The FDA’s approval of Pfizer’s Xalkori (crizotinib) represents a leap forward for both personalized medicine and Pfizer’s R&D turnaround, but its commercial success hinges on a pricey diagnostic array by Abbott’s Vysis.

The twice-a-day treatment, priced at $9,600 per month (or $115,200 per year), is targeted to a specific genetic mutation that afflicts 3%-5% of non-small-cell lung cancer patients, many of them non-smokers. Pfizer partnered with the Abbott unit on a companion diagnostic test, dubbed the Vysis ALK Break Apart FISH Probe Kit, that detects the abnormal gene responsible for those cancers.

“The approval of Xalkori with a specific test allows the selection of patients who are most likely to respond to the drug,” said Dr. Richard Padzur, MD, who heads the oncology drug unit of FDA’s Center for Drug Evaluation and Research. “Targeted therapies such as Xalkori are important options for treating patients with this disease and may ultimately result in fewer side effects.” In clinical trials, half or more patients benefited from the drug, and the one-year survival rate was 77%.

However, finding those patients that would respond to the treatment won’t come cheap. Abbott told Forbes’ Matthew Herper that the test would cost around $1,500, with $250 going to Abbott and the rest to the lab. If testing were to become universal, that could mean around $30,000 spent on tests for every patient that gets the drug, Herper estimated.

“While this has been found most commonly in patients with adenocarcinoma, it’s not completely restricted to those patients,” said Pfizer SVP clinical development and medical affairs for oncology Mace Rothenberg, MD. “So we feel that, especially with the increasing insights we have about genetic defects related to now 55%-60% of lung cancer patients, that it is appropriate to test all lung cancer patients for molecular abnormalities.”

The drug was fast-tracked through the approval process, and two post-marketing clinical trials are in progress. A similar drug/diagnostic combo, Genentech/Daiichi Sankyo melanoma treatment vemurafenib, won FDA approval earlier this month.

Pfizer engaged Abbott on crizotinib in 2009 based on Abbott’s expertise in molecular diagnostics and global reach.

“They understood exactly how to install the diagnostics across our clinical studies and run their regulatory program,” said Pfizer Oncology Business Unit head Garry Nicholson. “And we provided them with a therapeutic that would then pull their diagnostic on the market, so it’s been a very collaborative and productive exercise every step of the way.” The companies are keeping mum on their financial arrangements for the products.

Getting the green light on Xalkori, together with strong clinical trial results for Eliquis (apixiban), its promising blood thinner joint venture with Bristol-Myers Squibb, puts Pfizer’s “Innovative core” plans firmly on track. Also in the late-stage pipeline are renal cell carcinoma drug axitinib and tofacitinib, for rheumatoid arthritis and other autoimmune disorders. “For a company that many, including ourselves, have viewed as the poster-child for inefficient R&D spending, this is a remarkable achievement,” wrote Bernstein analyst Tim Andersen.