Zacks_Analysts' Blog : Life, Quidel Tie Up in Europe - Analyst Blog

Life Technologies Corporation (LIFE) recently signed an agreement with Quidel Corporation (QDEL) to distribute and commercialize the latter’s molecular diagnostic assays in Europe. Financial terms of the deal were not disclosed.

According to Kim Caple, the head of molecular diagnostics at Life Technologies, the company currently derives 10% of revenues from molecular diagnostics, which is expected to increase in the next few years.

Under the agreement, Life Technologies, with a strong distribution network, will sell Quidel's portfolio of assays in Europe, from October. This will include Quidel’s Molecular Influenza A+B Real-Time RT-PCR Assay and hMPV (human metapneumovirus) kits in European markets.

Last week, Quidel had received CE Mark approval for “Quidel Molecular hMPV Real-Time RT-PCR Assay” for the detection of human metapneumovirus (hMPV) infection. The hMPV assay is Quidel’s second molecular diagnostic test to be cleared for marketing in Europe. Last month, Quidel’s first molecular diagnostic test for Influenza A+B received CE Mark approval.  

Both the kits can be used with Life technologies' 7500 family PCR Instruments that are installed in several clinical diagnostic labs across Europe. Later in 2011, the two companies expect to launch additional infectious disease kits in the European market.

Carlsbad, California-based Life Technologies Corporation delivers a broad range of products and services, including systems, instruments, reagents, and custom services. Its products include innovative technologies for capillary electrophoresis based sequencing, next generation sequencing, mass spectrometry, sample preparation, cell culture, RNA interference analysis, functional genomics research, proteomics and cell biology applications, as well as clinical diagnostic applications and water testing analysis. The company operates primarily in the life sciences research and the biopharmaceutical production markets.

Life Technologies has a strong foothold in the European market and derives approximately 30% of its revenues from this region. However, given the current economic scenario, the company continues to experience lower demand from academic and government-funded researchers in the US and Europe.

Due to weakness in the funding environment in both the US and Europe, the company experienced softer sales in several areas such as instrumentation and basic molecular, and cell biology reagents. We believe the recent agreement should help the company garner higher revenues from the European market.

Life Technologies retains a Zacks #3 Rank (Hold) short term that corresponds with our Neutral long-term recommendation on the stock. The company faces tough competition from players such as Thermo Fisher Scientific (TMO) and Illumina (ILMN), both of which are Zacks #3 ranked peers with Neutral recommendations.