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DiaSorin to Buy Focus Diagnostics' Immunoassay, MDx Business From Quest for $300M

This article has been updated to include comments from DiaSorin management made during a conference call to discuss the deal.

NEW YORK (GenomeWeb) – Italian diagnostics firm DiaSorin has signed an agreement to acquire Focus Diagnostics' immunoassay and molecular diagnostics products business from Quest Diagnostics for $300 million in cash, the companies announced today.

Under the deal, DiaSorin would acquire all of the tangible and intangible assets of Focus that are used to develop, manufacture, and distribute molecular diagnostics and immunoassay ELISA products, including intellectual property, contracts, and customer lists. The transaction does not include Quest's diagnostic information service laboratories currently operating under the Focus Diagnostics brand.

"This transaction reflects our ongoing commitment to refocusing on Quest's core diagnostic information services business," Quest President and CEO Steve Rusckowski said in a statement. "We return the majority of our free cash flow to investors in the form of dividends and share repurchases, and also have been investing in the business through strategically aligned acquisitions."

For DiaSorin, the deal represents its latest effort to expand its presence in the molecular diagnostics space, which began in late 2012 when it launched an isothermal amplification-based genetic analysis system and two associated assays for BK virus and varicella-zoster virus.

By acquiring Focus, DiaSorin will pick up a suite of products already cleared for sale in the US and Europe including the Simplexa line of assays for C. difficile, influenza, respiratory syncytial virus, herpes, and strep infections, as well as the HerpeSelect serology test for herpes and the DxSelect line of IFA and ELISA assays.

DiaSorin said it expects to continue manufacturing Focus products from its base facility in Cypress, California with the roughly 180 employees currently employed there in manufacturing, research and development, sales and marketing, and administration.

"The combination of DiaSorin and Focus products will create a unique portfolio of specialty products, especially in the clinical area of infectious disease, which will continue to strengthen the leadership of DiaSorin in this segment that today already represents over 50 percent of DiaSorin revenues," DiaSorin CEO Carlo Rosa said in a statement. "Also, this acquisition offers  DiaSorin access to a large number of premier US hospitals that are served today by Focus, a market segment that is strategic for DiaSorin to grow in the future by combining the Focus molecular products with its broad Liaison product line."

The acquisition will also give DiaSorin a boost as it works to grow its footprint in the US, where it said it hopes to eventually generate 50 percent of its total sales. In 2015, Focus' product business generated approximately $80 million in revenues, about 80 percent of which were from sales to US-based customers.

"The US is strategically the most important market in our business," Rosa said during a conference call to discuss the deal. "I think it is a market that allows you long-term visibility, is a growing market, is a country where the expenditure on healthcare is twice what we have in Europe and other parts of the world."

He added that DiaSorin remains on the lookout for other potential acquisition targets in the US, but did not provide specific details.

At the same time, the tie-up between the companies would give Focus an opportunity to penetrate international markets, he said.

"The availability to the Focus business of the large DiaSorin commercial infrastructure will allow … better development of the Focus instrument install base outside the US, capturing an opportunity of growth that today was limited," Rosa noted.

The acquisition is expected to be completed in the second quarter through a newly created DiaSorin US affiliate. Additional terms were not disclosed.

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