when you think about it, the bottlenecks are really building the databases or specific for each individual study and that is a readily expandable capacity, and the ability to open kits in the back of our facilities early each and every morning, you know, and certain of those are lower scale positions that we can add very rapidly.
So, you know, we can double the size of our central lab without any substantial capital investments.
Greg Bolan - Wells Fargo
Okay, that is helpful. And then in terms of actual deal with Merck, do you expect the revenue to flow evenly as in roughly say $30 million per year for each of the five years, and then secondly do you expect the Rosetta margins to reach early development type levels over the next few years?
Joe Herring
Well, Greg there is a couple of different pieces there. First of all, recognize that Merck is a very innovative company that invested in this technology. They saw the need for personalized medicine, and they want to be able to provide products that are either based on a personal genetic information of patients. So that is sort of a win for payors and a winner for patients if you have only taken a drug that you know is going to work.
- To read the full transcript on Seeking Alpha, click here »
