Qiagen's Point of Need in China - Analyst Blog

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Molecular diagnostics solutions provider, Qiagen ( QGEN ) continued to expand its presence in China with the recent point-of-need diagnostics deal with a Beijing-based medical device company Lepu Medical Technology. The contract will enable Qiagen to combine its ESEQuant Lateral Flow System with five cardiac biomarker tests of Lepu which detect acute myocardial infarction or heart attack. The new integrated system will be marketed in China by Lepu under the name LEPU Quant-Gold.

Qiagen claims that this system would provide proper support in emergency rooms by delivering rapid and accurate diagnosis of heart attacks. This advance diagnosis is expected to be given some importance since patients suffering heart attacks face the greatest risk of death in the first hour. China's State Food and Drug Administration (SFDA) has already approved Qiagen'sESEQuant Lateral Flow System, to work with Lepu's biomarker tests. This was considered to be a milestone for Qiagen as it marked the first regulatory approval in human healthcare on a global basis, using the ESEQuant platform.

Qiagen believes that the new deal coupled with the SFDA approval, will justify the company's goal to strengthen its global footprint. China, one of the fastest-growing healthcare markets, is the third-largest country in terms of revenues for Qiagen. The wide scope in this region has always attracted Qiagen to invest more. This latest deal with Lepu in the company's leading edge point- of-need diagnostic assay portfolio is expected to broaden the opportunity further for Qiagen in China.

Based on its strong ESE platform portfolio, Qiagen is currently working hard to expand in the emerging market of point-of-need diagnostics. Earlier in May, the company acquired Boston-based privately owned company AmniSure International. The acquisition enabled the company to access AmniSure's proprietary diagnostic test AmniSure assay, which determines rupture of fetal membranes in pregnant women. The company also joined a global initiative with the Bill and Melinda Gates Foundation to create a platform for point-of care-diagnosis for developing countries.

Given the substantial potential of the molecular diagnostic market globally, Qiagen is currently focusing on expanding its diagnostics products offering. The company currently derives around 50% of its total revenue from this segment, which is likely to increase with this new deal. Apart from Amnisure, Qiagen has acquired several companies to expand its product portfolio. The significant ones are Cellestis and Ipsogen in 2011.

Qiagen's focus on strategic initiatives to drive growth and profitability in the molecular diagnostics market is encouraging. Its innovative tests in the genomic/esoteric arena, with focus on the high-margin esoteric testing business, are expected to accelerate the company's sales growth on the back of growing market demand, not only in the domestic market but also internationally.

The growing market of molecular diagnostic testing is also luring several small clinical laboratory companies to introduce their portfolio of genetic tests.

Major Peers in the Molecular Diagnostics Segment

Qiagen is facing intense competition in the molecular diagnostic space, especially from the likes of Laboratory Corporation of America Holdings ( LH ) and Hologic Inc. ( HOLX ).  LabCorp has already expanded its area of esoteric testing and personalized medicine business with the acquisition of Genzyme Genetics. Recently in August the company acquired Medtox Scientific, a premier forensic and clinical laboratory which will enable LabCorp to strengthen its foothold in specialized toxicology testing. In the same month, Hologic acquired Gen-Probe -- a player in the field of molecular diagnostics, with special focus on the women's health segment.

Currently, Qiagen retains a Zacks #3 Rank (short-term Hold). Over the long term, we are Neutral on the stock, at par with LabCorp and Hologic.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: HOLX , LH , QGEN

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