• 4/19/2008
  • Hilden, Germany
  • Patricia Gugau and Mantik Kusjanto
  • www.guardian.uk

Qiagen plans to keep its powder dry for major acquisitions for now as it focuses on integrating its $1.6 billion purchase of rival Digene, its finance chief said.

“We still have sufficient firepower (for purchases),” Roland Sackers told Reuters in an interview.

But Qiagen first wanted to integrate Digene, which has made it the second-largest molecular diagnostics company in the world after Roche.
Digene helped boost cash flow at Qiagen, which has a high equity-to-assets ratio of 50 percent, he said. Qiagen also had a credit line for an undisclosed amount.

Digene’s flagship product is a test for detecting human papilloma virus (HPV), the cause of almost all cervical cancers. The market for HPV testing is estimated at more than $1 billion.
In the HPV field, Digene is the market leader. Roche and smaller rival Third Wave Technologies are also tapping the lucrative and fast-growing market.

Digene shares were up 0.8 percent at 1240 GMT, compared with a 0.2 percent rise in pan-European DJ Stoxx drug index.
Sackers said the company was still in talks about payments from health authorities in Europe for its HPV test kits, which have proven to be more accurate than the traditional Pap smear test. Only private health insurers have been willing to pay for its HPV test kits in Europe.

“I believe there will be a breakthrough,” he said.
Qiagen also dominates the genetic test kit industry. They are used to isolate nucleic acid — building blocks of living organisms like DNA or RNA — in biological samples for analysis.
Sackers added that he remained comfortable with the company’s earnings guidance for this year.

The company expected revenue of $875-$905 million, a rise of up to 40 percent from 2007, and adjusted earnings per share of 76-80 cents.
“We are on track,” Sackers said, adding the company is also looking to expand in Brazil, Mexico and India.

Asked whether the company could be a takeover target, Sackers said Qiagen could grow faster by staying independent than by being part of a bigger group.

“We are certainly growing by far the fastest and we are addressing one of the most attractive markets in the life science area,” he said. “The speed at which we are growing could not be faster if Qiagen were part of a bigger organisation.”

Qiagen, with a market value of around $4 billion, has not been the subject of any takeover speculation.

Morgan Stanley analysts said in a recent report that major drugmakers needed to reallocate capital into sustainable business areas like vaccines, molecular diagnostics and animal health to deal with structural problems facing conventional drug discovery.
Earlier this month, Swiss drugmaker Novartis said it would acquire Nestle’s stakes in eye care company Alcon for $39 billion.