Battle for Biosite Reflects Sustained Interest in IVD Market

Beckman Coulter Inc. (Fullerton, CA) and Inverness Medical Innovations Inc. (Waltham, MA) continue to up the ante in their respective bids to acquire Biosite Inc. (San Diego). Late last month, Beckman Coulter entered into a definitive agreement to buy Biosite for $85 a share, or approximately $1.55 billion. The offer was quickly and unanimously endorsed by Biosite's board, with Biosite chairman and CEO Kim Blickenstaff saying the decision was in the best interest of the company. Yet, only days later, Inverness made an unsolicited bid for Biosite at $90 per share.

Biosite initially refused to entertain the new bid and would not talk with the would-be suitor. That is, until Inverness chairman, president, and CEO Ron Zwanziger called on Biosite stockholders to "contact their directors and demand that Biosite engage with us immediately."

Although Zwanziger described his company's offer as a superior proposal, Beckman Coulter president and CEO Scott Garrett dismissed it, saying, "We believe Biosite stockholders will conclude that Inverness is unable to make an offer for Biosite that is as compelling and definitive as the transaction between Beckman Coulter and Biosite, which is scheduled to be completed within the next 25 days."

After meeting with Inverness and reviewing its offer, Biosite warmed to the bid, stating that it "would likely lead to a superior proposal." Meanwhile, Beckman Coulter's Garrett continued to question the financials of the Inverness proposal and referred to it as "illusory."

The most recent retort came from Inverness, which provided revised financial data on its ability and commitment to fund the deal.

The battle for Biosite is being driven largely by the desire to gain access to the company's efforts in commercializing proteomics discoveries for the advancement of molecular diagnosis. In addition, Biosite's Triage rapid diagnostic tests are used in more than 70% of U.S. hospitals and in more than 60 international markets.

Although it initially appeared unlikely that Inverness would succeed in its bid for Biosite, the company's dogged determination is giving pause to industry analysts as to which suitor will eventually prevail. Beckman Coulter has already gained antitrust clearance for the acquisition from the Federal Trade Commission. The company's more than 10,000 employees and 2006 revenues of $2.5 billion dwarf those of rival Inverness, which has 2500 employees and annual revenues of less than $0.6 billion. Biosite, with a little more than 1000 employees, generated $0.3 billion in sales for 2006.

In February of this year, prior to its bid for Biosite, Inverness acquired First Check Diagnostics LLC (Lake Forest, CA) for $25 million in cash. First Check is a leading manufacturer of on-site rapid test devices for drugs-of-abuse testing in the home environment. Also that month, Inverness acquired Promesan Srl (Milan, Italy) for €3.4 million. Promesan is a manufacturer and distributor of point-of-care diagnostic testing products for the Italian market.

While the bid for Biosite continues to grab headlines in the financial press, a wave of recent activities and acquisitions readily attests to even broader interest in the in vitro diagnostics (IVD) market, which is medtech's largest sector.

In early March, 3M Co. (St. Paul, MN) announced the launch of a new medical diagnostics business unit. Explaining the rationale for its new unit, 3M cited "market trends pointing to the need for rapid, easy-to-use microbial diagnostics that will aid in the prevention and control of infections in hospitals in the United States and abroad." According to Angela Dillow, PhD, global business manager of 3M Medical Diagnostics, the new business "is a natural extension of our infection prevention platform and enables us to offer hospitals a full spectrum of products that detect, prevent, and treat infections in the hospital setting."

Earlier this month, Roche Diagnostics, a division of F. Hoffmann–La Roche Ltd. (Basel, Switzerland), announced that it will acquire BioVeris Corp. (Gaithersburg, MD) for $600 million, thereby securing ownership of the company's complete patent estate of electrochemiluminescence (ECL) technology. Severin Schwan, CEO of Roche Diagnostics, described ECL technology as offering advantages such as enhanced sensitivity, short incubation times, and broad measuring ranges. "This acquisition ensures that Roche will be able to provide unrestricted access to all customers and therefore represents a significant growth opportunity for our immunochemistry business," he said. Roche, the world's largest manufacturer of IVD products, said the deal is expected to close in the third quarter.

Also in February, Quest Diagnostics Inc. (Lyndhurst, NJ), the country's largest provider of diagnostic testing services to doctors, hospitals, and individual patients, made its first foray into the IVD manufacturing market with the acquisition of HemoCue AB (Ängelholm, Sweden) for $420 million. HemoCue manufactures handheld diagnostic testing devices that feature electronic connectivity. Commenting on the acquisition, Surya N. Mohapatra, PhD, chairman and CEO of Quest Diagnostics, said, "Technology is enabling diagnostic testing to move closer to the patient, and the acquisition of HemoCue and its exciting product pipeline gives us a strong presence in this emerging market."

© 2007 Canon Communications LLC

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