Omicron a big windfall for test makers Abbott Labs, BD among others

A parade of diagnostic test makers could see record revenue as Americans are tested for the fast-spreading omicron variant of Covid-19.

Abbott Laboratories, Quidel and Becton, Dickinson and Company were among the companies named in a report this week by the investment bank William Blair, which cited a “perfect storm” of events including holiday travel, the surge of omicron variant Covid-19 cases and ongoing spread of the Coronavirus that will contribute to high demand for Covid-19 tests.

The report came a day before President Joe Biden announced U.S. plans to distribute 500 million at-home Covid-19 tests in January due to the surge in omicron variant cases.

“Manufacturers of Covid-19 tests (both molecular and antigen) should continue to see massive, potentially record, revenues and cash flows as demand remains elevated for these high-margin products.,” William Blair analysts wrote in their December 20 report. “Unlike the 2020-21 winter, 2021-22 is showing signs of a meaningful influenza season that is starting to gain traction exactly at the time of Omicron taking hold and a massive wave of holiday travel. We believe this portends a possible perfect storm of respiratory illness that has the potential to drive testing numbers to levels we have never seen before.”

Already, testing has been a huge business for diagnostic companies. Abbott, for example, reported global Covid-19 testing-related sales were $1.9 billion in the third quarter of this year. In an October call to discuss that third quarter report, Abbott chief executive Robert Ford said the company had “shipped over 1 billion tests since the start of the pandemic.”

Abbott sells a diversified portfolio of tests including BinaxNow, an at-home test that turns around results within 15 minutes and can be administered at home, in schools, workplaces and other sites. Such a test, which still requires a nasal swab by a health professional, is akin to a pregnancy test in its use of “lateral flow technology” and is about the size of a credit card.

Demand for diagnostic tests like Abbott’s BinaxNow or Becton Dickinson’s Veritor are triggering some supply issues at drugstores and retail outlets. For example, Walgreens this week put a limit on purchases of at-home rapid tests due to what the drugstore chain called “incredible demand.”

“Due to the incredible demand for at-home rapid testing, we put in effect a four item purchase limit on at-home COVID-19 testing products in our stores and digital properties in an effort to help improve inventory while we continue to work diligently with our supplier partners to best meet customer demands,” Walgreens spokeswoman Emily Hartwig-Mekstan said. Forbes