Siemens and Labcorp form Alliance

Implications: Siemans Healthcare (NYSE: SI) recent alliance with Laboratory Corporation of America Holdings (NYSE: LH) to develop and distribute new clinical diagnostic tests will help accelerate the transition of novel assays, particularly molecular dianostics, from the research setting into mainstream clinical diagnostic use.

Analysis: The recent formation of a co-development alliance between Siemens Healthcare (NYSE: SI) and Laboratory Corporation of America Holdings (NYSE: LH) will help drive the transition of new clinical diagnostic tests from the research segment into mainstream clinical diagnostic use.  This potentially powerful strategic alliance brings together Siemens in-depth diagnostics capabilities with Labcorp's extensive lab services distribution pipeline to over 220,000 US customers.  Siemens acquired several leading diagnostic companies including Bayer Diagnostics, Diagnostic Products Corporation and Dade Behring Holdings, giving it proven assay development expertise.  Labcorp is known for its leading position in introducing new diagnostic tests to physician offices and providing reference lab services to hospitals and other healthcare delivery networks.

The alliance will focus its efforts on areas offering the highest patient value such as personalized medicine, cancer, metabolic syndrome and diabetes.  There is a constant stream of news media attention surrounding personalized medicine, which uses molecular diagnostics to assess a patient's response to selected therapies.  According to a report from a leading market research company, the worldwide market for molecular diagnostics was estimated at $18 billion in 2006 and is expected to reach $92 billion in 2016.  The US account for half of this market with an annual growth rate of over 40%.

Detailed information on clinical and molecular diagnostics market segments including companies, growth rates and competitive advantages are available through a consult.  Please contact your GLG representative and schedule one today.