Siemens to acquire Dade behring

Implications: Siemens, a German company, known for medical diagnostic equipment such as imaging devices is acquiring Dade-Behring to expand its portfolio into the clinical lab science diagnostic area. As predicted in a post I did on February 28, we will be seeing more "fully diagnostic" companies combining the full range of diagnostic tools under one umbrella.  Stand alone clinical lab companies are all ripe for acquisition right now.

Analysis: Companies that have  been known for providing invitro diagnostics -eg GE and Siemens - are in an acquisitive mood right now and pursuing a deliberate strategy to control the "whole diagnostic" arena. They want to combine imaging, IT and clinical lab diagnostics for example under one umbrella. Clinical lab companies have a mixed history of financial performance and even those that have done well (or emerged successfully from bankruptcy) might find it hard to compete against the looming giants.

The planned Dade/Siemens merger costing an estimated $7billion should take place in early 2008 and will catapult the new company to the number 1 position worldwide in the diagnostic industry. The GE-Abbott merger announced earlier this year has fallen through because of so-called "complexities" of resolving international licensure and intellectual property issues. That setback does not temper the acquisitive fervor of GE. Nor does it make Abbott comfortable since they will then be third or 4th in the diagnostic market if they stand alone.

Siemens merged with DPC and Bayer under the umbrella of Siemens Medical Solutions (SMS) to form the first full service diagnostics company. Now, the Dade acquisition. Dade brings a long history of good customer service, innovation and a  worldwide presence. Siemens is known for efficiency and IT expertise. This should be an interesting partnership.

Local clinical laboratory customers might well be concerned about any possible change in customer service, innovation and nd responsiveness. However, from a business point of view, this merger makes perfect sense. Another prediction: we have not seen the end of mergers in this space.