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QIAGEN Company Analysis

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Business Case Assignment

Company's overview:

"QIAGEN is a provider of sample and assay technologies for molecular diagnostics, applied testing, academic and pharmaceutical research" [1]. The company has been founded in 1984 [1] and began trading operations in 1986 as a groundbreaker in the emerging biotechnology sector by announcing an innovative method that standardized and increased extraction and distillation of nucleic acids from biological samples. As molecular biology has grown to shape many areas of life, QIAGEN has expanded to serve the full range of market demands [2].

QIAGEN has more than 4600 employees worldwide with over 35 locations in more than 25 countries and 60 sales offices around the globe. Peer M. Schatz is the company's Chief Executive Officer. The main operative headquarters are located in Hilden, Germany.  The company have been dealing with a steady and persistent growth strategy and they tried to direct investments towards the various growth sectors such as the QuantiFERON-TB test for latent tuberculosis control, next-generation sequencing with universal consumable products as well as the integrated GeneReader NGS workflow, Personalized Healthcare, the QIAsymphony platform, and differentiated technologies in cutting-edge areas such as liquid biopsy and microbiome analysis [3].

Based on QIAGEN 2016 fact sheet, 50% of company's market demand relates to Molecular Diagnostics such as disease prevention, profiling, personalized healthcare and point-of-need testing while the other half belongs to Academic Research, Pharmaceutical Industry, Applied Testing Such as Forensics, veterinary diagnostics and food testing. Also, 87% of company's products classed as consumables products such as sample preparation and test kits, assay components, reagents and bioinformatics solutions while the remaining 13% of its products are Instruments for automated processing of samples and molecular tests [3].

The company produces more than 500 products which can be divided into three categories: Instruments, Consumables and Bioinformatics to satisfy their 500,000 customer's need who they have worldwide [4]. One of the demanding product that they offer is complete robotics systems which allowing automated DNA extraction [5]. Company's main market is America with 47% of its revenue and 32% of the market belong to EMEA and the remaining 21% is from Asian Pacific & Japan's market [3].

Company's performance 2012-2016:

The company has had tons of ups and downs over the past five years which we are going to take a closer look at what has been happening to its products, markets and share prices in this case study.

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Figure 1    

According to company's 2012 annual report, they have had a 10 % grow in net sales at constant exchange rates to reach $ 1.25 billion. Company's sales grew among all geographic regions and customer classes, considering world macroeconomic challenges. Their profit in 2012 was more than what they have expected for the year and the net income increased 35% to $129.5 million [6].

Another success they gain was the approval from FDA for KRAS test which plays an important role in the diagnosis of metastatic colorectal cancer patients. They have also started developing complete next-generation sequencing workflow solutions for clinical purposes and introduced two more Business Areas in the company which are "Life Sciences" and "Molecular Diagnostics" [7].

After all ups and downs in 2012, as we can see the company's stock prices rose gradually during this year [Figure 1]. The company intended to introduce different novel assays for many purposes from blood-borne diseases to women's health. The top targeting countries are Brazil, Russia, India, China, South Korea, Mexico and Turkey which contributed 12 % of net sales and China contributed about 5 % of net sales. Company's revenue was increasing at much higher rate because the market was spreading widely by partnerships and cutting edge contents like the careHPV [6].

There are some weak points in net income and the balance between company's earning per share and return on equity. The company's earning rose up to 5.3% in 2012 which was company's minimum earning anticipation due to the fall in earning per share [9].

In 2013, QIAGEN acquires Ingenuity Systems and also CLC bio offering bioinformatics analysis software [1]. In February 2013, QIAGEN reveals sample-to-result Next-Generation Sequencing workflow designed for clinical research and diagnostics purposes. Moreover, QIAGEN and Lilly started to collaborate to develop and commercialize companion diagnostics in the same month [10].

The company had some weaknesses in terms of earning in 2013 and as soon as the first weak quarter reported, the shares had a downward trend since April 29th [11] [Figure 2.

C:\Users\User\Desktop\QIAGEN\2013.JPG

Figure 2

According to another online report, the fact that people postponed the use of healthcare services due to weak economy and jobs had a massive influence on the company's performance [12].

In 2014, QIAGEN showed a net sale of $1.3 billion which includes revenue contribution from Ingenuity and CLC bio acquisitions under purchase accounting rules [13] [Figure 3.

