Diagnostic kits supplier Immunodiagnostic Systems (IDS), which has impressed with another set of improved results, expects a looming acquisition and expansion into major markets will propel it to further success.

The current business is performing well and latest figures for the year to March portray sales rising 22% to £9.9m, with high operational gearing producing a 109% increase in pre-tax profits to £2.2m. Net cash of £875,000 led management to propose a 1.2p dividend per share.

Managing director Roger Duggan, a former biochemist and expert on sea snakes if you ever need one, almost bypasses mention of these results, so focused is he on prospects for the company. First, in order to address the $28bn fully automated test sector, IDS has worked with a Belgian manufacturer of such tests to obtain exclusive global rights for the bone and skeletal products of a system called 3X3, into which it can fit its diagnostic capability.

This enables little IDS to compete with the bigger boys for a share of much bigger markets. It has already secured a 3X3 clinical trial contract with a ‘top European pharmaceutical giant’ and expects more to come.

More immediately, the acquisition of Finland-based Nordic Bioscience Diagnostics should be complete as soon as bank finance is confirmed. ‘We have a facility letter from a UK bank,’ says chairman David Evans. If and when acquired, Nordic’s production will be moved to IDS’s Tyneside base to lower costs, and use of its headquarters will enable direct sales into Scandinavia, lifting margins.

After recommending the shares at 100p in 2005 and encouraging that there was ‘significant upside’ at 154.5p in July last year, investors who bought in early might book some profits, although current developments suggest further upside.