Last year, Andrew Shepherd, the chief executive of Omega Diagnostics (LON:ODX), told investors that while he was satisfied with 12 months of solid sales that the company had just delivered, he was nevertheless eager to seek out a value-boosting acquisition. This month, Shepherd reported back to the market on a year that not only produced the all-important transformational deal but also saw an equally important strategic agreement with fellow AIM company Immunodiagnostic Systems (LON:IDH). Together with finance director Kieron Harbinson and sales and marketing director Jag Grewal, Shepherd believes the events of 2010 have given Omega the opportunity to ratchet up its growth plans.

Until late last year Omega’s main focus was on the fast growing area of food intolerance and supplying tests for specific infectious and autoimmune diseases. With a distribution network spanning 100 countries, its products include the Genarrayt microarray system and the Food Detective self-testing kits, both of which help detect food intolerance in patients using in vitro diagnostics (IVD). However, in November the group took a strategic step into the allergy testing market with a £5.0 million acquisition of the IVD business of Germany’s Allergopharma. The deal was funded with the proceeds of a £7.75 million share placing and came at the same time as a licence agreement with IDS over the use of its widely recognised laboratory-based automated testing platform, the IDS-iSYS. This was important because Omega was not only substantially expanding its business through acquisition, but the related iSYS deal has opened the way for it to make a big splash in international allergy testing markets, particularly because the iSYS is already approved by the Food & Drug Administration (FDA) for use in the significant US market.

In the year to March 31, 2011, Omega enjoyed a 27% rise in sales to £7.9 million, with gross profits up by 30% to £4.7 million and pre-tax profit up by 25% to £0.74 million. Revenues in the food intolerance division grew by 21% to £3.6 million, in infectious diseases they were up by 8% to £2.8 million and in allergy and autoimmune they were up by 134% to £1.56 million. During the period the company expanded the coverage of its Genarrayt system to 95 systems in 24 countries (from 57 systems in 18 countries the previous year) and also…

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