Generation Health Growing Boston-Area Presence, Backed by Highland Capital Partners

3/18/09

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Lofberg, “and as of now there aren’t consistent programs and policies about what tests should be covered or what shouldn’t be covered.”

Lofberg, the former chairman of drug benefit management giant Merck-Medco (now Medco Health Solutions), says that Generation Health plans to negotiate terms with commercial labs regarding the costs and standards of genetic tests. The firm is also building a processing system that will connect the labs, itself, and its clients that provide health benefits. In addition, he says, the company is in the process of building an online repository of information for patients and doctors to find information about all available genetic tests.

Lofberg compares what Generation Health plans to do in the genetic testing market to what he and his colleagues did in building Medco into a powerhouse in the drug benefits management business. Franklin Lakes, NJ-based Medco (NYSE:MHS), which had 2008 revenue of $51.26 billion, is among the largest drug benefits managers in the country and fills prescriptions for millions of patients through its direct-to-patient services and network of pharmacies. Lofberg became an executive at the company in 1988 and served as chairman of the company prior to the spin-off of Medco from Whitehouse Station, NJ-based drug-maker Merck (NYSE:MRK) in 2003. (Walton, Generation Health’s new chief technology officer, is also a former employee of Medco.)

Highland Capital Partners in Lexington, MA, was the sole venture investor in Generation Health’s Series A round of financing, revealed last November. (The firm and Lofberg declined to say how much was raised in the financing, but website PE Hub reported it was $5 million.) Highland general partner Bob Higgins and principal Graham Gardner are on the startup’s board of directors. Gardner says the venture firm decided to back the company after spending more than a year researching the rapid adoption of genetic tests in clinical practice and the implications of this trend in healthcare.

Highland’s research led the firm to the founding team of Generation Health, which included Lofberg, former Medco executive Richard Schatzberg, David Margulies, founder and CEO of Correlagen, and Chris Kryder, who is founder and chief executive of D2Hawkeye. (D2Hawkeye was acquired in January by Jersey City, NJ-based data analytics firm ISO, but Kryder continues to lead the business as CEO of ISO’s Verisk Health unit.)

Lofberg, who credits Kryder and Margulies for the original idea for Generation Health, says that the company may establish its own office in Massachusetts by the end of the year. Meantime, the company will maintain a significant presence in the state in the offices of D2Hawkeye (Verisk Health) and Correlagen, he says.

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