Medical Device Link.

TRENDS & PERSPECTIVES

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To say that Inverness Medical Innovations Inc. (Waltham, MA) has been actively acquiring companies would be an understatement. In October, Inverness acquired Bio-Stat Healthcare Group (Stockport, UK), a distributor of core laboratory and point-of-care diagnostic testing products to the UK marketplace, for approximately $33.4 million. In addition, Inverness will pay an earnout up to a maximum of approximately $14.6 million, based on Bio-Stat’s 2007 results.

Inverness followed up by entering into a scheme implementation agreement with Panbio Ltd. (Brisbane, Australia), under which Inverness will acquire all of the issued shares in Panbio for $A0.65 cash per share. The proposed scheme, which values the issued share capital of Panbio at approximately $37 million, is subject to approval by Panbio shareholders at a meeting scheduled for December 2007 and various other conditions.

Panbio develops, manufactures, and markets diagnostic tests, including tests used in diagnosing flavivruses. In particular, Panbio’s position in the dengue fever diagnostic market will help Inverness to achieve its goal of promoting personal health worldwide by responding to the recent spread of the disease throughout South America and elsewhere.

While Inverness officials could not be reached for comment for this article, Manfred Scholz, PhD, president of Scholz Consulting Partners (Medford, MA), believes that Inverness is now the premier roll-up company in the decentralized IVD market.

“According to its chief executive officer, Ron Zwanziger, Inverness is in the business of enabling individuals to take charge of their health,” says Scholz. “With the need to manage many more acute and chronic diseases still being underserved, Inverness has been actively acquiring companies and product brands in women’s health and pregnancy, infectious-disease diagnostics, drugs-of-abuse testing, and cardiovascular tests. While a few companies have some very successful products in these decentralized diagnostic segments, Inverness shows the strongest determination to build dominant product portfolios.”

Inverness finished up by entering into an agreement to acquire Alere Medical Inc. (Reno, NV), a provider of health and care management services helping patients with chronic illnesses manage their conditions through a combination of at-home monitoring, patient education, and nurse–patient relationships. The purchase price is $302 million, comprising approximately $125 million in cash and $177 million in Inverness common stock. The transaction is expected to close prior to the end of 2007, subject to satisfaction of regulatory and other customary closing conditions.

“The natural extension is to migrate into the chronic disease management market segment through the acquisition of Alere Medical,” says Scholz. “Inverness is filling the gap between the traditional IVD companies, pharmacies, reference laboratories, and consumer businesses. To date, only Inverness and Philips show a strong commitment to this emerging consumer health segment.”

Earlier, Inverness completed its acquisition of Cholestech Corp. (Hayward, CA) through the merger of a wholly owned subsidiary with and into Cholestech, after Cholestech’s shareholders approved the deal. As a result of the merger, Cholestech stockholders received 0.43642 shares of Inverness common stock for each Cholestech share, resulting in an aggregate issuance of approximately 6.8 million shares of Inverness common stock.

Cholestech is a provider of diagnostic tools and information for immediate risk assessment and therapeutic monitoring of heart disease and inflammatory disorders. Inverness expects opportunities to develop between Cholestech and its existing point-of-care organization.

“Cholestech provides important companion diagnostics for cholesterol-lowering drugs and dietary products,” say Scholz. “Generally, the value of Panbio is less clear to me than Cholestech. While Panbio adds tests that are used in the diagnosis of mononucleosis, its tests for dengue fever and others could become important for global markets, more so than the United States.”

These acquisitions cap off Inverness’s major purchase of last year when it entered into a definitive merger agreement with Biosite Inc. (San Diego). Inverness acquired all of Biosite’s outstanding common stock not already owned by Inverness in a cash tender offer for $92.50 per share, or approximately $1.67 billion. This acquisition followed an intense bidding war with Beckman Coulter Inc. (Fullerton, CA) that lasted for two months.