Novacyt has started its expected acquisition spree by making a smart acquisition of IT-IS International limited.
Purchased for a cash consideration of £10.1m, IT-IS is the exclusive manufacturer of Novacyt’s q16 and q32 rapid polymerase chain reaction (PCR) instruments.
While IT-IS pulls in revenue of £3.9m at a healthy margin with net profit of £0.8m – the acquisition by Novacyt essentially gives it greater control in its supply chain to meet demand for COVID-19 tests.
Why this is a smart acquisition for Novacyt
The rationale of this acquisition is sound. Novacyt has essentially acquired a key and long-standing partner as it looks to fulfill increase demand for its q16 and q32 PCR instruments.
Due to the increased volume that Novacyt will be putting through, its costs of goods will reduce and therefore improve the margin on instrument sales.
While a small acquisition, strategically it is a safe and sound one. This is expected to be the first in a number of acquisitions by Novacyt as it puts its large amounts of cash generated to good use and builds on its success.
Commenting on the acquisition was Novacyt CEO Graham Mullis who added that the acquisition will allow it to support demands for COVID-19 testing:
“We are delighted to announce this strategically important acquisition of IT-IS and we welcome the employees to the Novacyt Group. IT-IS has established a reputation as experts in the development of mobile and rapid PCR instruments. Novacyt has been working with IT-IS for more than five years through the sale of the q16 and q32 instruments. During this time, IT-IS has proven the quality, performance and reliability of its mobile PCR platform. This acquisition ensures that Novacyt is in a strong position to fulfil the growing market demands for rapid near-patient testing of COVID-19, as well as other infectious diseases.”