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M&A Activity Among BCW-Covered Firms Down in ‘07, But MDx Remains Hot

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
 
The mergers and acquisitions market for the life science tool vendors covered by BioCommerce Week remained strong in 2007, with a little more than $5 billion spent on 18 deals during the year (see table below).
 
The number of deals among firms covered by BCW in 2007 fell short of the 22 consummated in 2006, and the total value of the deals did not come close to the more than $19 billion last year. In addition, even though deal activity was robust, the vast majority of the acquisitions were done in the first half of 2007.
 
Mega-deals, such as last year’s $10.6 billion merger of Thermo Electron and Fisher Scientific (see BioCommerce Week 11/15/2006) and Siemens’ $5.26 billion acquisition of Bayer Diagnostics (see BioCommerce Week 7/5/2006), failed to materialize during the year, as some industry observers had predicted.
 
GE Healthcare had signed a preliminary agreement to acquire two of Abbott Laboratories’ diagnostics divisions for $8.1 billion, but the firm pulled out of that deal in July and directed its cash toward buying back GE stock instead (see BioCommerce Week 7/18/2007).
 
MDx Remains Hot
 
Continuing a trend from last year, many of the acquisitions in 2007 were focused on the molecular diagnostics market, as traditional research-tool vendors sought higher-growth opportunities. 
 
Qiagen, which has rapidly expanded its molecular diagnostics business through acquisitions over the past two years, continued this trend with two more this year. Its $1.6 billion acquisition of Digene, completed in late July, was the biggest deal this year among firms covered by BCW (see BioCommerce Week 6/6/2007).
 
The acquisition gave Qiagen ownership of the only molecular diagnostic test for human papillomavirus cleared for marketing in the US and European Union and a sales force focused on molecular diagnostic users. It also provided a bridge between Qiagen’s virology test portfolio and Digene’s oncology products.
 
That purchase followed Qiagen’s April deal to acquire eGene for $34 million (see BioCommerce Week 4/18/2007). The acquisition provided Qiagen with a multiplex genetic analyzer that the firm said would combine seamlessly with its sample and assay technologies for both molecular diagnostics and clinical research applications.
 
Likewise, Cepheid added to its molecular diagnostic capabilities with the February acquisition of Sangtec Molecular Diagnostics for $27 million (see BioCommerce Week 2/21/2007). The purchase gave Cepheid a portfolio of real-time PCR-based assay kits for a variety of infectious diseases that affect immunocompromised patients. Cepheid said it would introduce Sangtec’s assays into the US market initially for research use only and eventually seek US Food and Drug Administration clearance for the tests.
 
Meanwhile, in March Luminex completed its $44 million acquisition of Canadian molecular diagnostics maker Tm Bioscience (see BioCommerce Week 12/20/2006). Tm, which has been renamed Luminex Molecular Diagnostics, was already selling DNA-based tests that run on Luminex’s xMAP platform.
 
For Luminex, the acquisition was a transformative event, moving the company beyond its established partnership model and diversifying its revenue stream with a variety of proprietary assays developed by Tm.
 
Beckman Coulter, with its sizeable presence in the immunoassay field, announced plans late last year to build a next-generation molecular diagnostics platform, which it plans to launch in 2010. It believes that its deal to acquire NexGen Diagnostics provides it with a sample preparation technology that will help speed test time and will eventually be incorporated into the next-generation platform (see BioCommerce Week 12/5/2007).
 
Beckman also lost a bidding war to acquire Biosite, which would have provided content for both its traditional diagnostics and molecular diagnostics platforms (see BioCommerce Week 5/16/2007).
 
Bio-Rad Laboratories, which has been known for years as a value buyer unwilling to pay hefty premiums for acquisition targets, announced in May that it would spend around $400 million to acquire DiaMed, a Swiss immunohematology diagnostics firm (see BioCommerce Week 5/16/2007). The acquisition marks the first major expansion of Bio-Rad’s clinical diagnostics business since its $210 million purchase of Sanofi Diagnostics Pasteur in 1999.
 
The deal greatly broadens Bio-Rad’s immunohematology and infectious disease diagnostics portfolio, but it does not provide the firm with a molecular diagnostics presence.
 
Bruker BioSciences, which had been very quiet over the past couple of years regarding its strategy for the diagnostics market, signed a deal earlier this month to acquire its Bruker BioSpin affiliate for $914 million in a combination that would enable it to pursue applications in molecular diagnostics and molecular imaging (see BioCommerce Week 12/5/2007).
 
