Demand will outstrip supply for the foreseeable future but the urgent requirement for tests will not be sustained
Diagnostics are often seen as the Cinderella of the health sector. This year, however, the Covid-19 outbreak has put a spotlight on the sector as never before. More than 200 companies around the world are racing to come up with more, and better, tests. Their success is vital to limit the pandemic’s economic and human cost. Gains could be big, but they are unlikely to be sustained.
Prices of tests are relatively modest. In the US, for instance, Medicare will reimburse labs $51 per test but manufacturers may only get a fifth of that. Even so, small companies could see a big spike in revenues. Take London-listed Novacyt, which had sales of £12.8m in its last financial year. The Anglo-French company’s Covid-19 orders were already worth nearly £18m by March 27. On Monday, shares jumped 12 per cent on news that France had approved its test. Shares have risen more than 1,300 per cent this year.
Big, if less spectacular, share price gains have been recorded in South Korea — a leader in commercialising Covid-19 tests. Shares in molecular diagnostics company Seegene and rival EDGC have more than tripled this year.
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