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Morningstar | BioMerieux's FilmArray remains a key growth driver, but competition should increase.

We believe BioMerieux's niche leadership position in clinical and industrial microbiology, solid recurring revenue base, and expanding global presence bode well for this diagnostic player.BioMerieux has been particularly successful in clinical microbiology, the company's core division. The firm’s long history of microbiology knowledge and product innovation has solidified BioMerieux’s dominance in this market segment. The clinical microbiology market is relatively mature, in our view, with expected industry growth rates around 3%-6% annually. However, greater demand for industrial applications in the food industry, more automated workflow processes, and tools to reduce hospital infections could spur new growth avenues for the company.BioMerieux has begun to push into new geographies and market segments in search of growth opportunities, but challenges abound in these areas. Over the past several years, BioMerieux has invested heavily in local subsidiaries, especially in emerging markets like China, which are instrumental in extending the company's brand to new geographies and solidifying customer relationships. Recent acquisitions and partnerships have also focused on higher-growth markets in industrial microbiology, molecular biology, immunoassays, and personalized medicine. After acquiring AES Laboratoire in 2011, BioMerieux became a major player in industrial microbiology (primarily for bacterial monitoring within the food industry) along with 3M, but in these other markets, BioMerieux remains a niche player focused on urgent test needs among low-volume, small, independent labs and hospitals. The recent purchase of BioFire and its multiplex PCR FilmArray product line has worked out particularly well for BioMerieux by boosting growth and enhancing its competitive position in molecular diagnostics. Although the potential growth opportunity remains attractive in many of BioMerieux's niche areas, the company faces a crowded field of established foes like Roche, Siemens, Danaher, and Qiagen. Powerful opponents, pricing pressure, and emerging new technologies (particularly genome sequencing) could pose future challenges.