While the drug industry continued to shun acquisitions in favor of alliances, service and device companies see mergers as the only way to go. Can diagnostics, still stubbornly unconsolidated, be far behind?

Imagyn faces problems common to small device companies: a daunting FDA, less lucrative end-markets, and lack of effective distribution. Short-term it’s betting on US Surgical to market its products. Longer-term it hopes to grow by building a portfolio of products that move gynecological and infertility procedures out of the hospital.

Development’s more expensive, markets are smaller, investors are meaner. But alliances aren’t the answer. Or at least not the answer anyone wants to hear. It's time to rethink the anti-alliance logic, which may require a new approach to starting up device companies.