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In an attempt to expand its Point of Need diagnostics portfolio, Qiagen (QGEN) recently acquired Boston-based privately owned company AmniSure International. Through the acquisition, Qiagen will have access to AmniSure’s proprietary diagnostic test AmniSure assay, which determines rupture of fetal membranes (ROM), most commonly found in pregnant women.

With roughly 30% of pregnant women undergoing this diagnostic test in the US, the acquisition of AmniSure will help Qiagen to widen its scope in in the growing market of woman health. AmniSure assay will expand Qiagen’s portfolio of test, which include the Qiagen’s digene HPV Test which has been widely accepted as the "gold standard" in testing for high-risk types of human papillomavirus (HPV), primarily responsible for cervical cancer.

This AmniSure assay earlier received clearance from the US Food and Drug Administration (FDA) for marketing and is reimbursable under most of the US state Medicaid plans.

Although the financial terms of the deal were not disclosed, Qiagen anticipates this acquisition to remain neutral to the company’s 2012 adjusted EPS, but accretive roughly by 2 cents in fiscal 2013. Further, Qiagen expects AmniSure to contribute around $12 million and $24 million to the company’s sales for the remainder of 2012 and full-year 2013, respectively. However, the company expects to incur transaction-related one-time charges and integration costs of $5 million in 2012.

Viewing 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 acquisition. Qiagen has acquired several companies to expand its product portfolio, the significant ones are Cellestis and Ipsogen in 2011.

We are encouraged by Qiagen’s focus on strategic initiatives to drive growth and profitability in the molecular diagnostics market. Its innovative tests in the genomic/esoteric arena, with a 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 domestic but worldwide.

This is also tantalizing several small clinical laboratory companies who are coming up in this regard with their comprehensive portfolio of genetic tests.

Major Peers in Molecular Diagnostics Space

Qiagen is facing intense competition in the molecular diagnostic space, especially from the likes 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 Genzyme Genetics.

Also, earlier this month, Hologic decided to acquire Gen-Probe (GPRO) -- 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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