The tests might be cheap, but the company is not. Its tests tend to reach the US market via the Clia waiver route, which is customary for simple tests that have a low risk of error and can be carried out by non-lab-trained personnel.Īnd an easy route to market helps keep costs low – no bad thing in a time of cost-cutting and pressure on pricing exerted by hospital chains. The largest chunk of Alere’s revenues comes from cardiometabolic diseases, where it markets tests for disorders including coronary heart disease and diabetes second biggest is infectious diseases, with tests for MRSA and Clostridium difficile, for example. But Alere already claims to be the global leader in point-of-care diagnostics.Ĭanaccord Genuity analysts estimate that the combined company will have around 54% of the global point-of-care market, which they say is worth $5.5bn and is growing at mid to high single digits. While Abbott’s diagnostics segment brought it $4.6bn last year, according to EvaluateMedTech’s consensus data, its bedside tests amounted to only a tenth of that. But Roche’s technology, like Abbott’s, centres on automated testing apparatus designed to process large volumes of samples in specialised laboratories, rather than that done on the spot in the hospital or doctor’s office. Integrating Alere’s technology ought to push Abbott’s annual diagnostics sales past the $7bn mark, Abbott says, meaning that the combined group will leapfrog Danaher to take second place to Roche in the in vitro diagnostics sector. Quite apart from this, some Alere shareholders have been vocal in their fervour for a trade sale, and will surely be delighted by today’s outcome. The beginnings of an attempt to take the group private surfaced in September with the group’s founder obtaining financing worth $8.6bn to purchase Alere’s stock and to pay down its debt.īut a more traditional trade sale had been telegraphed before that: in April 2015 Alere hired Jim Hinrichs, who had overseen the sale of CareFusion to Becton Dickinson for $12.2bn, as chief financial officer.
If Abbott had made its intention to buy – if not its target – clear, the same is not exactly true of Alere.
This deal is not just about increasing a product offering, but moving into what is arguably a more appealing area. The kind of sophisticated laboratory-based testing equipment that has been the core of Abbott’s diagnostics operations is expensive, and payers are increasingly unwilling to spend. Buying the molecular diagnostics company Alere will make Abbott the world leader in point-of-care testing, and paying a 50% premium for a heavily indebted company shows how avidly Abbott covets this title.Ībbott increasing its offering of simple, cheap bedside tests is another indicator of where the money is in medtech.
Back in September Abbott Laboratories told EP Vantage it was interested in large acquisitions, and six months later a $5.8bn deal has arrived.
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