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GE's Personalized Play for Amersham

Executive Summary

GE Medical's pending $9.5 billion acquisition of Amersham PLC, while cast in terms of the company's commitment to accelerate progress in personalized medicine, is fundamentally a hard-headed numbers play aimed at maintaining momentum of GE's gargantuan $10 billion medical systems business unit. GE needs healthy businesses oriented towards growing markets to maintain its momentum. And Amersham, with its stable, predictable contrast agent and protein separations businesses fits well into the portfolio. Meanwhile, the personalized medicine play holds mid-to-long term promise.

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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.

What's Next for Abbott in IVD?

Abbott and GE Healthcare broke off their $8.13 billion deal for Abbott's diagnostics and point-of-care businesses. The difficulty of delivering something so heavily integrated into Abbott appears to have surprised both sides. It's unlikely Abbott will seek another buyer and it is poised to make new investments in diagnostics. GE is also likely to continue pursuing more targeted acquisitions in diagnostics including, like Abbott, in molecular testing.

Does Roche Have It Right?

Roche's hostile tender offer for Ventana Medical Systems, and to a lesser extent its recent acquisitions of life science tools companies this year, highlight the firm's belief in diagnostics and its bet that personalized medicine--an area where innovative platforms and molecular test content will play significant if separate roles--will be key to its long-term growth. It could be an expensive and risky strategy that will take years to come to fruition.

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