Molecular diagnostics accounts for only a tenth of the in vitro diagnostics (IVD) market—but most of its hopes for future revenue growth, according to Kalorama Information, which projects the MDx market will balloon to $10 billion by 2021.
At 8% growth, molecular diagnostics is expected to double the 4% rate projected for IVD growth, thanks to their migration into routine medical practice and all levels of healthcare, as well as innovation in lower-cost nucleic acid amplification tests (NAATs) and clinical next-generation sequencing (NGS).
“The result has been the decentralization (or in a sense the democratization) of NAATs, from specialized clinical labs, to hospital labs and more recently near-patient settings such as urgent care clinics, physician offices, and field testing sites in the developing world,” Kalorama Publisher Bruce Carlson wrote recently in Clinical OMICs sister publication Genetic Engineering & Biotechnology News.
Expectations for future growth of molecular diagnostics have been driving mergers and acquisition deals within the industry. Below is a list of 20 top M&A deals whose values were disclosed in 2016 by diagnostics developers, ranked by deal value in U.S. dollars. Each acquired company is listed along with its acquirer or prospective acquirer, the price, the status of the deal, and the buyer’s stated reason for pursuing the deal.
Not included in the list are molecular diagnostics M&A deals whose values were not disclosed.
#15. DIAsource ImmunoAssays
Acquired by: Anteo Diagnostics
Price: €15.4 million ($16.7 million)
Deal status: Completion announced January 12, 2016
Reasoning: Anteo said the deal, announced August 26, 2015, was a transformative acquisition and a critical step in its corporate strategy which calls for global expansion. Anteo said it would establish DIAsource as the cornerstone of its diagnostics division, adding DIAsource’s catalogue of ELISA and RIA products for clinical diagnostics, as well as its strong revenue and 20% earnings before interest, taxes, depreciation, and amortization (EBITDA) margin over the four quarter before the deal was announced. Anteo said it also saw significant opportunities for accelerating sales of its Mix&Go reagents, activation, and coupling kits through the deal.
Acquired by: Oxford Immunotec
Price: $22.2 million
Deal status: Completion occurred July 1 and disclosed in a regulatory filing July 6, 2016
Reasoning: Oxford Immunotec said the deal, announced June 23, 2016, fit well with its strategy of focusing on immune-regulated conditions. The acquisition expanded the buyer into Lyme disease and other tick-borne diseases, increasing Oxford Immunotec’s revenue potential or “total addressable market” by $400 to $500 million.
Purchasing Imugen also enabled the buyer to offer its T-SPOT®.TB test at a second lab, thereby increasing testing capacity, and presented an opportunity to grow by leveraging its existing sales and marketing infrastructure.
Acquired by: bioMérieux
Price: €24 million ($26 million)
Deal status: Completion occurred May 31, 2016, and announced the following day.
Reasoning: bioMérieux said the deal would enhance its offerings with Hyglos’ expertise in the development and production of recombinant proteins used for the detection of endotoxins in pharmaceutical products. The buyer cited 2015 statistics from Markets and Markets that the endotoxin detection market stood at an estimated €250 million ($271 million), and was growing by around 12% per year.
Acquired by: CareDx
Price: $35 million, consisting of $29 million upfront and $6 million tied to achieving commercial and financial milestones in the fourth quarter of 2015 and over the course of 2016. Milestone payment was later deferred until March 31, 2017, under an amended agreement announced February 9, 2016.
Deal status: Completion announced April 14, 2016
Reasoning: CareDx said the deal, announced December 16, 2015, would create an international transplantation diagnostics company with product offerings along the pre-/post-transplant continuum, and a presence in the U.S. and Europe. Deal consisted of CareDx acquiring approximately 78% of Allenex’s outstanding shares from its three principal shareholders, then launching a tender offer for the remaining 22% during the first quarter of 2016.
#11. Signal Genetics
Acquired by: miRagen Therapeutics
Price: In reverse merger, miRagen acquired approximately 96% of Signal's outstanding common stock, with an investor syndicate investing $40.7 million in miRagen. That concurrent financing is part of the approximately $60 million in cash with which the new company was capitalized.
The syndicate consisted of existing and new miRagen investors that included Fidelity Management and Research Company, Brace Pharma Capital, Atlas Venture, Boulder Ventures, JAFCO, MP Healthcare Venture Management, MRL Ventures (a venture fund of Merck & Co.), Remeditex Ventures, and others.
Deal status: Completion announced February 13, 2017
Reasoning: The companies said their merger, announced October 31, 2016, would create a combined company better able to focus on developing microRNA-targeted clinical product candidates addressing hematological malignancies and pathological fibrosis and preclinical product candidates addressing cardiovascular and neurodegenerative diseases.
#10. Sividon Diagnostics
Acquired by: Myriad Genetics
Price: Up to $55.7 million, consisting of $39 million upfront and up to €15 million $16.7 million tied to achieving milestones.
Deal status: Completion occurred in May 2016 and disclosed in Form 10-K annual report for the fiscal year ending June 30, 2016, filed August 10, 2016
Reasoning: Myriad said the deal, announced May 31, 2016, strengthened its oncology product portfolio with Sividon’s EndoPredict kit-based RNA expression test that evaluates 12 genes to assess the aggressiveness of breast cancer on a molecular level. Sividon Diagnostics was spun out of Siemens Healthcare Diagnostics in 2010 as part of a management buyout
Acquired by: Agilent Technologies
Price: $72 million cash
Deal status: Completion occurred January 20, 2017, and disclosed in Agilent’s Form 10-Q for the first fiscal quarter of 2017, ending January 31, 2017, and filed March 8
Reasoning: Agilent said the deal, announced December 20, 2016, “significantly” strengthens its presence in the genomics market by expanding its target-enrichment portfolio and enhancing its next-generation sequencing workflow capabilities, providing immediate scale in adjacent markets.
