Abbott's US$5 rapid covid test takes US$22b bite out of peers

[NEW YORK] The US emergency authorisation for Abbott Laboratories' rapid Covid-19 test sent competitors spiraling, wiping out at least US$22 billion in market value across more than a dozen companies.

Fears that Abbott will dominate the nascent market eroded more than a third of Quidel's value. Hologic and Quest Diagnostics sank as much as 12 per cent, while other diagnostic companies like Becton Dickinson, PerkinElmer, Bio-Rad Laboratories and Thermo Fisher Scientific fell at least 5 per cent.

Evercore ISI analyst Vijay Kumar wrote that demand for Abbott's new antigen test "could be ENORMOUS" but he doesn't expect supply to keep up, which should help other test makers.

William Blair analyst Brian Weinstein called the news a "massive announcement that should be meaningful to Abbott's financial outlook." At the same time, the "desperate need for testing" across the country means no one single test is going to be in place everywhere. He expects any incremental pricing pressure from Abbott's US$5 test will be offset by stronger-than-expected demand.

"Abbott's EUA (Emergency Use Authorization) does nothing to change our enthusiasm around the opportunities for these other companies," Mr Weinstein wrote.

BLOOMBERG