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The biggest M&A deals occurred in 2006 and earlier this year when Siemens Medical Solutions (Malvern, PA) bought Diagnostic Products Corp. and Bayer Diagnostics, followed by General Electric Co. (GE; Fairfield, CT) purchasing a significant chunk of Abbott Laboratories. By acquiring these companies, Siemens and GE intend to integrate IVDs with their diagnostic imaging and information technology assets, and bundle them together to create a one-stop shop for their customers’ diagnostic needs. With such comprehensive bundling of diagnostic solutions, Siemens and GE could gain significant strategic advantages by being able to structure diagnostic package deals and also negotiate pricing.
Some IVD companies took a different approach to expanding their product portfolios via acquisition by focusing on specific target patient groups. For example, in May, Hologic Inc. (Bedford, MA) bought Cytyc Corp. (Marlborough, MA) for $6.2 billion. Since both companies are market leaders in women’s healthcare, Hologic will become one of the largest companies focused exclusively on developing advanced medical technologies for women’s health. Analysts such as Manfred Scholz, PhD, of Scholz Consulting Partners believe that during the next couple of years, more IVD companies will likely adopt this acquisition strategy of purchasing other companies with products for similar specialized, well-defined patient groups.
Other IVD companies took yet another approach to their acquisition strategies by targeting those companies with specific technology components and intellectual property. The acquiring companies viewed such technologies as being essential to filling certain technology gaps that are critical to their continued growth. For example, last month, Qiagen NV (Venlo, The Netherlands) acquired Digene Corp. (Gaithersburg, MD) for $1.6 billion. In announcing this deal, both companies stated that one of the objectives is to create market and technology leadership in molecular diagnostics. Moreover, in addition to Digene’s overall expertise in this area, Qiagen was especially keen on acquiring its HPV-targeted molecular diagnostic test.
If such M&As continue to emerge, the trends mentioned above could indicate that the IVD industry may be undergoing a paradigm shift in how IVD companies do business. Simply focusing on producing individual tests may not be enough anymore. IVD companies may need to take a more holistic approach by developing diagnostic product portfolios that offer a wider array of more-comprehensive health solutions and guidance to physicians.
