Zacks_Analysts' Blog : Quest Extends Simplexa in Brazil - Analyst Blog

Quest Diagnostics (DGX), the largest provider of commercial laboratory services in North America, recently introduced its Simplexa Dengue molecular test kit in Brazil. Developed by the company’s Focus Diagnostics products business, the newly launched kit is a path-breaking commercial real-time polymerase chain reaction (RT-PCR) test. The company expects this test kit, which is a part of the Simplexa product line on the 3M Integrated Cycler, to be approved by National Agency of Sanitary Vigilance, an office of Brazil's federal government, which clears test kits for use in public as well as in private health labs for clinical testing of patient specimens.

The latest move on the company’s part is consistent with its strategy of further expanding its reach in high-potential areas. Presently, Dengue has emerged as the major source of illness in Brazil and over a million dengue cases have been recorded annually, thus accounting for nearly 60% of America’s total dengue infections. The company, accordingly, is looking forward to continue with the strong growth prospect of Simplexa, which has been a hallmark of Quest over the past few quarters.

Last month, Quest received CE Mark approval for Simplexa Flu A/B & RSV Direct test. Using a proprietary technique, this test can eliminate nucleic-acid sample extraction, a process that is time-consuming. Again in the same month, the company received CE Mark approval for Simplexa Cytomegalovirus (CMV) molecular test kit. This test enables detection of CMV, a potentially fatal virus infection in patients with compromised immunity or those undergoing organ transplantation.

Quest Diagnostics is focusing on latent areas such as gene-based, esoteric testing for cancer, cardiovascular disease, infectious disease and neurological disorders. The company is currently witnessing higher demand for gene-based and esoteric tests compared to routine tests.

In order to bolster this specialized side of business, Quest has been pursuing accretive acquisitions. The acquisitions of Athena and Celera are expected to strengthen the company’s foothold in gene-based and esoteric testing.

Quest’s primary competitor, Laboratory Corporation of America Holdings (LH) is also targeting the esoteric testing space and has acquired Genzyme Genetics to meet its objective. We are currently Neutral on Quest Diagnostics, at par with its peer, LabCorp.