Recent History of Acquisitions and IPOs for Reference Labs

Recent History of Acquisitions and IPOs for Reference Labs and Companies Developing or Marketing Molecular Products

Laboratory versus Molecular Company Acquisition/IPO comparison

The table below shows the recent activity in the reference laboratory and corporate world. Prior to 2013 the activity in the Reference Laboratory Industry was pretty well limited to acquisitions of labs by labs capturing market share. Starting late 2012 this began to change as acquisitions and IPOs for labs were for molecular methods and content to expand into new market segments.

  2013 2014 2015 TOTAL
IPO        
LAB 3 3 4 10
COMPANY 1 4 3 8
ACQUISITIONS/MERGER        
LAB

a) by another lab

b) by a company

 

3

2

 

5

2

 

8

4

 

16

8

  5 7 12 24
COMPANY – molecular 4 9 14 27

Note: In the US the two largest reference labs embarked on a different growth strategy beginning in late 2013:

LabCorp   – 2/2014     Acquired Covance CRO

-11/2014     Acquired Bode – forensic testing business

-10/2015     Acquired Food testing business

Quest Diagnostics

-4/2015         Merger with Quintiles CRO

Further, both labs are focusing on partnerships with Hospitals to manage their laboratory testing services. A reasonable interpretation is these two labs do not expect growth via market expansion within the US clinical diagnostic segment. Outside the US lab acquisitions, principally in Europe, as consolidation continues to capture market share.

On the corporate side several firms changed their business model from manufacturer to laboratory services which mirrors the trend toward specialized content (Exact Sciences, Vermillion, Transgenomics, Sequenom, Cancer Genetics) and several set up via acquisition or partnerships laboratory services (Sysmex, Roche, Illumina, Opko, Premaitha, Diaxonhit). Again these were focused on content.

Finally, CareDx changed to laboratory services then acquired a product company, bioMerieux sold most of its shareholdings in its lab business bioTheranostics, and Beckman sold its testing laboratory.

A key theme for all the reference lab activity is the value of content. Laboratories that have ‘generic’ testing menus have struggled to obtain financing and a couple ceased operations. All but two IPOs were associated with a unique biomarker and clinical content was king. The two labs that were not based on content had strong market segment presence in a selected geography – India and Middle East respectively.

 

Meanwhile, as reported in IVDNews Molecular Deal reports, the number of lab and company private financing arrangements were multiple times larger than the IPO and acquisitions announced during the last 3 years. There were well over 100 private financing deals during this period. With the decelerating global economic financial measures reported on a regular basis, 2016/17 could be a watershed period for consolidation as privately financed entities are shut out of external financing channels and will need to find an acquirer.

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