Abbott’s Acquisition of Alere Continues Mergers of Lab, Pharmaceutical Interests

The merging of diagnostic laboratories into the folds of big pharma has continued with point-of-care firm Alere being acquired by Abbott for $5.8 billion.

The all-cash deal, announced on Feb. 1, was for $56 per share—a more than 50 percent premium above Alere’s stock price. Alere had previously been a subsidiary of health care giant Johnson & Johnson in 2001. The company rebranded itself as Alere in 2010.

Alere, which specializes in in vitro tests for influenza, hospital-acquired infections, toxicology and cardiology, introduced in 2014 a point-of-care molecular test that can differentiate between influenza A and B strains within 15 minutes.

Despite such innovations, Alere has experienced relatively flat revenue growth in recent years. It reported revenue of $2.16 billion in 2010 and is on track for $2.5 billion for 2015, down from $2.56 billion for 2014 and $2.62 billion in 2013. The company also lost $37.7 million in 2014. It has blamed currency fluctuations and decreases in sales of its pain management/toxicology tests, although its cardiology business has demonstrated recent significant growth.

“The combination of Alere and Abbott will create the world’s premier point of care testing business and significantly strengthen and grow Abbott’s diagnostics presence,” said Abbott Chief Executive Officer Miles D. White in a statement. “We want to offer our customers the best and broadest diagnostics solutions. Alere helps us do that.”

The deal is reminiscent in size, scale and fit of LabCorp’s acquisition of Covance, which not only made LabCorp the biggest lab in the country, but gave it entree into the growing world of drug development and related testing.

“Our leading platforms and global presence in point-of-care diagnostics, combined with Abbott’s broad portfolio of market-leading products, will accelerate our shared goal of improving patient care,” said Alere Chief Executive Officer Namal Nawana in a statement.

According to Abbott, the transaction will make it the biggest point-of-care lab company in the U.S., with related revenue in that segment of about $7 billion per year.

Despite Alere’s significant 2014 losses, Abbott said the deal would be accretive to its 2017 bottom line by about 12 cents a share, increasing to more than 20 cents by 2018.

Bruce Carlson of the research firm Kalorama Information said that the deal would give Abbott supremacy in point-of-care testing. “Abbott is marking out point-ofcare as an area that it can compete and win in,” he said in a statement. “This should not be surprising as point-of-care in some areas like infectious disease is growing at one and half times the global in vitro diagnostics market.”

Takeaway: Abbott’s acquisition of Alere is another example of the fusing of pharmaceutical and laboratory firms.