LabGenomics Smoothly Acquires CliaLab... "200 Billion Won War Chest to Serve as a Hub for Domestic Diagnostic Companies Entering the US Market"

Genome molecular diagnostics specialist LabGenomics announced on the 14th that the acquisition of the U.S. CLIA LAB is currently progressing smoothly. Since the management change to Luha Private Equity (Luha PE) in January, LabGenomics has been drawing up a blueprint for entering the U.S. market through the acquisition of CLIA LAB.

LabGenomics plans to establish a local corporation in the U.S. and continue acquiring CLIA LAB. Vice President Kyungchul Jang, formerly of KPMG and Seegene with extensive experience in acquiring and operating U.S. CLIA LABs, is leading the dedicated acquisition team. They are receiving support from four major global accounting firms, securities companies, specialized consulting agencies, and the Maryland state government, which has connections through COVID-19 diagnostic kits. Financial, legal, and operational due diligence on multiple CLIA LABs located across the U.S. is well underway.

Following the change of the largest shareholder, LabGenomics swiftly reorganized its structure and established its mission and vision through a declaration ceremony: “Leading the popularization of diagnostics with highly effective products and services” and “Becoming a company that leads the globalization of Korean diagnostic products and services through open R&D and open innovation.”

A LabGenomics official stated, “We will supply competitively priced and high-quality Korean products and services to the U.S., serving as a foothold for Korean diagnostics’ entry into the U.S. market,” adding, “We aim to become the only Korean company capable of monetizing in the U.S. diagnostic market.”

CLIA is a program by the U.S. Department of Health and Human Services (CMS) that provides regulatory standards for all human specimen testing practices and procedures conducted domestically in the U.S. Laboratories certified under CLIA can offer Laboratory Developed Tests (LDTs) that have undergone internal validation without FDA approval. To verify the accuracy and reliability of LDT services, appropriate quality control and certification procedures for test methods and results are required.

Several Korean diagnostic companies have attempted to enter the U.S. market through CLIA, but these were all very small labs with sales under 3 billion KRW. Moreover, the acquiring companies were not highly knowledgeable about the diagnostic service industry, focusing not on commercializing technology but on using newly developed diagnostic content for RUO (Research Use Only) labs and research purposes.

In contrast, LabGenomics, a diagnostic service company with know-how in operating central labs domestically, plans to acquire mid-sized labs. Their abundant financial resources, networks, domestic diagnostic service operation expertise, and content transplantation capabilities position LabGenomics as a game changer distinct from previous companies. The market environment is also favorable, as Korean diagnostic kits have gained global trust post-COVID-19. Seegene quickly secured a lead in the U.S. market with COVID kits based on past experience exporting STD kits to U.S. CLIA LABs; SD Biosensor expanded global COVID diagnostic kits through Roche; and LabGenomics has exported diagnostic kits globally via Siemens. The fact that most COVID kits in the U.S. are “Made in Korea” has significantly boosted trust in Korean diagnostic technology.

A LabGenomics official said, “Although it varies by test type, healthcare fees in the U.S. are much higher than in Korea,” and “Korean products and technologies also have cost competitiveness compared to U.S. products, so there will be many opportunities in the U.S. market.”

One of CLIA LAB’s core competitive advantages is its insurance sales network. Having a sales network is essential to synergize with competitive products and secure meaningful performance. Therefore, to respond to declining COVID sales through the acquisition of CLIA LAB, it is necessary to acquire a CLIA LAB of a certain scale that has an insurance sales network. However, finding a sizable CLIA LAB involves many considerations and is not easy.

As LabGenomics decided to acquire a sizable CLIA LAB, many companies have shown interest and shared plans for U.S. market entry. In the cancer diagnostics field, collaborations are underway with Novomics, Ngenbio, and GenCurix, while partnerships with new drug developers Abion and the RockOne Foundation are progressing to develop companion diagnostic clinical services for anticancer drugs.

LabGenomics focuses particularly on the anticancer field within diagnostics because it has the largest market size and growth potential. This aligns with the U.S. Biden administration’s Cancer Moonshot program, making it a high-growth market that U.S. diagnostic companies are also paying attention to. LabGenomics believes market penetration will be easier by entering with Korean companies that possess advanced technology.

Novomics is the world’s first company to develop a gastric cancer prognosis diagnostic kit. It has passed a technology evaluation for listing, demonstrating high-level technology, and is conducting diagnostic research on various cancers such as colorectal and rectal cancer, allowing expansion of the CLIA LAB service portfolio. Additionally, with the rapidly growing Asian population in the U.S. and increasing Asian dietary habits, gastric cancer incidence is rising quickly. The world’s first developed gastric cancer prognosis diagnostic kit is ready for immediate entry into the U.S. market.

Ngenbio is an NGS (Next Generation Sequencing)-based cancer diagnostics specialist. LabGenomics and Ngenbio are already providing various cancer diagnostic services domestically. Based on their synergy in Korea, they are working to launch services in the U.S. market. They plan joint research on liquid biopsy services that diagnose cancer through blood. The synergy between LabGenomics’ central lab foundation and Ngenbio’s analysis and software capabilities is highly anticipated.

GenCurix holds companion diagnostic and prognosis prediction kits. In June, at the American Society of Clinical Oncology (ASCO), comparative clinical results with Oncotype Dx, which holds over 90% of the global breast cancer prognosis prediction market, will be announced. LabGenomics has secured a diverse cancer diagnostic portfolio in the U.S. market by signing a business agreement with GenCurix.

Abion develops various new drugs including c-Met mutation anticancer drugs for non-small cell lung cancer (NSCLC). The RockOne Bio Convergence Research Foundation is a nonprofit public research foundation established based on Seoul National University’s Anticancer Drug Companion Diagnostics Project Group. The U.S. FDA mandates companion diagnostics to select patients likely to respond well to anticancer drugs through biomarkers during drug development. LabGenomics is collaborating with Abion and the RockOne Foundation on essential companion diagnostic clinical services for anticancer drug development. Furthermore, CLIA LAB’s diagnostic and analytical capabilities are crucial in global clinical trials. Global diagnostic service providers such as Labcorp and Quest are also strengthening their drug development clinical services, indicating a market with significant potential.

Meanwhile, LabGenomics is conducting SI investments and collaborations to secure excellent domestic diagnostic content. It has invested common shares in Novomics and convertible bonds in Abion. It also invested common shares in Ncitron, a health functional food marketing company, for linking with its DTC diagnostic kits. To enhance laboratory efficiency and strengthen diagnostic service competitiveness through cost reduction, LabGenomics is closely cooperating with diagnostic equipment companies such as Genolution and Curiox Biosystems. According to a LabGenomics official, these investments and collaborations serve as a hub for advancing Korean diagnostic technology into the U.S. CLIA LAB market.

A LabGenomics official explained, “During due diligence for the CLIA LAB acquisition, we verified that U.S. labs lack well-established systems compared to domestic labs, resulting in lower efficiency,” adding, “A U.S. CLIA LAB with sales around 100 billion KRW has similar company strength and processes to a Korean central lab with sales of 20 to 30 billion KRW due to insurance fee leverage, while smaller CLIA LABs are significantly less developed than Korean central lab systems.” He continued, “Therefore, we are seeking solutions with domestic companies to transplant high-value content and enable automation and efficiency, and have shared intentions for U.S. market entry with several companies.”

This content was produced with the assistance of AI translation services.