Meanwhile, Roche has been pursuing Ventana Medical Systems, which would provide the firm with a tissue-based diagnostics platform that it currently lacks and sees as an important piece of the oncology diagnostics and pharmacogenomics market (see BioCommerce Week 6/27/2007). The $3 billion bid by Roche, initially proposed in June, has been deemed “grossly inadequate” several times by Ventana’s board of directors. However, Ventana recently agreed to let Roche view its books in an effort to convince the firm that its offer is too low.
 
Roche did make one diagnostics purchase this year, though, acquiring BioVeris for $600 million.
 
Research Tools Still Attractive
 
While molecular diagnostics has been the hot market for M&A activity in the life science tools space, traditional research products vendors also were snatched up this year. And Roche, who was active in the diagnostics market, also made a couple of buys to fill in gaps in its research tools portfolio.
 
In April, the firm acquired next-generation sequencing firm 454 Life Sciences for $155 million (see BioCommerce Week 4/4/2007). It followed that acquisition with the June purchase of microarray firm NimbleGen Systems for $272.5 million (see BioCommerce Week 6/20/2007). While Roche officials have stated that these acquisitions will bolster its research products portfolio, both bring technologies that could also be used in the future for molecular diagnostic purposes.
 
Likewise, Agilent Technologies’ $250 million acquisition of Stratagene provided the firm with a variety of research tools and diagnostic products that complement its mass spectrometry, chromatography, and microarray platforms (see BioCommerce Week 6/13/2007).
 
Agilent’s rival in the microarray market, Affymetrix, inked a deal this week to acquire privately held reagents manufacturer USB for $75 million in cash (see related article, this issue). The acquisition provides Affy with molecular biology enzymes, biochemicals, and DNA sequencing reagents.
 
PerkinElmer was the most active among all of the firms in the BCW Index, making four acquisitions in 2007 — three of which were designed to rapidly build its presence in the cell analysis market.
 
In January, the firm completed its acquisition of Evotec Technologies for $30.5 million (see BioCommerce Week 12/6/2006). The acquisition provided PerkinElmer with high-content screening tools, particularly the Opera confocal imager, which has significant penetration in the high-content market.
 
The Euroscreen acquisition, which was announced a few weeks later, gave PerkinElmer a greater presence in the GPCR-screening market (see BioCommerce Week 1/3/2007). It followed these deals with the April purchase of Improvision, a privately held developer of cell-imaging software (see BioCommerce Week 4/4/2007).
 
PerkinElmer’s fourth acquisition of the year, the $300 million purchase of ViaCell, provided products and services that could significantly expand its neonatal and prenatal screening business (see BioCommerce Week 10/3/2007).
 
MDS, whose research tools business was built on its Sciex mass spec business, also acted on its belief that the cell-screening and -analysis markets offer a high-growth opportunity by snatching up Molecular Devices for $615 million (see BioCommerce Week 1/31/2007).
 
The acquisition has paid off thus far, with the combined operations of Sciex and Molecular Devices — now known as MDS Analytical Technologies — providing strong revenue growth over the past couple of quarters.
 
 
2007 M&A Activity Among Firms Covered
by BioCommerce Week*
Acquiror
Acquiree
Deal Value
Month Closed
Affymetrix
 
USB
$75million
Pending
Bruker BioSciences
 
Bruker BioSpin
$914 million
Pending
Beckman Coulter
 
NexGen Diagnostics
Undisclosed
Pending
PerkinElmer
 
ViaCell
$300 million
November
Bio-Rad Laboratories
 
DiaMed Holding
$406 million**
October
Qiagen
 
Digene
$1.6 billion
July
Qiagen
 
eGene
$34 million
July
Agilent Technologies
 
Stratagene
$250 million
June
Roche
 
NimbleGen Systems
$272.5 million
June
Roche
 
BioVeris
$600 million
June
PerkinElmer
 
Improvision
Undisclosed
April
Invitrogen
 
Cascade Biologics
Undisclosed
April
Roche
 
454 Life Sciences
$155 million
April
MDS
 
Molecular Devices
$615 million
March
Luminex
 
Tm Bioscience
$44 million
March
Cepheid
 
Sangtec Molecular Diagnostics
$27 million
February
PerkinElmer
 
Evotec Technologies
$30.5 million
January
PerkinElmer
 
Euroscreen
Undisclosed
January
 
* Firms covered by BCW include those in the Index, plus GE Healthcare, Roche, Siemans, and Philips.
** Bio-Rad acquired 77.7 percent of DiaMed's shares. The final price will be determined when the remaining shares are purchased by Bio-Rad.
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