C:\Users\User\Desktop\QIAGEN\2014.JPG

Figure 3

Also in 2014, QIAGEN tried to increase its ability to offer a universal solution for next-generation sequencing by launching of 14 new gene panels and acquisition of Enzymatics. QIAGEN's QuantiFERON-TB was penetrating globally and China market was expanding. Shareholders benefits from higher returns as QIAGEN solidify its position in cervical cancer screening [14].

On the other hand, the sale figures in the Americas declined from the previous year which showed poor performance in 2014 especially huge decrease in HPV test product sales [15].

On February 11, 2015, Largest-ever pivotal study in China start supporting QIAGEN's QuantiFERON®-TB Gold over tuberculin skin test for latent tuberculosis infection. This seems to have a positive impact on company's share prices. QIAGEN expands QIAsymphony test menu in partnership with Seegene and company's companion diagnostic wins FDA approval for use with IRESSA in July 2015 with another positive effect on company's market [16].

2015.png

Figure 4

In the third quarter of 2015, company's reports Results showed solid improvements in its Academia, Pharma and Applied Testing customer. While total sales output was also decreased by challenges in Japan and China, weaker results were seen in Molecular Diagnostics [17].

The company's revenue of its American HPV testing has fallen in the first quarter of 2016, despite the fact that U.S. is providing about 50% of the company's total sale. During this period of time, GeneReader system was a big hope for QIAGEN to cancel out losses. The company also began to offer a price-per-insight model for small labs [18].

On July 27, 2016, QIAGEN launched "Digital NGS solutions with unique Molecular Index Technology to reliably detect all genetic variation and also launched novel integrated system for collection, stabilization, transport, storage and isolation of circulating cell-free DNA".

These had a massive impact on company's share prices [19] Figure 5.

According to company's report of the third quarter of 2016, "customer classes and regions grew and Molecular Diagnostics led the performance with 12% sales growth at constant exchange rates. Net sales grew 8% at actual rates to $338.7 million compared to the same period of 2015 and rose 9% at constant exchange rates (CER)" [18].

2016.png

Figure 5

During 2016, QIAGEN continued to develop its Sample to Insight portfolio and among recent developments, QuantiFERON-TB Gold was cited in a final recommendation issued by the U.S. Preventive Services Task Force (USPSTF). QIAGEN has Also had a strong 2016 performance for itsGeneReader NGS. QIAGEN continued to expand its portfolio of liquid biopsy solutions with the launch of the QIAseq cfDNA All-in-One Kit [19].

"The company have launched high-throughput solutions for human ID databases in October 2016". New improved chemistry for the first Sample to Insight next-generation sequencing solution to be made available to first customers in December 2016 as QIAGEN GeneReader NGS System announced to re-launch in U.S. market [20].

Europe, Middle East, Africa region was among main international regions that the company has seen growth. QIAGEN expected the trend to reverse in the second half of 2016 despite the fact that sales in Japan during the second quarter has a downtrend. On the other hand, there was a huge competition in terms of variety of services QIAGEN provides. As a result, similar companies may gain massive benefits of financial, operational, sales and marketing resources [21].

Conclusion:

In summary, it seems that since 2012, although QIAGEN has had fluctuated pattern in terms of share prices but it showed a steady and slow increase overall. Another important aspect of the company is the introduction of novel products and services for a variety of market needs and also finding new market regions year-by-year and is continuing to do so in the future.

By looking at QIAGEN's history, it is clear that the company is focusing on its goals to improve human's life by investment on R&D to allow its customers to gain outstanding progress and development in life sciences, applied testing and molecular diagnostics.

References:

