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Qiagen Expands NGS Portfolio

Zacks Equity Research

Qiagen Inc., (QGEN) is all set to jump in the next-generation sequencing (NGS) bandwagon and plans to invest big to serve new and untapped areas like clinical research and molecular diagnostics space beyond NGS' current focus on life sciences research. The company expects to release the launch plan and specifications in early 2013.

The advanced initiative of Qiagen will help develop sample-to-result and cost-effective NGS workflows solutions, which will combine the company’s sample preparation and assay products with a next-generation benchtop sequencer, which was developed subsequent to the company’s recent acquisition of sequencing expert Intelligent Bio-Systems (declared lately). Additionally, the company will include new bioinformatics into the workflows, which came into existence after a recent collaboration with SAP AG.  The first sample-to-result NGS solution is slated to be launched in 2013.

The NGS market is currently growing by leaps and bounds and is estimated to be more than $1 billion within a year. We expect the NGS technology, which is currently emphasizing mainly on life sciences research, to grow further with greater focus and expansion into new areas with huge potentials such as clinical research and molecular diagnostics space.

This new product portfolio of Qiagen will cater to a large customer base with main focus on clinical research in Academia and Pharma as well as in some Molecular Diagnostics franchises, including select areas of Personalized Healthcare. Although Qiagen expects the expansion of NGS portfolio in the new markets to be dilutive to adjusted EPS by a penny in fiscal 2012 and by approximately 2 cents in fiscal 2013 but expects this to be accretive to the financial results from fiscal 2014 onwards.

We are encouraged by Qiagen’s focus on strategic initiatives to drive growth and profitability in the molecular diagnostics market. Its advanced initiatives to expand the NGS portfolio are expected to accelerate the company’s sales on the back of growing market demand, not only domestic but worldwide.

The NGS market is highly competitive with the presence of players like Illumina Inc. (ILMN) and Life Technologies Corporation (LIFE). In NGS, Illumina sells its Genome Analyzer instrument and related consumables and has emerged as a major provider in this growing market. Life Technologies directly competes in this space with Illumina with its Ion Torrent franchise. While Illumina launched its HiSeq 2500 in the beginning of 2012, the scheduled launch of Ion Proton Benchtop sequencer of Life Technologies in the second half of 2012 is expected to increase the competition in this space for Qiagen.

Currently, Qiagen retains a Zacks #2 Rank (short-term Buy). Over the long term, we are Neutral on the stock.

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