Qiagen Enhances Presence in Japan

Consistent with its strategy of expanding in the international arena, Qiagen (QGEN - Snapshot Report) recently obtained the regulatory approval for its therascreen EGFR Mutation Detection Kit RGQ in Japan. Japan has emerged as the leading companion diagnostics market in the world and this approval holds immense potential for Qiagen to further expand in this segment.

EGFR or the epidermal growth factor receptor has been proved to play an important role in certain cancers, thus helping guide cancer treatments. Apart from EGFR, Qiagen is also focusing on KRAS assay to detect genetic mutations. Earlier in 2011, the company received approval in Japan for its therascreenKRAS Mutation Detection Kit. With Japan’s potential patient population being roughly 100,000 per year for EGFR and KRAS testing, the company is well positioned to establish its presence in this huge market.

Additionally, with estimates showing a higher rate of EGFR mutations among Japanese and other East Asian populations and non-smoking East Asian women being the largest potential market for EGFR-inhibitor anticancer drugs, the approval should help drive Qiagen’s growth in coming years. With this approval, Qiagen will be able to market its companion diagnostic tests along with EGFR-inhibitor drugs marketed by some leading pharmaceutical companies.

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 in the next several quarters. Qiagen’s long-term strategy involves technological advancement and new product introduction that can hugely increase its competitive advantage.

However, Qiagen is facing mounting competition in the molecular diagnostic space especially from players like Laboratory Corporation of America Holdings (LH - Analyst Report) and Myriad Genetics (MYGN - Analyst Report).

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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