TRENDS AND PERSPECTIVES
Siemens AG (Munich) has once again stunned the IVD industry by signing a merger agreement to acquire Dade Behring Inc. (Deerfield, IL) for $7 billion. This merger is expected to be completed sometime early next year, at which point Dade Behring will become a wholly owned subsidiary of Siemens. According to Siemens officials, Dade Behring’s offerings in certain IVD product areas made it an ideal acquisition target.
“If you look at the portfolios of Dade Behring and Siemens Diagnostics, we’re probably the most natural fit,” says Tony P. Bihl, chief executive officer at Siemens Medical Solutions Diagnostics. “Where Siemens is strong, Dade Behring did not have as strong of a market position, and vice versa. But when the two portfolios are laid out together, we’ve got probably the broadest portfolio of products in the marketplace. Frankly, if you look at our positions in all of these areas, we now have the number one or two positions across four or five of the major testing disciplines. So if you think about the portfolios, it’s just a great match.”
This latest merger deal by Siemens follows its acquisitions last year of Diagnostic Products Corp. (DPC) and Bayer Diagnostics. Bihl says that the acquisition of Dade Behring is a continuation of Siemens’ strategy of developing integrated clinical work flow–oriented solutions by combining IVDs, in vivo diagnostics, and healthcare information technology.
“If you back up to why Siemens acquired DPC and Bayer, it was very simply to create the market’s first integrated diagnostics company by bringing together in vitro and in vivo diagnostics,” says Bihl. “For Siemens, they had the in vivo diagnostics and information technology, but needed to pick up some IVD businesses. DPC gave a good first entry as a strong immunoassay player. The acquisition of Bayer gave Siemens a broader-based diagnostic company with automation, blood gas, urine testing, and very importantly, a position in molecular diagnostics. And with the desire to be a top player and leader in the industry, the opportunity to acquire Dade Behring was quite attractive.”
Industry analysts expect that as Siemens and Dade Behring combine their operations, there will have to be an eventual reduction in jobs and other areas. Bihl says that there are going to be cases in which there may be redundancies, and that it will be imperative to make decisions quickly on such matters. However, he does not think there are a lot of areas in which Siemens will have to make significant reductions, such as in product lines.
“The two product lines are in many ways complementary,” says Bihl. “And in many ways, we can offer better solutions to customers. For example, Siemens has a strong automation position at the high-volume part of the market. At the same time, I don’t think there’s any dispute that Dade Behring has made some very strong success in automation, but more at the lower to mid-end of the market. So in that way, our early indications tell us our product lines are more comple-mentary than overlapping.”
Some industry analysts suggested that in the process of examining potential redundancies between the two companies, Siemens should consider maintaining as much of Dade Behring’s upper management as possible.
“A less tangible opportunity in this acquisition can be the potential retainment of arguably the best management team in the IVD industry,” says Manfred Scholz, PhD, president of Scholz Consulting Partners. “What Jim Reid-Anderson, chairman, president, and chief executive officer at Dade Behring, and his team accomplished may be what Siemens needs to make an integration and a good strategy work. It would be great for Siemens if the Dade Behring team feels up to the task.”
Completion of the merger will be subject to government regulatory approvals and other customary closing conditions. Despite the fact that the deal with Dade Behring will be Siemens’ third acquisition of a major IVD company during the past year, Siemens officials do not believe they will have to address any antitrust concerns by federal authorities.
“We’ve had a first review of this merger by our legal teams,” says Bihl. “We feel highly confident that we’ll move through the process fairly well. We think this strengthens the market rather than weakens any other players in the marketplace. As I said, although we will achieve very strong positions in many aspects of the market, if you look at the way we are complementary, we don’t see anything that’s anticompetitive.”
