Pharma Cozies Up to Diagnostic Labs

Last year, the Laboratory, MRI & Dialysis sector posted robust deal volume, relatively speaking. The total of 52 announced transactions was a 58% gain compared with the year before, and better than every year since 2007, when 54 deals were announced (see the chart below).

Two of the deals targeting a diagnostic lab or technology were made by major pharmaceutical companies. The common thread we’re seeing as we look back in our database is that these pharma companies are gaining another entry to physician practices, like the camel getting its nose under the tent.

The largest deal was OPKO Health‘s (NYSE: OPK) $1.47 billion acquisition of Bio-Reference Laboratories (NASDAQ: BRLI), for 1.7x revenue and 12.7x EBITDA. Bio-Reference is one of the largest full-service diagnostic laboratories in the world, providing clinical testing services to physician offices, clinics, hospitals, long-term care facilities and employers in more than 50 countries. Back in 2012, OPKO paid $40 million for OURLab, a CLIA-certified laboratory with 18 phlebotomy sites throughout the U.S., and an experienced national sales force calling primarily on urologists.

Valeant Pharmaceuticals International (NYSE: VRX) also acquired privately-held Commonwealth Lab‘s North American business, for an undisclosed price.  The deal included the rights to IBSchek™, a breakthrough blood test designed to help physicians quickly and reliably diagnose irritable bowel syndrome. Commonwealth’s owners then formed Commonwealth Diagnostics International, Inc., to continue offering their current portfolio outside of the United States and Canada.

The year before, Roche (SIX: RO) bought IQumm, Inc., a Cambridge, Mass.-based company focused on developing point-of-care offerings for the molecular diagnostics market. Its lab-in-a-tube technology is a novel biological sample testing platform.

 DealsChange, YoYDollarsChange, YoY
20155258%$4.25 billion-62%
201433-8%$11.1 billion491%
201336-23%$1.9 billion-15%
20124752%$2.2 billion-63%
201131-26%$6.0 billion164%
20104240%$2.3 billion2412%

 

 

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