Fisher Scientific Seizes Opportunity in Molecular Diagnostics

In March, during a presentation at the Lehman Brothers Global Healthcare conference, Paul Meister, vice chairman of Fisher Scientific International Inc. (Hampton, NH), reiterated a claim that has been often repeated among in vitro diagnostics (IVD) industry observers. “The quest for drugs that enhance and prolong our lives is driving a shift toward protein-based drugs and the promise of personalized medicine,” he said.

In light of this, Fisher's announcement a week later that it was investing nearly $300 million in the molecular diagnostics market came as little surprise. The company announced that it was purchasing test developer Athena Diagnostics Inc. (Worcester, MA) from Behrman Capital for $283 million in cash. In addition, Fisher said that it would buy a 9% stake in Nanogen Inc. (San Diego) for $15 million in cash. Fisher plans to work with Nanogen to expand Athena's markers and tests. Athena's menu of genetic markers is focused on neurological disorders, such as epilepsy, amyotrophic lateral sclerosis, and Alzheimer's disease.

“Fisher's acquisition of Athena is consistent with our strategy to expand our offering of high-value, high-margin products and services in growing markets,” said Gia Oei, a spokesperson for Fisher. “While Athena has been focused on neurology, it does have a small offering in nephrology and endocrinology, which can be expanded. Athena also has opportunities to develop new tests for the clinical trials–testing market based on its portfolio of genetic markers. In particular, Athena's genetic tests can help pharmaceutical companies better identify which patients may respond more effectively to specific drugs during clinical trials. The company also has opportunities to expand internationally—beyond its existing footprint in North America.”

Through a variety of purchases over the past five years, Fisher has transformed itself into one of the world's largest scientific research and clinical laboratory suppliers. In 2003, the company bought Perbio Science AB for about $714 million. The following year, Fisher merged with Apogent Technologies Inc. in a deal worth approximately $3.9 billion. For 2005, Fisher recorded $1.3 billion in revenues for its healthcare products and services division, which markets IVD kits, reagents, and related products. Although the company sells a variety of diagnostics to laboratories, most of its recent efforts have been focused on expanding its consumables business. According to Meister, consumable products constitute about 80% of Fisher's projected 2006 sales of $5.9 billion. Consumables represent an even higher percentage of sales among its clinical products, he said.

In addition to updating and broadening its IVD offerings, the company's latest investments will complement its consumables products. “Fisher is currently a large provider of many of the tools used in molecular diagnostics, such as reagents and other consumables used in sample collection, sample preparation, and DNA amplification,” Oei said. “Information gained through gene-based testing can ultimately be used to develop tools and consumables for use in research into therapeutics that directly address the genetic basis of disease.”

As it produces these new tests, Fisher will have access to Nanogen's NanoChip electronic microarray platform. The automated system allows multiple patient samples to be placed on the same chip. Nanogen says that by doing so, labs can dramatically reduce the cost of running molecular tests—a recurrent concern among providers of genetic testing. “We believe the opportunity for growth in this market will come as the menu of molecular tests expands to replace older methods and as more laboratories are able to bring these methods in-house for routine use,” said Bob Proulx, vice president of marketing at Nanogen. “The fast growth of the molecular diagnostics market makes it attractive to the larger IVD players that have been strong in other segments, like clinical chemistry or immunodiagnostics. Crossover to the molecular market is likely and will create a challenging competitive marketplace.”

© 2006 Canon Communications LLC

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