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In an attempt to manage its growing volume of genomic data, Qiagen (QGEN - Analyst Report) recently acquired Calif.-based privately owned company, Ingenuity Systems, Inc. Through the acquisition, Qiagen will have access to Ingenuity’s proprietary Ingenuity Knowledge Base and software applications, which is an advanced knowledge system and analysis solution for complex biomedical information. However, financial terms of the deal were not disclosed.

Over the recent past volume of data generation through next-generation sequencing (NGS) has been increasing. This has compelled Qiagen to realize the need for advanced solutions of Ingenuity. These solutions, according to the company, will act as a critical success factor in analysis and interpretation of complex biological data.

Qiagen claims that, with the Ingenuity products, the company will be able to widen its scope in the rapidly growing market of sequencing with faster and efficient data analysis. Ingenuity stated that, while an entire human genome sequence takes only 2 days to complete, the data analysis can take months and years. However, the Ingenuity product line needs some time (may be some minutes) for data interpretation.

Viewing the substantial potential of the molecular diagnostic market globally, Qiagen is currently focusing on expanding its diagnostics products offering. The company currently derives around 50% of its total revenue from this segment, which is likely to increase with this acquisition. Qiagen has acquired several companies to expand its product portfolio, the significant ones are Cellestis and Ipsogen in 2011.

We are encouraged by Qiagen’s focus on strategic initiatives to drive growth and profitability in the molecular diagnostics market. Its innovative tests in the genomic/esoteric arena, with a focus on the high-margin esoteric testing business, are expected to accelerate the company’s sales growth on the back of growing market demand, not only domestic but worldwide.

This is also provoking several small laboratory companies to introduce their comprehensive portfolio of genetic tests.

Major Peers in Molecular Diagnostics Space

Qiagen is facing intense competition in the molecular diagnostic space, especially from Laboratory Corporation of America Holdings (LH - Analyst Report). Currently, Qiagen retains a Zacks Rank #3 (Hold). However, other stocks in the medical device sector, carrying a Zacks Rank #1(Strong Buy), like HEALTHSOUTH Corp. (HLS - Snapshot Report) and Nuvasive Inc. (NUVA - Snapshot Report) appear impressive.

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