Market adoption of Meridian Bioscience’s (NASDAQ:VIVO) new molecular diagnostic testing platform illumigene will go a long way toward determining the company’s future.

Cincinnati-area Meridian is betting big on the technology, hoping it’ll help rescue the diagnostic testing company from its recent struggles. the company has reported declining year-over-year earnings in several recent quarters and twice in the last few months downwardly revised its full-year earnings outlook for 2011.

Meridian’s illumigene platform provides its hospital and laboratory customers with a simpler, cheaper option to test samples for certain types of bacteria without the use of expensive instrumentation. It represents Meridian’s first foray into molecular diagnostics, a means of analyzing the makeup of an organism at the genetic level.

AdvertisementMolecular diagnostic tests tend to offer better sensitivity and specificity than their antibody-based counterparts, said Zarak Khurshid, a senior research analyst with Wedbush Securities. “the world appears to be moving in the direction of molecular tests,” he said.

So for Meridian to stay at the cutting edge of its industry and build the best products it can, the company’s push into molecular diagnostics must succeed.

“Illumigene is critically important to Meridian’s future — the reason being that the diagnostic space is fiercely competitive,” Khurshid said.

Thus far, Meridian has just one illumigene test on the market, for C. difficile, a bacterium that can cause symptoms ranging from diarrhea to life-threatening inflammation of the colon. CEO Jack Kraeutler said in July that Meridian expects to begin selling a second illumigene test, for Group B Streptococcus, to international markets before the end of the year.

Kraeutler said at the time that the company had achieved 500 “placements” of the test, with 90 percent of those in the U.S. Those sales contributed $6 million in revenue in 2011. (Kraeutler didn’t return calls for this article.)

That performance is a little better than Khurshid had expected, though he warned the true test of the illumigene platform will be whether it can help Meridian regain market share it’s lost to competitors like Cepheid, Becton Dickinson and Thermo Fisher Scientific.

Cepheid, in particular, has bruised Meridian with a molecular C. difficile test that came on the market in 2009. Khurshid estimates that the Cepheid test has taken a 10 percent bite out of Meridian’s market share in each of the last two years.

If Meridian is going to succeed, it needs to turn that around quickly — and that’s among the company’s biggest looming challenges.

“the jury is still out as to whether illumigene will allow Meridian to take back some of its lost market share and whether they can develop additional tests on that platform to build a meaningful, high-growth franchise in molecular diagnostics,” Khurshid said.