Roger Duggan, the chief executive of medical equipment group Immunodiagnostic Systems Holdings plc, speaks to Stockopedia News

When Roger Duggan brought his company to AIM in 2004, investors bought in at 51p per share. This month, stock in Immunodiagnostic Systems Hldgs (LON:IDH) was changing hands at 800p. For the company’s chief executive, the “astonishing” upward trajectory has followed a period of dramatic change for the diagnostic testing specialist, which is currently embarking on a major new offensive to sell a new generation of immunoassay kits to even larger markets.

IDS in behind a range diagnostic tests for the clinical and research markets, with a focus on immunoassays used in the area of bone disease, such as vitamin D and bone formation and loss markers. Its systems are used by labs and hospitals to measure or detect particular substances within a sample in order to help them diagnose or monitor a disease. In 2007 the company boosted its portfolio in the in vitro diagnostics market by acquiring Nordic Bioscience Diagnostics A/S for £17m and later Biocode Hycel S.A. for €23m.

Last year, the group launched a new fully-automated immunoanalyser called the IDS iSYS. With the new machine, and a growing number of analytes (different types of tests), the company is hoping the break into much larger market areas, complementing its traditional focus on manual testing kits. This month, it reported a 49% rise in annual revenues to £37.6m with pre-tax profits up 130% to 10.99m, as the iSYS gathered momentum. With the recent receipt of a 510(k) approval from the US Food & Drug Administration to market the iSYS in the US, IDS is now eyeing even more significant growth opportunities.

As Roger Duggan now prepares to step down from his role as CEO in October to concentrate on business development work at IDS, he spoke to Stockopedia News about the company’s drive for even greater market exposure.

Roger, with the introduction of the IDS iSYS last year, how challenging has it been to focus on both the company’s continuing work with manual products together with the roll-out of the new system?

I would say that it has actually been remarkably straightforward. We are specialists in immunoassay so our manual business and our customer base is very well defined. With the increasing volume, particularly in vitamin D, the ability to sell automated vitamin D tests into those accounts and additional accounts has been relatively straightforward. Over the last five years the company has changed quite dramatically, particularly with the acquisitions of Nordic Bioscience Diagnostics and Biocode Hycel, and it has been a continuum. Going forward now, having finally received the US FDA 510(k), it is going to be another step change in getting automation into the United States. But we still think our manual assays will continue to grow.

How do you see market demand being split between manual and automated testing systems?

The smaller manual accounts are largely in research laboratories and the higher volume manual accounts are small regional hospitals. What we are seeing is that a number of smaller hospitals, particularly in the UK, that have hitherto been sending away their vitamin D tests to Manchester or London or Liverpool, are now saying that the volume is sufficient to justify getting and instrument in. We have placed a good number of instruments on that basis. I think where the major change will come is that in those markets where most of the testing is done in reference laboratories, primarily in Germany and the US where there are huge laboratories that work 24/7, we have not been able to address those markets with manual assays because they are totally automated. Now, we can knock on their doors.

In that respect, what opportunities do you see in the US market and how have you prepared the company to take them on?

The US market is gargantuan, it is reckoned to be about 45% of the global market, most of which is automated. From a relatively small base we have seen our manual assay sales doubling year-on-year but now we will be able to address a different echelon of accounts – the likes of Quest Laboratories (NYSE:DGX) and LabCorp (NYSE:LH). The case is that our major competitor Diasorin (Milan:DIA) has been automated for years and they have been absolutely unchallenged in the US market. We have been fighting them in Europe with manual and automated assays in the last year, but in the US they remain totally unchallenged.

We have been in the US since 2003 and Ken Gibbs, who joined us to start that company and was at one of our major competitors, has built an excellent team who are mostly sales and product support related now. They are ex-Abbott, ex-Diasorin and are very experienced people in sales and instrumentation.

Turning to Europe, have you been able to present a competitive threat to other operators there?

Very much so. In the vitamin D market there are actually two different analytes. There is something called 1,25-Hydroxy Vitamin D, and we dominate that market and we have a better share than Diasorin with about 75% European market share. In the bigger volume market for 25-Hydroxy Vitamin D we have probably got less than 25% in Europe at the moment, but that is growing.

How do you intend to deal with the prospect of increased competition in your markets?

We have been anticipating competition, particularly in vitamin D, for a number of years now. We believe through the grapevine and ears to the ground that Abbott (NYSE:ABT), for instance, will launch a vitamin D product before the end of this financial year. We also know that Siemens (NYSE:SI) are working on a version of vitamin D. So in two or three years time we know that the competitive environment will be considerably different.

IDS has been a real AIM success story since it came to the market in 2004. What do you make of that share price performance during that time and how is your role now set to change?

It is astonishing, we floated at 51p in 2004 and the staggering thing is that I just see more prospects going forward, it is awesome. My change of role continues a succession policy that we started a couple of years ago with the appointment of Ian Cookson from Axis-shield (LON:ASD) to IDS. With the two acquisitions of 2007 and what has happened since then, the company is much bigger and much more complex and I am very happy to hand over to Ian Cookson. I can go back to my more entrepreneurial activity of talking to scientists and opinion leaders, because that is where I came from in the first place, and I am truly looking forward to it.