On Tuesday, Thermo Fisher Scientific (TMO -0.16%) announced its intent to acquire a leading global provider of testing technology, QIAGEN N.V. (QGEN 0.69%) for $11.5 billion. That deal valuation includes $1.4 billion of the Netherlands-based company's outstanding debt.

A major COVID-19 player overnight 

It's hard to imagine a well-run company like Thermo Fisher authorizing an 11-figure acquisition solely to chase the latest virus outbreak. That said, recent progress made by the molecular diagnostics specialist in developing a test for the novel coronavirus SARS-CoV-2 probably nudged Thermo Fisher's decision along.

DNA model

Image source: Getty Images.

Since January, Qiagen has been providing instruments and test kits used to detect the coronavirus that causes COVID-19. In late February, Qiagen announced initial shipments of test kits that can rapidly differentiate between the coronavirus responsible for COVID-19 infections and 21 other pathogens that present similar symptoms. 

A long-term gambit

Test kits for SARS-CoV-2 could be big sellers in the year ahead, but Thermo Fisher's bet on Qiagen is part of a much larger strategy. New therapies for cancer and other diseases are increasingly being tailored to match the specific genetic profiles of patients and their cancers. This purchase will immediately embed Thermo Fisher even more firmly in the spaces between drug developers and healthcare providers.

For example, Qiagen and Amgen (AMGN -0.01%) recently announced a collaboration to develop a companion diagnostic that will be used to gauge which cancer patients are eligible to receive Amgen's candidate treatment AMG 510 if that drug earns approval. The diagnostics industry is hyper-competitive, but having the only FDA-approved test that can determine which patients should be given a popular treatment could provide it with a significant and relatively reliable source of revenue.