Medical test kit firm goes for dominance

MEDICAL testing kit company IDS is making its biggest acquisition – a Danish company for £17m.

MEDICAL testing kit company IDS is making its biggest acquisition – a Danish company for £17m.

South Tyneside’s IDS (Immunodiagnostic Systems) has grown rapidly since floating on AIM at the end of 2004 and now the purchase of Nordic Bioscience Diagnostics (NBD) has confirmed the board’s growth ambitions.

With IDS’s market cap standing at £34.5m yesterday, the cost of the NBD deal equates to half the business’s stock market value.

It will be financed through £7m raised from the issue of new shares, and £10m through bank borrowing – though IDS said yesterday the latter deal has yet to be finalised.

IDS is buying the product lines of NBD, leaving the company’s research and laboratory testing arm to be spun off as a separate entity.

IDS will publish its full year results a week on Monday, July 16, with the company having already said it will exceed analysts’ expectations. Profits are set to soar 74% to £2.28m on sales up 20% to £9.9m.

Managing director Roger Duggan said he was confident that selling the NBD product range through IDS and its subsidiaries in the US, Germany and France would be more cost effective than using distributors, as the Danish company has done up to now.

Dr Duggan said: “This acquisition represents a significant step in becoming the dominant force in a rapidly expanding sector of the global IVD (in-vitro diagnostics) market.

“Bone and skeletal diseases such as osteoporosis, osteoarthritis and rheumatoid arthritis have massive sociologic and economic costs in an ageing population, and the advent of effective treatments will drive the need for earlier diagnosis and close monitoring of expensive therapy.

“With an enhanced product offering, IDS will be ideally placed to capitalise on this increased demand.”

IDS also said it planned to bring manufacture of NBD’s products into its own centre at Boldon, which is likely to create some jobs. That move is expected within 12 months.

Additional cost savings are also expected through savings on sales, marketing, research and administration.

However, NBD is already an extremely profitable business, with the most recent figures available showing earnings before interest and tax, excluding the spun-out businesses, of about £2.13m last year from sales of about £4.21m.

The NBD business is very similar to that of IDS – making diagnostic testing kits, primarily for diagnosing conditions such as osteoporosis and arthritis.

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