Consistent with its strategy of expanding in the international arena, Qiagen (QGEN) recently entered into a co-marketing agreement with China's largest independent laboratory network KingMed Diagnostics. This deal will make Qiagen’s digene HPV Test broadly available in the Chinese market, which has emerged as one of the leading companion diagnostics markets in the world. However, the financial terms of the agreement were not disclosed.
Qiagen’s digene HPV Test has been widely accepted as the "gold standard" in testing for high-risk types of human papillomavirus (HPV), which is primarily responsible for cervical cancer, the second most common malignancy detected in women after breast cancer. Registered in 2000, the digene HPV Test is currently available in most of the top-tier hospitals and private laboratories in China. KingMed Diagnostics will act as a central lab, allowing smaller hospitals in less-populated areas to offer this test and send samples to KingMed Diagnostics for processing and analysis.
Each year, around 500,000 women worldwide are detected with cervical cancer with 275,000 fatalities. In China, 80,000-100,000 new cases of cervical cancer appear annually with fatality of around 30,000-50,000. Thus, the deal holds immense potential for Qiagen to further expand in this segment.
We are encouraged by Qiagen’s focus on strategic initiatives to drive growth and profitability in the companion diagnostics market. Its innovative tests in the genomic/esoteric arena, specifically in the area of cancer with a focus on the high-margin esoteric testing business, are expected to accelerate sales growth over the next several quarters. Qiagen’s long-term strategy involves technological advancement and new product introduction that can hugely enhance its competitive advantage.
However, Qiagen is facing mounting competition in the molecular diagnostic space from players like Laboratory Corporation of America Holdings (LH) and Myriad Genetics (MYGN).
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 Myriad.
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