Industry Buzz: The Diagnostic Market’s M&A Highlights from 1H 2017

As usual, the Big 3 of Abbott, Quest and LabCorp were the driving force of M&A activity in the diagnostics industry in the first half of 2017.

Abbott Continues to Make News
Each company announced or completed multiple acquisitions during the period, including the January closing of what remains the year’s biggest deal Abbott’s $25 billion purchase of St. Jude Medical. Already a leader in stents and mitral valve repair (via its MitraClip device), acquisition of St. Jude’s heart failure and vascular disease products portfolio makes Abbott arguably the strongest player in the $30 billion cardiovascular device market and one of the biggest overall medical device manufacturers in the world.

Abbott is also at the center of the biggest story of the year so far—the on again, off again and now on again—Alere merger. After taking their dispute to federal court, the sides announced on April 14 that the deal would go through after all. But to make it happen, Alere had to discount the purchase price from $5.8 billion to $5.3 billion to compensate Abbott for the erosion of its stock value since the deal was first announced back in Feb. 2016. In July, Alere secured shareholder approval of the deal and divested its triage, blood gases and other assets to pave the way for anti-trust approval. Meanwhile, Abbott CEO Miles White said he was “quite confident” that the deal would close by the end of the year.

Other Movers and Shakers
Another headline was the closing of Grifols’s acquisition of Hologic’s blood screening business. The acquired assets include a San Diego plant, development rights and Hologic’s access to patented technologies under license agreements. In addition to the $1.85 billion purchase price, the sale enables Hologic to get out of blood screening, which Hologic CEO Steve MacMillan described as a “drag on our growth.”

Quest also had a busy H1, acquiring outreach lab operations from Peace- Health Laboratories (in the northwest) and Dignity Health Sierra Nevada Memorial Hospital, as well as a pair of clinical labs in Texas.

Molecular Diagnostics & Life Sciences
GenomeWeb reports that overall M&A deal volume in molecular diagnostics and life sciences for the first half of the year was down 14% from H1 2016. But while deal volume was down—30 vs. 35 deals—prices remained high, with a pair of billion-dollar acquisitions. The biggest is Thermo Fisher Scientific’s $7.2 billion acquisition of contract development and manufacturing organization (CDMO) Patheon. Thermo Fisher says the deal, which is expected to close by the end of 2017, will secure its access to the $40 billion CDMO market and create $120 million in synergies ($90 million in cost and $30 million in revenues synergies), prompting the company to increase its 2018 adjusted earnings per share by $0.30. The other nine-figure acquisition in the period was PerkinElmer’s $1.3 billion purchase of Euroimmun.

H1 2017’s Top 5 M&A Deals in the MDx/Omics Life Science Tools Space