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June 18, 2010
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Diagnostic product maker Gen-Probe Inc (GPRO) has made a $50 million strategic investment in privately-held DNA sequencing firm Pacific Biosciences Inc (PacBio). The companies will collaborate on developing products based on their proprietary technologies.
Per the deal, the companies will combine their efforts to develop new clinical diagnostic systems, leveraging PacBio's Single Molecule Real Time (SMRT) DNA sequencing technology platform and Gen-Probe's diagnostic expertise. They will initially collaborate for up to 30 months with the goal of building a long-term relationship and improving diagnostic capabilities. Moreover, the companies will buy each other's products on preferred terms of trade.
California-based Gen-Probe has been a pioneer in the commercial and scientific development of nucleic acid testing (NAT) for the diagnosis of infectious diseases. The company sells its products in the clinical diagnostic as well as blood screening markets. Gen-Probe is a market leader in domestic gonorrhea and chlamydia testing with its PACE and APTIMA assay product lines.
Gen-Probe faces stiff competition from larger, more established firms in the molecular diagnostic industry such as Roche (RHHBY), Becton Dickinson (BDX) and Abbott Labs (ABT).
Gen-Probe is a leading pure-play molecular diagnostics company. The company's molecular diagnostic tests and instruments are designed to improve results and increase laboratory operating efficiency.
Gen-Probe's clinical diagnostics business performed strongly in the last quarter with revenues growing nearly 30% year over year.
Molecular testing enables real-time detection of the primary cause of a disease at a molecular level. Gen-Probe is well positioned to benefit from the ongoing market shift from traditional diagnostic methods (such as antibody-based assays) toward molecular testing, which offers greater precision and sensitivity in detecting biological events.
The global market for molecular diagnostic tests currently exceeds $3 billion and is projected to reach roughly $5 billion by 2011. The U.S. and Europe are the pioneers of molecular testing adoption and currently account for a major portion of the market. Gen-Probe's investment in PacBio underpins the compelling opportunity in this booming market.
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