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In an attempt to expand its companion diagnostics portfolio, Qiagen N.V. (QGEN - Analyst Report) entered into a new co-development agreement with global pharmaceutical product manufacturers Eli Lilly and Company (LLY - Analyst Report). Based on this “master collaboration”, the companies will form a partnership on all the future projects to develop and commercialize companion diagnostics for pairing with Lilly’s investigational and approved medicines across all therapeutic areas. Financial terms of the agreement have not been disclosed.

Qiagen expects this deal to be accretive in terms of expanding the scope of use of its companion diagnostics assay as well as simultaneously developing diagnostic products with the Lilly compounds.

This agreement forms the second landmark in Qiagen’s long standing relationship with this pharmaceutical major. Earlier in 2011, both the companies entered into a partnership for co-development of companion diagnostic for an early stage investigational compound known as a Janus kinase 2 (JAK2) inhibitor.

Presently, Qiagen offers a broad range of tests covering more than 30 biomarkers, which are already marketed in select regions of the world for use in personalized healthcare. The company also works in collaboration with more than 15 pharma companies in order to co-develop companion diagnostics. Like several others, this latest companion diagnostic collaboration with Lilly will offer a cost-effective way to maximize the value and benefits of potential new medicines, while reducing the risks in medicine development.

We are encouraged by Qiagen’s good progress and strategic moves, which complement its objective to leverage leadership in Sample and Assay Technologies across its four customer classes. Last month, the company made a regulatory submission of its therascreen EGFR RGQ PCR Kit a.k.a therascreen EGFR test to the U.S. Food and Drug Administration (FDA) as a proposed companion diagnostic to guide treatment with Afatinib. Afatinib or Tomtovok (proposed name) is a new investigational oncology compound by the German drug major, Boehringer Ingelheim.

Companion diagnostics is currently gaining significant traction and peers like Myriad Genetics (MYGN - Analyst Report) are establishing themselves as strong players in this market. However, this latest move on Qiagen’s part is expected to strengthen its foothold in this market by combining its excellence in companion diagnostics with Lilly's strong scientific and global background.

Qiagen currently retains a Zacks Rank #3 (Hold). Other medical stocks such as ResMed(RMD - Analyst Report) carries a Zacks Rank #1 (Strong Buy) and warrants a look.

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