Diagnostics M&A Review   
The Molecularization of IVD
Third QUARTER 2008

The Medicare Clinical Laboratory Diagnostic Fee Schedule Modernization Act of 2008 (H.R. 6761) and The Medicare Improvements for Patients and Providers Act of 2008 (H.R. 6331) represent important reimbursement advances for the IVD industry.  With the momentum gained in the recent repeal of the Medicare Competitive Bidding Demonstration Project via H.R. 6331, the industry can now focus its attention on the passing of  H.R. 6761 to address the widespread concern that the existing laboratory fee schedule fails to adequately address the more complex and technologically-intensive demands of providing lab services in today’s marketplace—particularly in fast growing areas such as molecular diagnostics.   From a valuation perspective, both Acts should increase the overall profitability of the industry, as the resulting modernized fee schedule will incorporate more accurate costs of doing business, providing a direct boost to the bottom line.

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Diagnostics M&A Review
The IVD Integration/Innovation Movement
Second QUARTER 2008

Molecular diagnostics, by definition, includes all tests and methodologies used to identify a disease or predisposition to a disease through the analysis of an organism’s DNA or RNA. It has traditionally been a major component of any in-vitro diagnostics (“IVD”) discussion; however, by leveraging the discoveries made from the human genome project in the first half of this decade, molecular diagnostics has assumed an even greater importance in the industry. As more genes are identified, evaluated and connected with specific diseases, the need for molecular tests that are accurate, automated, scalable and able to interface with a wide variety of information technology platforms increases correspondingly. Given these dynamics, most industry analysts expect molecular diagnostics to grow in the 10% - 15% range over the near-term, outpacing all other areas of IVD.    

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Diagnostics M&A Review
The IVD Integration/Innovation Movement
FIRST QUARTER 2008

Integration and innovation were central themes used to describe transaction activity in the in-vitro diagnostics (“IVD”) industry throughout 2007, and the impact of these factors can be examined on both a tactical and strategic level. Estimates for a shortage of trained laboratory technicians have resulted in greater emphasis being placed on the ability of new products and technologies to incorporate a wide array of diseases, communicate with a large number of data sources and automate routine and/or repetitive tasks. This emphasis has specific goals in 2007 in Review: The IVD Integration/Innovation Movement both clinical and drug development settings: improved laboratory efficiency, faster decision-making, fewer medical errors (in a clinical sense), reduced drug development costs and faster time to market for newly developed drugs.

From a mergers and acquisitions perspective, the need for innovative new products that can be smoothly integrated into existing and anticipated IVD platforms resulted in over 200 transactions in 2007, with several mega-deals changing the competitive landscape of the industry. 

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