Yesterday, we gave you an intro to why the clinical diagnostics sector looks primed for sustainable growth.  Many sources paint an optimistic scenario for the In Vitro Diagnostics (IVD) market. In a report from the Embargo Group of Austin,Tx, a survey of executives in the IVD and medical device industries said that 71% of the executives expect overall sales to increase in 2010 and 70% felt positive or somewhat positive about the overall business environment. Despite declining prices due to lower reimbursement for tests and increased competition, IVD companies are betting on strong returns from new products in advanced lab automation and molecular diagnostics.  Enterprise Analysis Corp.(EAC)  forecasts a 2010 growth rate of 6.1% for the industry versus 5.3% in 2009. Another trend in the IVD marketplace is that there is solid evidence of the diagnostic test value through health economic studies. The following test sectors may be poised for growth: molecular diagnostics (the need to control and treat viral and bacterial infections); automation and robotics because of the need to be more productive; Point of care testing(POCT), a specialty niche, driving tests closer to the patient and the home; and pharmacogenomics or personalized medicine -advanced molecular testing that will target therapy. Here are some of our sources of information as well as interesting reading in the space:

• February 2010 Clinical Laboratory News: An Optimistic Outlook for the Diagnostic Market
• Article : Molecular Diagnostics Take Center Stage Genetic Engineering & Biotechnology News – Biotechnology from Bench to Business

The confluence of factors such as technology, cost effectiveness, and new products convinces us that this is a long term trend. Below are some summaries of well-positioned companies in this space. Yesterday. we briefly discussed diagnostic companies already in our model portfolio. Here are  additional companies that have unique strengths in product, technology and  market focus. Of course, you need to do your own homework and research technicals before buying any of these stocks, they can be volatile: Qiagen (QGEN) $21.5 Built largely through acquisition (Digene-leader in HPV testing) with a strong R&D base, diverse product line in tools, molecular diagnostics and automated solutions, Qiagen is still digesting acquisitions. Because of their strong technology base, they are able to partner with drug companies in drug development and companion Dx. At $1B revenue level with profits forecasted at 4.5% in 2010. Forward PE at 23 with P/S at 5. Sequenom (SQNM) $5.3 An emerging diagnostic and genetic analysis company focusing on translating genomics into biomedical applications. SQNM is starting to recover  from serious clinical regulatory issues involving a Down Syndrome test last April and have  launched a fetal sex determination test SensiGene Fetal(XY) performed at its own CLIA certified diagnostic laboratory. Earlier this month SQNM launched a fetal test for RHD genotyping. Total Company revenues are in the $40M range with a loss forecasted at about $1.00/sh. in 2010. Blackrock recently took a 6% stake in the Company. SeraCare (SRLS) $3.50 (Recommend in November at $2.75) SeraCare provides services, diagnostic reagents and controls . New products were launched in January. The Company was built through acquisition and is in a turnaround mode with 2010 revenues forecasted in the $50M range and an EPS of $0.25/sh.2010 PS is 1.5. -- Rod Raynovich, Raygent Associates (www.raygent.com) Disclosure: The author of this post trades actively in biotech and is currently long SQNM