Aoxin Q&M's acquisition will raise its exposure to PCR testing demand: Deputy CEO

AOXIN Q&M Dental Group is boosting its exposure in the Covid-19 testing space. The Catalist-listed company expects its acquisition of a stake in medical technology company Acumen Diagnostics to improve its top and bottom lines.

The deal is a "very good opportunity" for the company to expand its reach into the medtech business, which has been on a tear since the start of the Covid-19 pandemic, Aoxin Q&M's deputy chief executive Ryan San told The Business Times on Tuesday.

Shareholders can expect stronger financials as soon as the second half of 2021 ending December, and higher dividend payouts, he added.

Aoxin Q&M 1D4 , which was spun off from Q&M Dental Group QC7 and listed on the Singapore Exchange in 2017, had on Monday announced that it had entered into a conditional sale and purchase agreement to acquire 49 per cent of Acumen Diagnostics for S$29.4 million.

Aoxin Q&M will issue 127.3 million new ordinary shares at 23.1 Singapore cents per share as consideration for the acquisition.

Post-acquisition, Aoxin Q&M will hold 49 per cent stake in Acumen Diagnostics, while Q&M Dental Group will continue holding the remaining 51 per cent.

Acumen Diagnostics was set up in 2020 as a joint venture between Q&M Dental Group and Ong Siew Hwa, the founder of Acumen Research Laboratories. Today, Acumen Diagnostics operates Covid-19 clinical labs where polymerase chain reaction (PCR) tests for Covid-19 are processed.

PCR tests are required under several circumstances. Holders of the Business Travel Pass, for instance, need to take PCR tests at regular intervals upon return from travel overseas. Some groups of workers also have to participate in rostered routine testing every 14 days, in the form of a PCR test.

Dr Ong said Acumen Diagnostics has made several "improvements" over the past one year to deal with the increased demand. These include the addition of one new laboratory in Singapore, as well ramping-up of testing capacity to 7,000 tests per day from about 3,000 tests previously.

Acumen Diagnostics has also expanded its workforce to cope with higher processing volumes, automated certain workflow processes, and acquired more medical instruments.

Acumen Diagnostics has also made improvements to its testing conditions and the sensitivity of its PCR test kits.

"These (tests) are high precision, and very targeted," said Dr Ong. For instance, Acumen Diagnostics's test kits are now able to spot even a "very tiny little bit" of the virus in tests.

And by automating some processes, the company has also cut down on inconsistencies caused by human errors.

Dr Ong said that Acumen Diagnostics has exposure to various parts of the PCR chain including research and development for test kits, manufacturing, clinical lab testing, sending out swab test kits to various swab sites in Singapore, and then sending the results back to the Ministry of Health.

The company would be able to "quickly add" a third laboratory in Singapore if required, she added.

Beyond the Covid-19 pandemic, Dr Ong said Acumen Diagnostics was looking to apply PCR diagnostics to the dental industry. She noted that serious dental infections that involve different types of microorganisms, bacteria or viruses can be detected by PCR.