What happened

Several stocks of companies that make COVID-19 diagnostic tests were sinking on Thursday following big news from Abbott Laboratories (NYSE:ABT) on Wednesday evening. Abbott announced that it received FDA emergency use authorization (EUA) for a COVID-19 antibody test that costs $5 and provides results within 15 minutes

Shares of Co-Diagnostics (NASDAQ:CODX) were sliding 11.8% lower as of 11:52 a.m. EDT on Thursday. Luminex (NASDAQ:LMNX) stock was down 11.2%. GenMark Diagnostics (NASDAQ:GNMK) and Opko Health (NASDAQ:OPK) were hit even harder, with their shares falling 16.8% and 20.4%, respectively.

Gloved hand holding vial with label indicating a positive coronavirus result

Image source: Getty Images.

So what

COVID-19 diagnostic testing has quickly become a big business in 2020. It has also driven quite a few healthcare stocks a lot higher. Prior to today, Luminex stock was up 28% year to date. Opko's shares had soared nearly 174%. GenMark's share price had more than tripled. Co-Diagnostics has been the biggest winner of this group, with its shares skyrocketing 1,370% so far this year.

In July, Opko attributed its strong Q2 revenue growth primarily to its COVID-19 testing. It was a similar story for Co-Diagnostics, GenMark, and Luminex when they announced their Q2 results earlier this month. 

Abbott's new product could disrupt business for all of these companies. Healthcare providers are likely to flock to the company's cheap and quick COVID-19 antibody test. Abbott's competitors could see their coronavirus antibody test sales shrink dramatically.

Now what

There are two big questions looming now. First, how will Co-Diagnostics, GenMark, Luminex, and Opko respond to Abbott's shot across their bows? Second, will more disruption be on the way with a COVID-19 test for diagnosing infection by the novel coronavirus that's as inexpensive and quick as Abbott's antibody test?

Innovation is good. It can also be game-changing. And we're seeing the game now changing in the COVID-19 testing business as a result of Abbott's new product.