Molecular diagnostics solutions provider, Qiagen ( QGEN - Snapshot Report ) recently got the nod of the U.S. Food and Drug Administration (“FDA”) to market the therascreen KRAS RGQ PCR Kit (therascreen KRAS test), which helps in determining the responsiveness of the metastatic colorectal cancer patients to the drug Erbitux (cetuximab). Qiagen considers this FDA approval of the therascreen KRAS test as a major breakthrough in the company’s international expansion of its Personalized Healthcare franchise that comprises a huge portfolio of molecular companion diagnostics to guide treatments in oncology.

The drug Erbitux is an epidermal growth factor receptor (EGFR) inhibitor and is used to treat colon and rectum cancer. It is also beneficial for head and neck cancer treatment. Currently, this drug is marketed in the U.S. by Bristol-Myers Squibb Co. ( BMY - Analyst Report ) and Eli Lilly & Co. ( LLY - Analyst Report ) .

With the current estimation of roughly 110,000 colorectal cancer patients a year, Qiagen encouragingly noted that the annual sales of the KRAS test in colon cancer in the U.S. should be around $20 million annually. Hence, the company is expected to gain major traction in the companion diagnostics market on the heels of this latest development.

Notably, Qiagen already successfully markets a broad range of companion diagnostic tests covering 30 biomarkers in Europe, Asia/Pacific and Japan. The company currently offers 10 CE-marked tests based on real-time PCR technology or Pyrosequencing in Europe.

The new development should fit well in the company’s product portfolio as Qiagen has been pursuing the development of molecular detection platforms across the world. We remain 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 with a focus on the high-margin esoteric testing business are expected to accelerate sales in the next several quarters. Qiagen’s long-term strategy involves technological advancement and new product introduction that can hugely enhance its competitive advantage.

However, the company is facing mounting competition in the molecular diagnostic space especially from players like Quest Diagnostics ( DGX - Analyst Report ) , Laboratory Corporation of America Holdings ( LH - Analyst Report ) and Myriad Genetics ( MYGN - Analyst Report ) . Currently, Qiagen retains a Zacks #3 Rank (short-term Hold rating).