• Corporate Finance Transactions

BGL Healthcare & Life Sciences Insider: Diagnostics Get Smaller, Faster, and More Personal

December 11 2013

Healthcare reform is advancing tenets of preventive health, wellness, and personalized care, with diagnostic testing gaining value as a means to improve patient outcomes and lower healthcare costs through early detection, prevention, and treatment.

Secular trends are driving significant change in a large and fragmented global diagnostics market, which is experiencing rapid growth and expanding at twice the rate of the pharmaceutical industry:

  • Aging of a global population in need of more and frequent diagnostic testing and the increasing incidence of lifestyle-related chronic diseases
  • Movement to rapid testing methods, including point-of-care testing
  • Molecular testing furthering the discovery of genetic markers to aid in the early detection of disease and advancing personalized medicine
  • Technological advancements allowing for miniaturization and optimization of testing
  • Population growth and healthcare infrastructure expansion creating new market opportunities in emerging regions

M&A is continuing to play an instrumental role in how companies navigate a rapidly changing marketplace, with participants leveraging acquisitions to more rapidly access new technologies and market segments; expand test menus and geographic reach; and increase market share. Ongoing pressures of a changing regulatory environment and reduced reimbursement are accelerating consolidation.

Historically acquisitive in the diagnostics space, private equity remains active in industry consolidation. Large cap sponsors The Blackstone Group, The Carlyle Group, and Kohlberg Kravis Roberts emerged as preliminary bidders for Life Technologies, while Johnson & Johnson’s Ortho-Clinical Diagnostics unit, currently in play, is attracting interest from The Blackstone Group and The Carlyle Group. Select recent transactions, including Panasonic Healthcare Company (Kohlberg Kravis Roberts, agreement in September 2013), Genova Diagnostics (Levine Leichtman Capital Partners, November 2013), and the LIFECODES business of Hologic (TPG Biotech, March 2013 add-on to Immucor), illustrate a robust investment appetite. Strong players in niche market segments continue to be attractive targets.
 

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Related pages: John C. Riddle

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