Capping Laboratory Diagnostics Strategy, Siemens to Acquire Dade Behring for $7 Billion

Subject to regulatory approvals, the transaction is expected to close by March 2008.

With annual revenues of about $1.7 billion and some 6,400 employees in 35 countries, Dade Behring (Deerfield, IL, USA) is a global leader in laboratory diagnostics, including clinical chemistry testing, immunodiagnostics, hemostasis testing, and microbiology.

Siemens Medical Solutions (Erlangen, Germany), one of the world's largest providers of healthcare products and systems, and a unit of technology giant Siemens AG (Munich, Germany), employs more than 41,000 people in some 130 countries and reported sales of EUR 8.23 billion in fiscal 2006.

With the proposed acquisition, Siemens Medical Solutions aims at advancing its vision of becoming the global leader in full-range medical diagnostics – incorporating imaging diagnostics, clinical laboratory diagnostics, and healthcare information technology (IT) – all offered from a single source and under the Siemens umbrella.

Erich R. Reinhardt, president of Siemens Medical Solutions, pointed out, the planned acquisition of Dade Behring complements our current capabilities and offers us the unique opportunity to create an unparalleled portfolio of products and services, and become world market leader in comprehensive clinical laboratory diagnostics.

Siemens' foray into the relatively fast-growing and high-margin laboratory diagnostics field was first launched in mid-2006, when Diagnostics Products Corp. (DPC), a major player in immunodiagnostics, was acquired for $1.86 billion. This was soon followed with Siemens agreeing to buy Bayer AG's diagnostics division for EUR 4.2 billion. The acquisition of Bayer Diagnostics - with 2006 sales exceeding EUR 1.5 billion – elevated Siemens' emerging laboratory diagnostics group to the top ranks of the industry, a position to be further enhanced with the proposed acquisition.

A 'homecoming' for the venerable Behring imprint

Dade Behring was formed in 1997 by the merger of two venerable names from across two continents – Behring Diagnostics, founded in 1904 in Marburg, Germany, by the legendary scientist Dr. Emil Behring; and Dade International, founded in 1949 in Miami, FL, USA, by blood bank pioneer Dr. John Elliott.

Considered the father of modern immunology and serology, Dr. Behring discovered the diphtheria antitoxin and brought about other breakthroughs related to infectious diseases, earning him the first Nobel Prize for Medicine in 1901. Behringwerke, founded by Dr. Behring in the university town of Marburg to commercialize his scientific developments, expanded into diagnostic products in 1935 and ever since formed a pillar of the laboratory diagnostics sector in Germany.

Industry sources commented that Siemens might be paying a premium for
bringing the illustrious Behring name back home. In its claim for
global leadership, they expect Siemens' newly-minted laboratory
diagnostics powerhouse to fully capitalize on the value of the Behring
image.

GE's proposed Abbott Diagnostics acquisition is called off

The benefits of merging in-vitro (laboratory) and in-vivo (imaging) diagnostics under one roof, did not go unnoticed by GE Healthcare (Chalfont St. Giles, UK), a principal Siemens rival in the global healthcare sector. Accordingly, in January 2007, GE Healthcare initiated an agreement to buy market leader Abbott Laboratories' in-vitro and point-of-care (POC) diagnostics segment – a business that showed sales of $2.7 billion in 2006 – for $8.13 billion. However, the financial community was displeased with what it viewed as an excessive price tag, while ongoing regulatory problems in the manufacturing area raised additional hurdles. As a result, the proposed acquisition was called off in mid-July.


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Siemens Medical Solutions
Dade Behring
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