  1. En.wikipedia.org. (2017). Qiagen. [online] Available at: https://en.wikipedia.org/wiki/Qiagen [Accessed 3 Mar. 2017].
  2. Qiagen.com. (2016). Financial Reports - QIAGEN. [online] Available at: https://www.qiagen.com/us/about-us/investors/financial-information/financial-reports/ [Accessed 3 Mar. 2017].
  3. En.wikipedia.org. (2015). Qiagen. [online] Available at: https://en.wikipedia.org/wiki/Qiagen [Accessed 3 Mar. 2017].
  4. Qiagen.com. (2015). Who We Are - QIAGEN. [online] Available at: https://www.qiagen.com/fi/about-us/who-we-are/ [Accessed 3 Mar. 2017].
  5. N.V., Q. (2001). History of Qiagen N.V. - FundingUniverse. [online] Fundinguniverse.com. Available at: http://www.fundinguniverse.com/company-histories/qiagen-n-v-history/ [Accessed 3 Mar. 2017].
  6. Qiagen.com. (2012). Financial Reports - QIAGEN. [online] Available at: https://www.qiagen.com/us/about-us/investors/financial-information/financial-reports/ [Accessed 3 Mar. 2017].
  7. Qiagen.com. (2012). History - QIAGEN. [online] Available at: https://www.qiagen.com/dk/about-us/who-we-are/history/ [Accessed 3 Mar. 2017].
  8. GenomeWeb. (2012). Investment Bank Mizuho Downgrades Qiagen, Alere. [online] Available at: https://www.genomeweb.com/mdx/investment-bank-mizuho-downgrades-qiagen-alere [Accessed 3 Mar. 2017].
  9. TheStreet. (2012). Qiagen NV Stock Downgraded (QGEN). [online] Available at: https://www.thestreet.com/story/11787526/1/qiagen-nv-stock-downgraded-qgen.html [Accessed 3 Mar. 2017].
  10. Qiagen.com. (2013). Press Releases - QIAGEN. [online] Available at: https://www.qiagen.com/us/about-us/press-releases/ [Accessed 3 Mar. 2017].
  11. Research, Z. (2013). QIAGEN Downgraded to Strong Sell. [online] Zacks Investment Research. Available at: https://www.zacks.com/stock/news/99824/qiagen-downgraded-to-strong-sell [Accessed 3 Mar. 2017].
  12. Stynes, T. (2013). Qiagen swings to loss on restructuring charge. [online] MarketWatch. Available at: http://www.marketwatch.com/story/qiagen-swings-to-loss-on-restructuring-charge-2013-07-30 [Accessed 3 Mar. 2017].
  13. Qiagen.com. (2014). Financial Reports - QIAGEN. [online] Available at: https://www.qiagen.com/us/about-us/investors/financial-information/financial-reports/ [Accessed 3 Mar. 2017].
  14. N.V., Q. (2014). QIAGEN Reports Results for Fourth Quarter and Full-Year 2014. [online] Prnewswire.com. Available at: http://www.prnewswire.com/news-releases/qiagen-reports-results-for-fourth-quarter-and-full-year-2014-290115201.html [Accessed 3 Mar. 2017].
  15. Research, Z. (2015). Qiagen Poised on Molecular Diagnostics, International Business. [online] Zacks Investment Research. Available at: https://www.zacks.com/stock/news/193299/qiagen-poised-on-molecular-diagnostics-international-business [Accessed 3 Mar. 2017].
  16. Qiagen.com. (2015). Press Releases - QIAGEN. [online] Available at: https://www.qiagen.com/us/about-us/press-releases/ [Accessed 3 Mar. 2017].
  17. N.V., Q. (2015). QIAGEN Reports Results for Third Quarter and First Nine Months of 2015. [online] Prnewswire.com. Available at: http://www.prnewswire.com/news-releases/qiagen-reports-results-for-third-quarter-and-first-nine-months-of-2015-538063051.html [Accessed 3 Mar. 2017].
  18. fool.com. (2016). Better Buy: Opko Health, Inc. vs. Qiagen. [online] Available at: 1. https://www.fool.com/investing/2016/07/02/better-buy-opko-health-inc-vs-qiagen.aspx [Accessed 3 Mar. 2017].
  19. Qiagen.com. (2016). Press Releases - QIAGEN. [online] Available at: https://www.qiagen.com/us/about-us/press-releases/ [Accessed 3 Mar. 2017].
  20. PRNewswire. (2016). QIAGEN GeneReader NGS System to Relaunch in U.S. Market. [online] Available at: http://www.prnewswire.com/news-releases/qiagen-genereader-ngs-system-to-relaunch-in-us-market-600504881.ht [Accessed 3 Mar. 2017].
  21. zacks. (2016). [online] Available at: 1. https://www.zacks.com/stock/news/231554/qiagen-molecular-diagnostics-amp-expansion-plans-on-track [Accessed 3 Mar. 2017].

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