Leading player in the diagnostic testing market, Quest Diagnostics (DGX), recently received the prestigious Medical Design Excellence Award (MDEA) for its Simplexa molecular diagnostic test on the 3M Integrated Cycler. MDEA, organized by the leading business-to-business media company UBM Canon, is a premier awards program that recognizes the achievements of medical devices manufacturers.
Under a global agreement with 3M (MMM), Quest’s Focus Diagnostics (the infectious disease diagnostic arm of Quest) has developed the Simplexa line of molecular test products, which was launched in 2009.The Simplexa/3M technology won a bronze 2011 Edison Award for new science and medical diagnostic product in April 2011.
In May 2010, Simplexa received clearance from the US Food and Drug Administration (FDA) to support the detection and differentiation of the 2009 H1N1 influenza virus. Other FDA cleared Simplexa tests include those for influenza A and B and respiratory syncthial virus. The Simplexa portfolio also includes tests for Clostridium difficile, Epstein Barr and BK viruses that are available in Europe.
Quest Diagnostics is focusing on areas with high potential in gene-based, esoteric and anatomic pathology testing, which accounted for approximately 36% of the company’s total revenues in 2010. The 11% growth in esoteric testing in the last reported quarter was primarily driven by double digit growth in Vitamin D testing, which is being increasingly used for a range of conditions such as osteoporosis, cancer, diabetes and heart disease.
The company’s portfolio was strengthened further with the US launch of AccuType IL28B test (in April 2011) for facilitating the prediction of patient response to peginterferon alpha-based therapy for hepatitis C virus (HCV) infection.
We are encouraged by Quest’s strong portfolio of tests, many of which are finding greater acceptance with time. Besides, the company is adopting strategies such as suitable acquisitions, increased sales force and targeting additional geographies to drive its top line.
Based on favorable demographic trends and strong focus, Quest will continue to remain one of the leading players in the industry. However, the company faces stiff competition from Laboratory Corporation of America Holdings (LH). Moreover, revenues derived from anatomic pathology have been under pressure for the past few quarters due to in-sourcing of the tests by physicians.
We are currently Neutral on the stock, which also corresponds to a Zacks #3 Rank (Hold) in the short term.
QUEST DIAGNOSTC (DGX): Free Stock Analysis Report
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