LabGenomics is rebounding after three days. Expectations that it will achieve significant results in the $70 trillion U.S. CLIA Lab (Clinical Laboratory Improvement Amendments) market appear to be influencing its stock price.
As of 9:07 a.m. on the 14th, LabGenomics was trading at 4,045 KRW, up 405 KRW (11.13%) from the previous trading day.
In August last year, LabGenomics acquired 100% of the shares of QDX Pathology Service, a CLIA Lab located in New Jersey, USA, for $60 million. By supplying not only its own products but also those of various domestic diagnostic companies, it has established a foothold for the entry of 'K-Diagnostics' into the U.S. market. LabGenomics aims to stand shoulder to shoulder with industry leaders in the U.S. CLIA Lab market such as Labcorp and Quest. The corporate values of Labcorp and Quest are highly regarded, exceeding 20 trillion KRW.
QDX provides diagnostic services related to gastrointestinal, respiratory, urology, and women's medicine in regions including New York, New Jersey, and California. It has contracts with major large insurance companies in the U.S. In the first quarter of this year, overseas sales reached 12 billion KRW, growing approximately 100 times compared to the same period last year. Prices for tests are set at about half the level of competitors, and diagnostic kits developed by LabGenomics will be sequentially serviced in the U.S.
LabGenomics is improving QDX’s profitability by producing lab-developed test (LDT) kits. A LabGenomics official stated, "We are developing a total of 13 kits for the transition to LDT kits," adding, "The respiratory LDT kit, developed for the U.S. CLIA Lab market and scheduled for first shipment in September, has a cost less than 90% of the respiratory kits previously used in the U.S." Amid the resurgence of COVID-19, this is seen as an opportunity for rapid growth based on price competitiveness. LabGenomics expects that supplying respiratory kits capable of COVID testing, based on its technology, will increase both sales and profits.
Previously, in May 2020, LabGenomics received Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA) for its COVID PCR kit. The COVID PCR kit is still authorized for use in the U.S. It can also diagnose recently prevalent COVID variant viruses.
A LabGenomics representative said, "Internalizing externally procured kits as LDT kits lowers costs and improves profitability," adding, "We are the only domestic company operating a large CLIA Lab and are building various strategic collaborative relationships."
LabGenomics is pursuing the acquisition of a CLIA Lab in the western U.S. Jo Jeonghee, CEO of LabGenomics USA, explained, "Following the successful acquisition of QDX, we are pursuing the acquisition of a second CLIA Lab in the West," and added, "Through CLIA Lab acquisitions, we will enter various diagnostic fields such as cancer diagnosis, enabling expansion and economies of scale."
Tim Rich, CEO of QDx, said, "QDX has the competitiveness to provide diagnostic results within 24 to 48 hours," and explained, "By introducing digital pathology and AI, we will provide more precise and faster test results." He added, "Based on sales and marketing capabilities in the U.S. Northeast region, we will create new and diverse opportunities with LabGenomics."
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