Deal volume settled down in 2016, following a very busy 2015 in the Laboratories, MRI & Dialysis sector. The 41 deals recorded represent a 21% decline compared with the 52 announced in 2015.

Laboratories have had to adapt as hospitals and health systems have merged or closed in recent years. Some labs have evolved to offer coordinated diagnostics: offering tests that give on-the-spot diagnoses, handling bills and lab data from several sources and providers as an aid to accountable care organizations, and focusing on the patient experience to ensure repeat business.

At the same time, deal value surged in 2016, up 166% year-over-year to $11.6 billion. Two multi-billion-dollar deals accounted for 84% of the total. Seven of the 10 acquirers to disclose prices were publicly traded companies, while nine out of the 10 targets in those deals were based in the United States.

The largest deal in this sector has yet to close, and the acquirer is now in court seeking to terminate it. Yes, that would be the $5.8 billion deal that Abbott Labs (NYSE: ABT) announced in February 2016, with Alere Inc. (NYSE: ALR) as its target. Alere provides point-of-care diagnostics and services focused on the areas of infectious disease, cardio-metabolic disease, and toxicology in the United States and internationally. At the time of the announcement, Abbott agreed to pay $56 per common share, which was a 51% premium to Alere’s prior-day closing price. Since the signing, Alere suffered a series of damaging business developments, including multiple government subpoenas. On December 7, 2016, Abbott filed a complaint to terminate the deal, based on the substantial loss in Alere’s value following the merger agreement. No further word on that motion, but Abbott moved along and closed its $30.7 billion acquisition of St. Jude Medical (NYSE: STJ) on January 4, 2017.

No such drama existed in the transaction between Danaher Corp. (NYSE: DHR) and its target, Cepheid (NASDAQ: CPHD). The medical device maker paid approximately $3.9 billion for Cepheid, a molecular diagnostics company that develops, manufactures and markets integrated systems that enable molecular testing for organisms and genetic-based diseases by automating manual laboratory processes. The third largest deal came from privately held IBA Molecular, a global manufacturer and distributor of radiopharmaceutical products. The Virginia-based company acquired Mallinckrodt’s (NYSE: MNK) nuclear imaging business for $690 million, including a portfolio of diagnostic imaging products. Approximately two-thirds of current annual revenues originate in the United States.