What's Fueling The Recent Diagnostics Dealmaking?
Executive SummaryA variety of new players have become active dealmakers around personalized medicine diagnostics tests and services. One way to put these deals in context is to view the acquired assets through the lens of how they are to be deployed. To a large extent, the transactions are being driven by the interests of drugmakers, which are seeking new tools to assist them in clinical trials, thus creating more opportunity for the acquirers to offer clinical development services.
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The prospective medical device tax, the continuing decline of venture investing, pricing challenges, austerity measures in Europe, and other headwinds continued to push against the medtech industry in 2012. But emerging clinical and geographic markets, along with an active M&A market, are providing the industry with some momentum going into 2013.
Diagnostics industry trends include the increasing adoption of genomics in clinical testing and with it a focus on services and workflow more so than differentiated technology; a slowdown in M&A activity, partly to allow the digestion of assets acquired in 2010-11; and the ongoing uncertainties of regulation and reimbursement of high-value molecular tests.
The current crop of molecular diagnostics acquisitions – espcially those made by nontraditional buyers – must mature prior to the commencement of additional M&A activity. Historical data suggest this could occur starting in the 2014-2015 timeframe.