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Pfizer's (NYSE: PFE  ) crizotinib is apparently the real deal. In addition to working on lung cancer patients, the drug appears to work in patients with anaplastic large-cell lymphoma -- at least for the two patients it's been tested in.

Normally I would mock data like this. The data reported by two Italian doctors (not Pfizer) in The New England Journal of Medicine is a brief report of two patients in an uncontrolled environment. There's no placebo control and two isn't exactly a large data set.

But these are very sick patients having failed multiple treatments. And the patients have remained cancer-free for at least five months. That's pretty remarkable if it happened spontaneously. It seems fairly likely that crizotinib is the cause.

Like Vertex Pharmaceuticals' (Nasdaq: VRTX  ) VX-770, which posted extremely positive data yesterday, crizotinib works by targeting a specific mutation in a subset of patients.

The bar for improving health outcomes increases with every new treatment developed, and personalized medicine can help that issue by using underlying genetic mutations to design specific drugs.

In the case of crizotinib and VX-770, the drugs clearly work really well on the patients in the right subset, but the specificity will limit sales. There are only so many patients with certain mutations.

The best way to play the increase in personalized medicine might be to invest in companies such as Abbott Labs (NYSE: ABT  ) and Myriad Genetics (Nasdaq: MYGN  ) , which are developing tests to determine if the drugs will work on an individual patient. Since all patients will need to be tested to determine if the drugs will work, the market for the test makers is considerably larger.

Looking for more stock ideas? Here are six stocks that David and Tom Gardner think you should be watching.

Pfizer is a Motley Fool Inside Value pick. Vertex Pharmaceuticals is a Motley Fool Rule Breakers pick. Motley Fool Alpha owns shares of Abbott Laboratories. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

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  • Report this Comment On February 25, 2011, at 12:05 AM, FarmaBiz wrote:

    But you can charge so much more. Granted the reduction in volume will over come the pricing, but is still the better path to go. Big Pharma is still so bloated in terms of cost structure. Cut there first, then premium pricing for strong efficacy.

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