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Qiagen Targets Small, But Fast-Growing, Veterinary Testing Segment of Applied Markets With VLA Pact

Looking to grow its footprint in the veterinary testing market and drive growth in its applied markets segment, Qiagen this week formed a collaboration with the British Veterinary Laboratories Agency to commercialize a portfolio of PCR-based veterinary molecular assays outside the UK.
The firm, which has aggressively pursued expansion of its molecular diagnostics and sample preparation technologies franchise over the past couple of years, has recently placed a greater emphasis on selling into the $5-billion applied markets field. Though the veterinary testing market represents a tiny sliver of this total, Qiagen believes it is a high-growth opportunity on which it can capitalize.
Under the terms of the deal, Qiagen acquired a license to market seven assays for infectious veterinary diseases affecting livestock such as cows and horses. The tests included in the agreement are for bovine viral diarrhea in bovine blood, pathogenic leptospires in kidney samples, discrimination of Campylobacter jejuni from C. coli in culture, E. coli virulence targets in culture, rabies in tissues, Taylorella equigenitalis, and equine T. asinigenitalis.
VLA, which has already commercialized the tests in the UK, will validate the assays for Qiagen. Also under the pact, Qiagen will receive rights to future molecular diagnostic assays for veterinary applications developed by VLA.
Additional terms were of the pact with VLA were not disclosed.
Qiagen expects to launch the first products from the collaboration in mid-2007, after the tests have been validated by VLA based on Qiagen’s preanalytical and assay technology, according to Solveigh Maehler, director of investor relations for Qiagen.
She told BioCommerce Week via e-mail that the firm is not disclosing revenue targets for the tests. However, she noted that the overall global veterinary testing market is valued at around $100 million, with a growth rate of greater than 20 percent.
Qiagen’s veterinary testing business currently represents between 3 percent and 4 percent of its annual revenue, which was nearly $400 million in 2005 and is expected to be between $453 million and $462 million in 2006. The firm believes its current offerings in veterinary testing and molecular diagnostics will provide it with an edge against competitors as more PCR-based tests are developed for the industry.
“Qiagen’s 20 years of expertise [in] molecular diagnostics and being able to leverage this expertise into new markets, including veterinary medicine, represents a huge competitive advantage” for the firm, Maehler claimed. “In addition, Qiagen is the only company able to provide not only the test but also the sample preparation on a standardized automated platform.”
Looking Beyond Molecular Diagnostics
The agreement with VLA is another sign that, despite Qiagen’s overwhelming focus on building its molecular diagnostics and sample preparation products portfolio over the past couple of years, it sees the applied markets as an important revenue stream.
This past summer, CEO Peer Schatz said during a presentation to analysts and investors in New York that the applied testing market will represent a $5 billion opportunity by 2008, and Qiagen expects its preanalytical technologies to play a significant role in that segment (see BioCommerce Week 7/5/2006).
Schatz said that the applied markets segment of molecular testing — which targets applications including food and environmental testing, quality control, forensics, biosecurity, and veterinary applications — is expected to grow greater than 20 percent per year through 2015.
As an example of its progress in this area, Qiagen highlighted its inroads into the potentially lucrative markets for avian flu research and animal and food screening. Its PG Biotech business, which Qiagen purchased in September 2005 (see BioCommerce Week 9/29/2005), received approval from Chinese regulatory authorities in 2004 to sell the first PCR-based test kit for avian influenza virus screening. The company also sells an RT-PCR influenza kit for types A/B and avian flu (H5N1) virus, which it gained last year through its purchase of Artus (see BioCommerce Week 6/2/2005).

“Qiagen’s 20 years of expertise [in] molecular diagnostics and being able to leverage this expertise into new markets, including veterinary medicine, represents a huge competitive advantage” for the firm.

Qiagen isn’t the only BCW Index firm looking to the applied markets to drive growth. Waters, Bruker BioSciences, and Applied Biosystems have all pointed this year to the revenue potential of these markets.
"If you look at near-term and long-term, and where AB is placing its bets and making investments, clearly it's in this area of applied markets and sequencing tailored for applied markets, including software and kits for that space," said ABI President Cathy Burzik during a webcast in March (see BioCommerce Week 3/29/2006).
Even though the applied markets currently represent around half of Qiagen's total sales, Schatz said the firm will remain primarily focused on growing its molecular diagnostics business.

"What we wanted to show today was that the applied testing markets … share technologies with these other markets and has huge opportunities," he told BioCommerce Week during an interview after the July presentation. "But our near-term market is clearly molecular diagnostics."

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