The primary motivation for PerkinElmer's acquisition of Chinese infectious disease diagnostic firm Shanghai Haoyuan Biotech, announced this week, is to provide the Waltham, Mass.-based firm entrée into the nucleic acid-based blood screening market, company executives said this week.
However, the acquisition also provides PerkinElmer with its first major quantitative real-time PCR products, which it hopes to integrate with its existing products for sample preparation and laboratory automation to potentially address a variety of molecular testing applications, including molecular diagnostics, executives said.
"From a strategic perspective, this allows us to bring more technology capabilities in house; allows us to enter a new market that we don’t compete in today; and then it gives us a portfolio of products to sell to our current customers in the Chinese market as they look to move to qPCR for viral load testing for infectious disease testing," Jim Corbett, president of diagnostics at PerkinElmer, told PCR Insider this week.
Terms of the deal call for PerkinElmer to purchase Haoyuan for $38 million plus other considerations. Haoyuan is eligible for potential additional payments based on revenue targets. A research note issued by Goldman Sachs this week noted that if certain revenue targets are hit PerkinElmer would owe an additional $30 million beyond the $38 million purchase price.
PerkinElmer currently offers a wide variety of life science research, drug discovery, laboratory automation, and clinical diagnostic products, but its nucleic acid testing portfolio is comparably sparse. Corbett noted that the company has been dabbling in the molecular testing space for a few years, citing in particular its endpoint PCR and sample prep products.
For instance, in February 2011 PerkinElmer acquired Chemagen Biopolymer-Technologie primarily for that company's automated nucleic acid isolation products based on magnetic bead technology, thus addressing sample prep for molecular diagnostics.
The Chemagen technology allows users to "take samples directly from serum or plasma, extract the DNA or RNA, and run an assay on that," Larry Wray, vice president of R&D at PerkinElmer, told PCR Insider. "It's a very effective methodology [that] generates nucleic acids at a very high yield and purity."
Also, in 2011 PerkinElmer acquired Caliper Life Sciences for $600 million, providing it with Caliper's array of LabChip products for automated nucleic acid fractionation and, outside the US, its LabChip Dx instrument for performing high-resolution, electrophoretic separations of multiplex PCR products – a product that is CE Marked in Europe and is used with Seegene's highly multiplexed endpoint PCR assays (PCR Insider, 1/13/2011).
PerkinElmer also offers microarray-based cytogenetic diagnostics through its Signature Genomics subsidiary, as well as next-generation sequencing services. Finally, it also markets an array of laboratory automation and liquid-handling products, such as the Janus workstation, which it positions as a solution for automated nucleic acid isolation, among other applications.
With its acquisition of Haoyuan, PerkinElmer adds another piece to the molecular diagnostics puzzle: quantitative real-time PCR assays.
Haoyuan supplies a number of molecular infectious disease screening technologies for both blood bank and clinical laboratories in China, including four infectious disease assays that are approved by China’s State Food and Drug Administration: a qualitative 3-in-1 assay for detecting hepatitis B, hepatitis C, and HIV; two clinical quantitative assays for HBV and HCV, and one qualitative CT/NG assay for Chlamydia trachomatis and Neisseria gonorrhoeae.
The initial end market for these assays will be blood screening, PerkinElmer said, taking advantage of a recent mandate by the Chinese government to shift all blood screening methods to nucleic acid testing by 2015 — a move that several other countries have made in recent years in an effort to replace relatively inefficient and inaccurate antibody-based methods.
"This allows us to move into [the blood screening market] where we don't compete today, particularly in the Chinese marketplace, which has an attractive macro environment for growth," Corbett said. In addition, he noted that PerkinElmer currently has "a very strong clinical business today in the Chinese market, and many of those customers are now doing quantitative PCR measurements for viral load testing of patients infected with hepatitis B and other infectious diseases. These customers today traditionally buy our immunoassay products in the China market, and will be migrating to these [molecular] technologies for those patients that are identified as positive during the screening."
With its foray into nucleic acid-based blood screening, PerkinElmer will compete directly with established players such as Roche and Novartis Diagnostics (in partnership with Hologic's Gen-Probe), both of which have a strong worldwide presence in NA-based blood screening.
According to the Goldman Sachs research note, the Chinese government granted five commercial licenses for NA-based testing of the blood supply as part of its mandate. Haoyuan was granted one of those licenses along with Roche, Novartis, and two smaller private Chinese companies.
"We will have access to sell to those blood screening centers in China, and again the government has mandated a move to this technology in coming years," Corbett said. "The market demand is there; it's mandated to secure the blood supply and make it safe, and we think we have the right technology at the right time to help them do that."
Corbett also noted that PerkinElmer may be able to combine Haoyuan's real-time PCR assays with its own complementary product offerings, and move into the blood screening market beyond China's borders.
"We've seen in blood screening that many of the more developed markets have already mandated NA testing, and as we move into different emerging markets, and those governments make their decisions, I think you'll see a change over time where more and more will go to NA testing," Corbett said. "And our capability to then take this tech and move it into other markets that demand this will clearly be part of our long-term strategy."
Corbett noted, however, that Haoyuan's kits are currently approved only for use in China, and that PerkinElmer would need to seek appropriate regulatory approvals to move outside that market.
Initially, PerkinElmer will be taking over Haoyuan's technologies and testing workflow as they are currently used. However, eventually PerkinElmer may be able to supplant several of the instrumentation platforms currently offered by Haoyaun with its own complementary products for automation.
"We do have that capability, certainly, to move from their current platforms … we have the liquid-handling capabilities, and the Chemagen DNA extraction," Wray said. "I think with this real-time PCR technology we have all of the pieces to put together to develop any kind of automated solution for nucleic acid testing."
However, one of the few pieces to the molecular diagnostics workflow that PerkinElmer is still missing is a real-time PCR system. Haoyuan's assays are currently run on a Life Technologies ABI 7550 Real-Time PCR platform.