Qiagen (QGEN), a major provider of innovative technologies and products for pre-analytical sample preparation and molecular diagnostics solutions, recently noted that it exceeded its 2012 new placements target of the QIAsymphony modular laboratory workflow platform. This suggests that the company is working in the right direction and is in line with its strategy to increase the worldwide placements of its flagship platform QIASymphony. The company encouragingly provided data showing more than 750 placements of QIAsymphony at the end of 2012, decently higher than the 550 placements a year ago.
Qiagen noted that almost 70% of all these 750 placements were with Molecular Diagnostics customers, primarily through reagent rental agreements (revenues are recognized on a pro rata basis over the time of these multi-year contracts). However, the rest were with the Life Sciences customer classes, especially in Applied Testing customers (human ID/forensics, food safety and veterinary medicine) following the launch of new QIAsymphony protocols for these applications in early 2012.
Qiagen, with this encouraging performance, continues to expect QIAsymphony to act as the primary growth driver for the company over the next decade. The company is also optimistic about a strong uptake of this platform in the early years of its introduction. Accordingly, the company expects to see more than 1,000 placements of QIAsymphony by the end of 2013 with further focus on expansion of the test menu particularly in Europe and the U.S.
We are impressed with Qiagen, making good progress on strategic moves, all of which are supporting its objective to leverage leadership in Sample and Assay Technologies across four customer classes. Based on the worldwide rollout of QIASymphony platform, the company is perfectly on track to achieve its stated goal for near term as well as long term and improve the utility of this instrument with an expanded menu, such as the QIAensemble seriesin the fast growing markets.
Further, this rollout is also expected to create strong growth in demand for consumables use on the QIASymphony platform. As per the company, every placement creates an opportunity for annual consumable sales of anywhere between $30,000−$300,000. Earlier, in its last earnings call, the company mentioned about a number of customers with annual consumable levels above $100,000−$150,000, given the full version launch in late 2010 in Europe and early 2011 in the U.S. According to Qiagen, this is an impressive figure showing substantial longer-term growth potential.
Qiagen’s long-term strategy also involves technological advancement and product introduction that can hugely enhance its competitive advantage, especially from players like Quest Diagnostics (DGX), Laboratory Corporation of America Holdings (LH) and Myriad Genetics (MYGN). We currently have a long-term Neutral recommendation on QIAGEN. The stock carries a Zacks Rank #2 (Buy).
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