Axis-Shield future looks healthy after new deal

AXIS-SHIELD, the Dundee-based medical testing kit maker, has been tipped for "substantial" revenue growth after yesterday announcing a new deal with one of its biggest American partners.

The company will develop a haemoglobin test to run on Abbot's flagship "Architect" automated testing system.

No value was placed on the deal but an Axis-Shield spokeswoman said the "market is big and growing" and that the firm "has a low market share so far".

The firm has already developed a similar test to run on Abbot's AxSYM system.

Haemoglobin is the protein that allows red blood cells to carry oxygen through the body.

Axis-Shield said that an international expert committee of diabetes specialists had recently recommended that the haemoglobin marker be used as the front line test to diagnose diabetes in the laboratory for appropriate patients.

The international expert committee included representatives from the American Diabetes Association, the European Association of Diabetes and the International Diabetes Federation, Axis said.

Ian Gilham, the Scots group's chief executive, added: "The agreement with Abbott to provide this important diagnostic test on its Architect system complements our previous development of an haemoglobin assay for AxSYM.

"The haemoglobin test is already available on our Afinion and NycoCard point-of-care systems and represents a significant and rapidly growing revenue generator for Axis Shield, and we are well placed to capitalise on the growing demand for this important analyte."

Dr Julie Simmonds, a senior research analyst at Piper Jaffray, said: "Architect is an important platform and haemoglobin is a widely used and rapidly growing test, therefore we believe this new agreement has the potential to result in substantial revenues for Axis-Shield.

"With rapidly falling multiples, a diversified business reducing risk and valuation below sector peers, we believe the current price is an attractive entry point for investors and we continue to view Axis-Shield as a key sector pick."

Shares in Axis-Shield closed down 4p at 397.5p last night, having risen as high as 409.95p in early trading.