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December 10, 2013

Acton's Psychemedics Eyes Possible Brazil Expansion

With one of the highest traffic death rates in the Western Hemisphere, Brazil recently took a bold step by requiring all professional drivers to pass a hair drug test when they apply for license renewals every five years.

Effective Jan. 1, the Brazilian federal government hopes the law will act as a powerful deterrent to drivers, many of whom transport goods on 18-wheelers on Brazilian highways. By requiring hair testing instead of less-sensitive urinalysis, more professional drivers who use drugs and alcohol habitually will be prevented from renewing licenses, keeping the roads safer.

New Law Presents New Opportunity

Acton-based Psychemedics, already deeply entrenched in the Brazilian drug-testing market, sees it as an opportunity. The company, which currently operates one lab in Culver City, Calif., announced last week that it may build a second lab in Brazil as a result of the new drug-testing law.

“If the volume justifies it, we will definitely build a lab in Brazil,” CEO Ray Kubacki said Monday.

Today, Psychemedics’ hair tests – which are patented by the publicly-traded company and provide more sensitive detection of drug and alcohol use than urine tests, as well as many other hair tests on the market — are available in Brazil through the company’s independent distributor, Psychemedics Brazil. That partnership goes back 15 years.

“They’ve done a great job in securing the business that is there … hair-testing business. They’ve certainly been the leader down there, no question” said Kubacki, who noted the company provides drug testing in 31 countries.

Psychemedics Brazil will continue to provide Psychemedics drug tests at clinics throughout Brazil, and those will be shipped, as usual, to Culver City for analysis. But if the driver’s license-renewal law generates enough new business, Kubacki said it will be time to build a second lab, and the first overseas for the 26-year-old company.

By implementing a hair drug-testing requirement, Kubacki said the Brazilian government has gone a step beyond what the U.S. government requires of professional drivers. Here, drivers are required to submit urine tests to screen for drug and alcohol use, and those tests often fall short.

Kubacki cited data compiled by transportation company J.B. Hunt, a Psychemedics client, which found that of 65,000 specimens subject to both hair testing and urinalysis, urine testing identified 559 positive results, while hair testing identified 3,690.

More Than 43,000 Killed On Brazilian Roads In 2010

In Brazil, the difference will likely be meaningful. According to the World Health Organization (WHO), Brazil had a traffic death rate of 22.5 per 100,000 people in 2010. That’s much higher than rates of 6.8 in Canada, 6.7 in Guatemala, 14.7 in Mexico, and 11.4 in the United States. All told, 43,869 people died in traffic accidents in Brazil that year.

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