The future of clinical laboratory diagnostics

Implications: The purchase of Abbott Diagnostics (ADD) by General Electric follows the purchase of Bayer Diagnostics and DPC by Siemens. It can be anticipated that GE will purchase a second diagnostics company. Since this is part of a restructuring of the diagnostics industry away from pharmaceutical companies to electronics companies, it should also be anticipated that Philips and possibly IBM would enter this arena in the very near future

Analysis: The major available diagnostics companies of interest to the electronics groups are Roche, BioMerieux, Beckman Coulter, Dade Behring and Ortho Clinical Diagnostics (OCD). With the intent of improving their short-term bottom line in preparation for these negotiations, many of these companies have recently had major layoffs or restructuring of their debt, similar to that which occurred in ADD and Bayer. Due to Roche's market market leading position in diagnostics, it would represent a significant acquisition. It is interesting that Beckman Coulter has recently purchased rights to amplication technology, possibly as part of or in preparation for negotiations for its sale. While all of these companies are potentially of interest to GE, OCD may be the best fit. Abbott has traditionally had weak chemistry analyzers and has an obsolete low volume immunoassay analyzer (AXSYM). These gaps in ADD are the major strengths of OCD. OCD also has access to molecular diagnostics amplification technology, which they have not developed but which would fill the gap created by GE’s decision not to purchase Abbott Molecular. The fit between the GE Amersham group, the ‘old’ Amersham group within OCD, and the new OCD manufacturing plant close to Cardiff are also interesting. Due to the high penetration of ADD and OCD in the blood screening market and associated anti-trust issues in the US, if GE should pursue this with OCD, it should also be anticipated that the OCD blood screening group would not be part of this agreement. This product line may be of interest to Siemens. Based on the strong molecular portfolio of Roche, a two-company approach which includes Roche, may be pursued by Philips or IBM, with the intent of remaining competitive with Siemens and GE.

Since this activity is intended to leverage a new generation of high-value diagnostics products, which address specific diagnostic and prognostic questions (‘personalized medicine’), the information technology supporting multivariate analyses generating data from scores of probes (‘markers’) and assessing patterns within these data sets is critical. It is this information technology requirement, which is a strength of Siemens, GE, Philips and IBM that is driving these changes. Based on this assessment, it should be anticipated that, in a second phase, there would be acquisitions of the major diagnostics companies in the anatomic pathology arena. The intent will be to allow the capture of images of histologic sections on which scores of probes have been applied. Digital image capturing and manipulation are also strengths of Siemens, GE, Philips and IBM, which they have already successfully leveraged, particularly in Radiology. Manipulation of the digital image to select the area of diagnostic interest and to assess the data patterns generated by the probes within these areas of interest should revolutionize the practice of surgical pathology and clinical medicine.