Acquired by: Qiagen
Price: DKK 683 million (Approximately $99.6 million)
Deal status: Completion announced June 23, 2016
Reasoning: Qiagen said the deal, announced March 29, 2016, is expected to broaden its molecular biology portfolio spanning sample technologies, assay technologies, and bioinformatics. Qiagen added that its leadership position in Sample to Insight solutions for RNA analysis would be strengthened with the addition of Exiqon’s offerings in non-coding RNA (ncRNA).
Acquired by: Luminex
Price: Approximately $113.9 million consisting of approximately $88.5 million cash and $25.4 million in assumed debt
Deal status: Completion announced June 30, 2016
Reasoning: Luminex said the $1.70-per-share deal, announced May 16, 2016, and raised a week later from $83 million or $1.35 a share, enlarged its molecular diagnostics portfolio and expanded its holdings into molecular microbiology. The deal also grew Luminex’s customer base with Nanosphere’s more than 240 customers, plus a growing revenue stream and new platforms for growth—such as Nanosphere’s Verigene technology to detect bloodstream infection, which the buyer said complemented its current infectious disease portfolio.
#6. Focus Diagnostics’ immunodiagnostic and molecular diagnostic products business
Acquired by: DiaSorin
Price: $300 million
Deal status: Completion announced May 13, 2016
Reasoning: In acquiring Focus from Quest Diagnostics, DiaSorin said the deal, announced March 30, 2016, will enable it to expand into molecular diagnostics with products cleared for distribution both in the U.S. and Europe, and significantly increase its presence in the growing market of Infectious Disease molecular testing.
DiaSorin said having access to the Focus customer base in the U.S., consisting mostly of large hospitals, will allow it to speed up the penetration of this market with its Immunoassay LIAISON platform. DiaSorin added that the deal will help the Focus business expand outside the US. The transaction does not include Quest Diagnostics’ diagnostic information services laboratories, currently operating under the Focus Diagnostics brand.
Acquired by: Laboratory Corporation of America Holdings (LabCorp)
Price: Approximately $371 million, consisting of approximately $302 million cash, or $2.40 a share of Sequenom stock, and the assumption of debt
Deal status: Completion announced September 7, 2016
Reasoning: LabCorp said the deal, announced July 27, 2016, expanded its presence overseas, especially in Europe and Asia, and added to its offerings the top provider of noninvasive prenatal testing (NIPT), women’s health, and reproductive genetics diagnostics. The acquisition also ended a challenging period for Sequenom in which it announced plans in January 2016 to eliminate about 20% of its workforce, 110 positions, sell its operations within North Carolina’s Research Triangle Park, and consolidate in San Diego.
#4. Assurex Health
Acquired by: Myriad Genetics
Price: Up to $410 million, consisting of $225 million upfront and up to $185 million in payments tied to achieving milestones
Deal status: Completion occurred August 31, 2016, and announced the following day, when Assurex became a wholly-owned subsidiary of Myriad.
Reasoning: Myriad said the deal, announced August 3, 2016, expanded the buyer into genetic testing for psychotropic medicine selection by giving Myriad its first commercial neuroscience diagnostic test, GeneSight, whose potential market according to the company exceeds $4 billion based upon current and future indications.
#3. Hologic’s share in joint blood screening business
Acquired by: Grifols
Price: $1.85 billion cash
Deal status: Completion announced January 31, 2017
Reasoning: Grifols said the deal, announced December 14, 2016, would enable the company to grow its diagnostics division and strengthen its transfusion medicine business by acquiring Hologics facilities for the R&D and manufacture of assays and instruments for detecting infectious agents in donated blood and plasma, using nucleic acid testing (NAT) technology, as well as by adding capabilities in immunoassay antigen manufacturing, and blood-typing product sales.
Hologic said the deal would strengthen it by accelerating top- and bottom-line growth, while significantly increasing financial flexibility. The deal ended a collaboration in molecular blood screening stretching back to 1998 by the companies’ predecessor businesses.
Acquired by: Danaher
Price: Approximately $4 billion
Deal status: Completion announced November 4, 2016
Reasoning: Announced September 6, 2016, the deal added the molecular diagnostics developer and its tests—including core product GeneXpert, which enables rapid genetic testing—to the buyer’s $5 billion Diagnostics unit.
Cepheid was Danaher’s first major acquisition since the company narrowed its science and technology focus in July 2016 by completing the spinout of its Test & Measurement segment, Industrial Technologies segment (except its Product Identification platform), and Retail/Commercial Petroleum platform through the creation of a new entity, Fortive Corp.
Acquired by: Abbott Laboratories
Price: $5.3 billion
Deal status: Completion announced April 14, 2017 after resolving a year-long legal wrangle stemming from a decline in Alere’s value followed by Abbott’s attempt to end the deal. The companies agreed to a price $500 million less than originally announced.
Reasoning: Abbott chairman and CEO Miles D. White said the deal, announced February 1, 2016, would “create the world's premier point-of-care testing business and significantly strengthen and grow Abbott's diagnostics presence.” The deal would create for Abbott a broad point-of-care menu of infectious disease, molecular, cardiometabolic, and toxicology testing, as well as expand Abbott's platforms to include benchtop and rapid strip tests.