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Amersham's Push for High-Value Diagnostics

Executive Summary

Amersham Health is applying Big Pharma marketing and R&D strategies to the traditionally stodgy, highly price-sensitive field of diagnostic imaging contrast agents. It has been far more aggressive than competitors in working to make innovation the basis of competition. But some analysts question whether the company can maintain near-to-mid-term growth as it awaits results of its risky, long-term effort in molecular imaging.

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GE Acquires Clarient To Anchor Its Molecular IVD Business

GE is buying Clarient, which provides molecular cancer tests. It intends to make Clarient the cornerstone around which it builds out a molecular in vitro diagnostics business, combining Clarient with its own diagnostic imaging expertise to give it a full suite of triage and cancer diagnostic capabilities. In some ways, it could solve GE's long-standing issue of how to innovate in healthcare and move into high-value businesses without taking on the risks and timelines of pharma-style R&D.

The Pace of Development of Molecular Imaging Agents

The adoption of new in vivo molecular imaging agents may eventually follow the current path of in vitro diagnostics, which for some products is shifting from a cost-effectiveness standard for reimbursement toward an evidence-based. But the companies most likely to support the clinical trials that would establish such benefits are only slowly integrating the development of molecular agents into their core businesses. IVD - an area of acquisition interest for these companies -may be the force that transforms them into more biologically minded and innovation-driven entities, and in so doing it may bolster the development of molecular imaging agents.

GE'S Perception of Convergence

Although much smaller in scale, General Electric Co.'s $9.4 billion acquisition of Amersham PLC (now GE Healthcare's division GE Healthcare Bio-Sciences Inc.) [See Deal] early last year is every bit as radical in its space as Johnson & Johnson's $25.4 billion acquisition of Guidant Corp. is in the cardiovascular world. [See Deal] And while J&J's move highlights the decades-long consolidation movement in major medical device sectors, GE's actions illustrate another key trend: convergence. The Amersham purchase puts GE for first time in the life sciences industry and has a systems-oriented, engineering company talking about intangible, biology-focused strategies like personalized medicine.

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