), a prominent player in the field of diagnostic testing, recently
received the U.S. Food and Drug Administration's ("FDA") 510(k)
clearance for its Simplexa Flu A/B & RSV Direct test, which was
developed by the company's Focus Diagnostics Laboratory and a
global technology company
). Subsequently, Quest Diagnostic launched this test in the U.S.
Earlier in 2011 this test received CE mark approval
As another addition to Focus Diagnostics' array of Simplexa
branded molecular tests, the new assay will operate on 3M's
Integrated Cycler technology for the qualitative detection and
differentiation of RNA of influenza A and B viruses and respiratory
syncytial virus (RSV), which are the common causes of respiratory
Being the first-of-its-kind moderate-complexity molecular test
among the Simplexa product line, it received Clinical Laboratory
Improvement Amendments ("CLIA") moderate-complexity categorization
mark by the FDA. Accordingly, from now on, this cutting-edge test
can be performed in the moderate complexity labs which lag
high-complexity medical support.
The alliance between Focus Diagnostics and 3M was first formed
in 2009 through an exclusive global collaboration. Since then,
several Simplexa molecular tests were introduced including the
first FDA-approved influenza A H1N1 (2009) virus test.
As the influenza and respiratory virus diseases are growing at
an alarming rate, reporting test results at a fast pace becomes
very important. In this scenario the Simplexa test kits are
expected to show encouraging results, further boosting Quest's
latent area of diagnosis testing.
Quest Diagnostics has been currently focusing on areas with high
potential such as gene-based esoteric testing for cancer,
cardiovascular disease, infectious disease and neurological
disorders. The company has experienced increasing demand for
gene-based and esoteric tests compared to routine tests.
In the recent past, Quest Diagnostics developed a number of
gene-based and esoteric tests. In September this year, the company
launched TERC test to help physicians recognize molecular changes
to cervical cells that increase the probability of cervical cancer
in women. The company believes that this test, which is designed as
an addition to Pap and HPV tests, will act as a second opinion for
doctors to confirm malignancy in the initial stages.
Earlier in May, the company expanded its endocrine diagnostics
portfolio with the introduction of four new test panels for
congenital adrenal hyperplasia (CAH), an endocrine disorder mostly
found in newborns, children and women. Earlier this year, Quest
acquired S.E.D. Medical that provides full-service drugs-of-abuse
Quest Diagnostics is relying on the strong growth prospects of
S.E.D. Medical, which the company expects to be in sync with its
strategy of further expansion in high-potential areas. Encouraged
by these factors, we expect higher sales from esoteric testing in
the forthcoming period.
In order to bolster this specialized niche, Quest Diagnostics
has engaged itself in accretive acquisitions such as Athena and
Celera. This apart, we are encouraged by Quest's efforts to improve
its sales effectiveness and strengthen its relationship with health
plans and payers.
However, the company continues to witness challenges with
respect to physician office visits, which remain soft. The
competitive landscape is tough as well, with the presence of
Laboratory Corporation of America Holdings
). LabCorp is also targeting the esoteric testing space and has
acquired Genzyme Genetics to meet its objective.
We currently have a Neutral recommendation on Quest Diagnostics
over the long term. The stock retains a short-term Zacks #3 Rank
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