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i-Stat's New Mainstream Partner: Abbott

Executive Summary

i-Stat Corp., a leader in the point of care diagnostics business, is teaming up with Abbott Diagnostics to sell its hand-held POC devices to hospitals and clinics. The deal signals a change of heart on the part of both companies: Abbott has been sitting on the sidelines of the non-blood glucose POC market, watching it evolve, while i-Stat early on gained a reputation for trying to bypass laboratories in favor of selling directly to other hospital departments. Now, Abbott, which has a strong hold on clinical labs, will be taking over responsibility for all i-Stat sales, with the exception of territories carved out by another i-Stat partner, Hewlett-Packard.

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A Sobered Abbott Buys i-Stat

Abbott Laboratories' acquisition of i-Stat for $392 million reflects the promise and limitations of point-of-care diagnostics. A decade ago, i-Stat was a giddy startup, on a mission to revolutionize laboratory medicine with a handheld diagnostics system that could run basic blood tests rapidly at the patients' bedside. While it has accomplished much, it is far from creating a revolution. Meanwhile, the timing of the deal comes as Abbott emerges from a four-year nightmare with the FDA in which the FDA forced it to pull many of its important immunoassay tests off the market.

A Sobered Abbott Buys i-Stat

Abbott Laboratories' acquisition of i-Stat for $392 million reflects the promise and limitations of point-of-care diagnostics. A decade ago, i-Stat was a giddy startup, on a mission to revolutionize laboratory medicine with a handheld diagnostics system that could run basic blood tests rapidly at the patients' bedside. While it has accomplished much, it is far from creating a revolution. Meanwhile, the timing of the deal comes as Abbott emerges from a four-year nightmare with the FDA in which the FDA forced it to pull many of its important immunoassay tests off the market.

I-Stat's $60 Million Gamble

I-Stat, the pioneer in point-of-care diagnostics, is paying Abbott $60 million to break off a five-year-old distribution arrangement. That's a lot of money for a company that lost close to $60 million last year and has never made a dime. But i-Stat executives say it's the only way for their company to thrive and become profitable. The deal with Abbott never reached hoped-for sales goals, although Abbott met minimum targets. I-Stat has spent the better part of the past year shoring up its executive management team and building a sales and marketing infrastructure so that it can hit the ground running when the deal terminates in December.

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