Howard,
According to Table 2 on page 5 of Principal's 7 October 1996 research report, 44 million strep tests are performed in the U.S. annually, and 26 million are rapid. Figure Quidel sells its Strep A test for $3 each and captures the entire rapid market, then its annual Strep A sales would be 26m X $3 or $78m.
Quidel's 24 April 1996 press release states: "Over 20 million strep tests are performed each year in doctors' offices, clinics, and emergency rooms generating a market estimated at between $50 to $60 million annually."
The Wedbush Morgan Securities 29 March 1996 research report estimates (table of Quidel's sales by product line, page 6) Quidel's infectious disease tests would account for about 20 percent of Quidel's 3Q97 sales. For the 3Q97 this would amount to about $2.3m. How much of the $2.3m is Strep A? - Don't know.
So if Quidel sells $8 million Strep A tests in March (according to your source), then can we estimate the annual market for Quidel's Strep A sales to be about $8m X 6 months (the strep season months) or $48m?
Is it theoretically feasible for Quidel to sell $8m in March? - Yes, but to do so Quidel would have to sell almost the entire rapid test market or a combination of the rapid and culture test market. Is it probable? - Very doubtful; I just can't conceive Quidel picking up so much market share, so quickly.
However, even if the estimated $2.3m were all Strep A sales, it's much, much less than the current market, which could potentially total $48m plus in Quidel's third and fourth quarters. Consequently, there's the possibility Quidel will sell a whole lot more Strep A tests than the analysts are forecasting and beat their earnings estimates by a very wide margin.
Can you provide more specific information about the source of your information?
Mike |
