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Thermo Fisher (TMO) Buys Mesa Biotech, Grows in Point of Care

·4 min read

Thermo Fisher Scientific TMO recently completed the acquisition of point-of-care molecular diagnostic company, Mesa Biotech. The agreement, which was announced in January, is worth $550 million.

Mesa Biotech at a Glance

Mesa Biotech’s PCR-based rapid point-of-care testing platform detects infectious diseases including SARS-CoV-2, Influenza A and B, respiratory syncytial virus (RSV) and Strep A. As per claim, this patented technology expands the availability of gold standard nucleic acid PCR amplification to point-of-care diagnostics.

Mesa’s Accula Flu A/Flu B, RSV and Strep A tests have already obtained FDA’s 510(k) clearance and Clinical Laboratory Improvements Amendments (CLIA) waivers. The Accula System also received EUA from the FDA for SARS-CoV-2 in-vitro diagnostic testing and is now available for use in patient care settings. According to the report, it, while providing results within 30 minutes, claims to have higher accuracy than other rapid tests on the market.

Strategic Significance

According to Thermo Fisher, this acquisition remains part of the company’s recent efforts to expand foothold in the field of molecular diagnostics at the point of care. Mesa's point-of-care platform will help the company to rapidly scale manufacturing volume, drive cost efficiencies and bring diagnostic testing to market faster and at greater scale.

Mesa Biotech, which had 2020 revenues of approximately $45 million, will become part of the Life Sciences Solution Segment of Thermo Fisher.

Thermo Fisher’s COVID-19 Progress So Far

In 2020, Thermo Fisher’s COVID-19 testing revenues accelerated as customer demand for sample preparation, PCR solutions and viral transport media remained robust. This resulted in generating $6.6 billion of COVID-19 response revenues. In response to the pandemic, the company gained regulatory approval to launch the TaqPath COVID-19 combo kit in March 2020, providing gold standard PCR-based test for customers at an unprecedented scale. The company also significantly expanded its portfolio of COVID-19-related products, including Amplitude solution for high-throughput PCR-based testing and TaqCheck PCR test for asymptomatic health surveillance. In addition, it launched a number of advanced products across base business to strengthen leading positions in analytical instruments, biosciences and bioproduction.

According to the company, its COVID-19 testing has reached an unprecedented level, creating a market-leading molecular diagnostics business in just a few months to support hundreds of millions of PCR tests around the world. The company is also actively engaged in projects to help, develop and produce vaccines and therapies. By the end of 2020, this led to $500 million in COVID-19 vaccine therapy revenues and the company expects this to increase to $1 billion in 2021.

Price Performance

Over the past six months, shares of the company have dipped 3.4% compared with the industry’s 1.4% fall.

Zacks Rank and Key Picks

Currently, Thermo Fisher carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the broader medical space are Meridian Biosciences Inc. VIVO, Owens & Minor, Inc. OMI and Envista Holdings Corporation NVST, each carrying a Zacks Rank #1 (Strong Buy). You can seethe complete list of Zacks #1 Rank stocks here.

Meridian Biosciences has a projected long-term earnings growth rate of 61%.

Owens & Minor has a projected long-term earnings growth rate of 45%.

Envista has an expected long-term earnings growth rate of 24%.

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