), one of the leading providers of commercial laboratory services
in North America, recently received the 510(k) clearance from the
US Food and Drug Administration (FDA) for its Simplexa C.difficile
Universal Direct Test that run on the 3M Integrated Cycler. The
test has been developed by Quest's Focus Diagnostics business and
enables rapid detection of Clostridium difficile-associated
disease, a potentially fatal virus infection that causes diarrhea
and other intestinal problems in patients.
Using a proprietary technique, this test can eliminate
nucleic-acid sample extraction, a process that is time consuming.
As per the recent data published by US Centers for Disease Control
and Prevention, currently around 14,000 people die annually
suffering from C. difficile-associated disease in the US. Thus, the
latest FDA approval for this new diagnostic test kit will enable
Quest to market the test in the US and this is expected to work
favorably for Quest's growth. Earlier in the second quarter of
fiscal 2011, Quest commercially launched the Simplexa C. difficile
Universal Direct Test in Europe.
In November last year, Quest received CE Mark approval for
Simplexa Flu A/B & RSV Direct test. Again in the same month,
the company received CE Mark approval for Simplexa Cytomegalovirus
(CMV) molecular test kit. This test enables detection of CMV, a
virus infection in patients with compromised immunity or those
undergoing organ transplantation.
Again in January this year,
received market authorization from the FDA for its STRATIFY JCV
Antibody ELISA testing service. As the first antibody-based blood
test of its kind to receive FDA approval, STRATIFY JCV enables
qualitative detection of antibodies to the polyomavirus JC virus
(JCV) for determining the risk arising from progressive multifocal
Quest Diagnostics is currently focusing on latent areas such as
drugs-of-abuse testing, gene-based, esoteric testing for cancer,
cardiovascular disease, infectious disease and neurological
disorders. The company is witnessing higher demand for these tests
compared to routine tests.
In order to bolster this specialized side of business, Quest has
been pursuing accretive acquisitions. The acquisitions of Athena
and Celera are expected to strengthen the company's foothold in
gene-based and esoteric testing. Apart from that, we are encouraged
by Quest's efforts to improve its sales effectiveness and
strengthen its relationship with health plans and payors.
The company is also focusing on women's health. It has launched
SureSwab for gynecological infections and also Spinal Muscular
Atrophy testing, which has been witnessing significant acceptance.
Encouraged by these factors, we expect higher sales from esoteric
testing in the forthcoming period.
However, the company continues to witness challenges with
testing volume. Moreover, the competitive landscape is tough 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. Quest currently
retains a short-term Zacks #4 Rank(Sell).We currently have a
Neutral recommendation on Quest and Lab Corp over the long
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