No Surprise: LifeScan is Probably Buying Inverness
LifeScan is negotiating to buy Inverness Medical Technology, its long-time contract manufacturer, which makes electrochemical-based glucose meters and strips. LifeScan recently introduced a new glucose meter designed and made by Inverness; response to the product has been good and LifeScan wants more control of its partner, especially its manufacturing operations. LifeScan sees the Inverness technology as a key to its strategy for regaining its number one position in the lucrative glucose testing market. Inverness, for its part, has been primping itself to be bought by LifeScan for years. The parties are in final negotiations.
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In the past two years, Inverness Medical Innovations has paid a total of roughly $500 million to buy five rapid point-of-care (POCT) diagnostic testing businesses, which now lie at the heart of its effort to expand in the POCT realm. These have laid the ground work for four subsequent transactions and related financings, all aimed at making Inverness a world leader in women's health and pregnancy testing. But what's of interest isn't so much the women's health play per se as the company's management tream, which has twice before built up POCT companies, then sold them for significant premiums.
The diagnostics industry grew an estimated 7% from 2000 to 2001, to more than $20 million, with 8% projected for this year, according to Boston Biomedical Consultants. While in some industries, that figure might be considered lackluster, in diagnostics it is far better than the norm, especially considering that the growth was solid and broad, benefiting most top companies in many product categories.