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If Siemens Medical Solutions (Malvern, PA) intended to make a grand entry into the IVD market, it certainly has done so with a huge splash. Coming off the heels of its $1.86 billion acquisition of Diagnostic Products Corp. (DPC; Los Angeles) in April, Siemens signed an agreement to acquire Bayer Diagnostics (Tarrytown, NY) for approximately $5.4 billion. Pending worldwide regulatory approvals, the acquisition is expected to close sometime during the first half of 2007.
According to Siemens officials, one of the primary objectives in acquiring Bayer is that it will enable Siemens to tap into and expand its position in the molecular diagnostics market.
"For early-stage disease predisposition and prevention, a lot of it comes from diagnostics and specifically molecular diagnostics, because of its high specificity and sensitivity to detect disease very early on," says Mohammad Naraghi, MD, PhD, senior vice president of business development at Siemens. "That's one of the reasons why we wanted to expand our portfolio into molecular products, services, and technologies, which will enable us to provide early and specific diagnostics, prevention, and predisposition."
From the big-picture perspective, the acquisition of Bayer is a continuation of Siemens' overall strategy of developing integrated clinical work flow–oriented solutions by combining IVDs, in vivo diagnostics, and healthcare IT.
"With these acquisitions, we are now building a very strong IVD business," says Naraghi. "In doing so, we are building for the first time in the industry an integrated diagnostics company that brings together all of the assets, technologies, and people from imaging, lab diagnostics, and information technology."
For Bayer's part, while it will retain its diabetes care division, the decision to sell its diagnostics division was based on a long-term business strategy.
"The focus of Bayer Healthcare's strategy is to invest and grow its pharmaceutical and consumer-oriented businesses," says Tony Bihl, president of Bayer Diagnostics. "Since the diagnostics business was the one professional-focused business within the portfolio, it was a belief within Bayer that this was the best strategic move to take the next step in our diagnostics business and truly invest in this business. In addition, it was clear that it wasn't going to be possible to fund the required investment needed to grow every business at the same rate. The Siemens opportunity, which had been in front of us a number of times in the past, became a very good opportunity to divest the diagnostics business, and for Siemens to acquire and invest in it."
While Naraghi declined to comment on the structure of Siemens' new IVD business and the possibility of any future acquisitions of other IVD companies, he did state that Siemens does not plan to discontinue any DPC or Bayer product lines.
"These are two great companies; we understand the strengths of those companies, and there is absolutely no reason to discontinue any of their products," says Naraghi. "We think their products are complementary, and that's why we are pleased to have these two strong partners. They have their customer base, and they have their differences."
By acquiring two major IVD companies during a two-month span, Siemens has made its intentions clear for becoming a major player itself in the IVD industry, and strongly believes in the future of IVDs and their role in healthcare.
"This is strong proof of Siemens' ability and willingness to change and drive change, and to combine continuity with change," says Naraghi. "From that perspective, we have expanded our skill and technology base into biology, biochemistry, and molecular biology. We also think that growth opportunities come about from global megatrends, and the increasing demand for efficient, high-quality healthcare solutions is one of those megatrends. That's why IVDs are one of the focus areas in our strategic discussions. IVDs have a lot of potential in many emerging fields, enabling solutions to those challenges arising from global megatrends."
