Abbott-North West London Pathology Expand In Diagnostics

Illinois-based global medical device company Abbott Laboratories (NYSE:ABT) recently signed a $252-million managed equipment service contract with North West London Pathology (NWLP), hosted by Imperial College Healthcare NHS Trust. Abbott expects this alliance to solidify its footprint in the rapidly growing diagnostics market.

Per the terms of the collaboration, Abbott will be the authorized supplier of all analytical equipment and consumables, covering Abbott's Alinity ci and Alinity h series diagnostics instruments and AlinIQ, which provides professional services and informatics solutions.

Also, per NWLP, the alliance which presently covers 6% of the pathology market in the U.K. is expected to execute 26 million tests per year in the future.

Abbott has been focusing on gaining traction in the diagnostics segment. In June 2017, the company received CE Mark for Alinity hq, which has become the fifth new diagnostic system to be launched in Europe along with the ongoing rollout of four instruments in the areas of immunoassay, clinical chemistry, blood screening and point-of-care.

Interestingly, Abbott raked in 19.2% of total revenues from the diagnostics segment in the recently reported second quarter. This recent development is expected to help the company gain further traction in this space.

Per a report by MarketsAndMarkets, the global market for molecular diagnostics is projected to reach a value of $10.12 billion by 2021 at a CAGR of 9.1%.

Considering the market potential and Abbott’s current developments in the diagnostics space, this collaboration seems to be a strategic one.

We believe an ageing population, unhealthy lifestyle and rising awareness and expenditure in healthcare will continue to drive growth in the diagnostics market. However, this market is dominated by well established players like Quest Diagnostics Inc. (NYSE:DGX) and QIAGEN N.V. (NASDAQ:QGEN) .

Moreover, Abbott has been gaining investor confidence on consistent positive results. Over the past three months, the company’s share price has outperformed the broader industry. The stock has gained 11.7%, higher than the broader industry’s gain of 3.7%. The company has also outperformed the 2.6% gain of the S&P 500 market over the same time frame.

Zacks Rank & Key Picks

Abbott currently has a Zacks Rank #3 (Hold). A better-ranked medical stock is Edwards Lifesciences Corporation (NYSE:EW) , with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 2.7% over the last three months.

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