J&J Agrees to Sell Blood Testing Business for $4 Billion

Johnson & Johnson announced Monday that it has accepted a binding offer from The Carlyle Group to buy its Ortho-Clinical Diagnostics business.The roughly $4 billion purchase, still pending customary closing requirements, is expected to close toward the middle of the year.News of the potential sale came out early this year, with Monday the deadline for J&J to accept or reject the Carlyle Group's offer. The Ortho Clinical Diagnostics division provides blood-testing equipment and chemicals.So what exactly does the Ortho Clinical Diagnostics division sell? The Associated Press has a good summary of the business:"One division supplies equipment and chemicals to screen donated blood for HIV, hepatitis C and other serious diseases, and for typing donated blood to ensure patients get safe, compatible blood transfusions. The other division makes technology for advanced testing of blood to diagnose a range of health conditions and to monitor the effects of medication."

One would think a blood testing equipment business would be a gold mine. Getting one's blood drawn is pretty common, after all.But it has not been so for J&J.The company's diagnostics business brought in $1.89 billion in revenue in 2013, a nearly 9 percent decline from 2012. J&J is not alone in this situation. Even with a slight uptick related to the U.S. Affordable Care Act bringing in new patients, the $75 billion lab testing industry will continue to slow down through 2015, according to G2 Intelligence research recounted by American Public Media's Marketplace.The culprit is shrinking testing reimbursements from both public and private insurers.

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker.