Abbott Laboratories (NYSE:ABT) has signed a deal with the government of Canada to potentially supply around 21 million of its Panbio COVID-19 tests, the latter announced on Tuesday. The move closely follows the approval of the test by Health Canada, the nation's healthcare industry regulator.

Panbio is an antigen test that can produce results on the spot in 20 minutes. It is also portable, making it ideal for testing in point-of-care sites outside of standard medical facilities.

This should alleviate the overcrowding seen at official testing centers in certain parts of the country. Some areas -- for instance, the province of Ontario, home to Ottawa, the capital -- are also struggling with a backlog of tens of thousands of samples from other tests that have yet to be evaluated.https://www.cbc.ca/news/politics/health-canada-antigen-test-abbott-1.5751939 

A coronavirus cluster.

Image source: Getty Images.

"To be clear, the strategy in terms of our procurements is not to replace the standardized testing model but to enhance the capacity of provinces and territories to keep up with the increasing demand for tests," Public Services and Procurement Minister Anita Anand was quoted as saying by the Canadian Broadcasting Company.

"Our strategy is one of diversification across various testing types and models," she added.

The government plans to distribute 8.5 million tests throughout the country by the end of this year. If those tests prove to be effective, Canada will exercise an option it holds with Abbott to obtain an additional 12.5 million.

No financial details of the arrangement have yet been made public.

Abbott's shares dipped by 2.1% on Tuesday, a steeper fall than that suffered by the S&P 500 index.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.