by Benjamin Shepherd, contributing editor Personal Finance
One of the most exciting — and potentially lucrative — trends in the biotech space is the emergence of personalized medicine.
The concept behind personalized medicine is simple: Based on genetic information medical practitioners can tailor health care solutions for individual patients. Here are three stocks poised to benefit from this trend: Qiagen
), Life Technologies
) and Roche Holding
Advances in gene sequencing have enabled researchers to identify the root causes of chronic diseases. These discoveries, in turn, allow drug makers to develop targeted treatments, with less damaging side effects, for a number of illnesses.
Netherlands-based Qiagen develops and markets high- and low-end technologies used in DNA analysis and diagnostic testing. It generates about 15 percent of its revenue from instrument sales, with the remainder coming from reagents and consumables used in testing.
Over the past three years, the company has grown its revenue at an average annual rate of 19 percent. Qiagen's fourth-quarter sales surged 17 percent from a year ago, bolstered in part by the launch of QIAsymphony, a system that automates sample processing and analysis to reduce work time and errors.
Qiagen had installed more than 550 QIAsymphonys by the end of 2011 and aims to expand this base to 750 units in 2012.
The firm has also benefited from limited vaccination for human papillomavirus (HPV) in the US. Although a vaccine against HPV is available, the treatment only inoculates against two of the 13 known high-risk strains of the virus.
Qiagen has developed low-cost HPV tests that detect and differentiate between the 13 high-risk strains of the virus and the five low-risk strains. With this knowledge, physicians can recommend the best course of treatment for a patient.
The firm has also reduced its debt load and amassed a sizable cash balance, moves that should enable the company to self-finance its expansion plans. Buy Qiagen up to 20.
One of the largest manufacturers of life science products, Life Technologies offers more than 50,000 reagents and sample kits for analyzing genetic information and proteins.
The firm's efforts to drive down the cost of DNA sequencing should pay off in coming years. Low-cost DNA sequencing would also expand the pool of information available to genetic researchers.