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Dx Deal Roundup: Top 10 Clinical Lab M&A Deals of 2023

by | Jan 9, 2024 | Deals-lir, Essential, Lab Industry Advisor

An overview of the key 2023 mergers and acquisitions in the diagnostics industry and the trends they reveal.

M&A activity in the wider healthcare market and clinical diagnostics space is nowhere close to where it was before the COVID-19 pandemic. However, diagnostics M&A showed signs of life in 2023, in terms of both deal volume and deal value. Several of the lab industry’s biggest players made major strategic acquisitions during the year, including Thermo Fisher Scientific, Danaher, PerkinElmer (now known as Revvity), Abbott, Quest Diagnostics, and Labcorp.

For decision-makers in clinical laboratories, the deals raise these important points:

    • In vitro diagnostics (IVD) manufacturers are hungry for more customers following a decline in sales related to less demand for COVID-19 test kits and services. From this perspective, labs looking to expand their offerings may be in an advantageous position with IVD suppliers.

    • On the other hand, as the lab supply and IVD market continues to consolidate, it has led to a tightening of choices of whom labs can shop with. As the number of companies that sell products and services dwindles, the larger, surviving entities wield more influence and power in the industry.

  • Finally, savvy lab leaders should examine the market conditions that resulted in these deals, looking for clues or early trends that may give their organizations a leg up on competitors.

Here’s an overview of the M&A year and the long-term trends that drove and will likely continue to drive it.

M&A deal value increases in 2023

There were seven reported mergers and acquisitions involving diagnostics companies with a deal value at or above $1 billion announced this year, compared to only four in 2022.1 As they did in 2022, deal makers kept a tighter lid on deal financial terms, with acquisition prices disclosed in only roughly 50 percent of all publicly announced deals during the year. Among the transactions in which prices were reported, these were the 10 largest by deal value.

Top 10 Diagnostic M&A Deals of 2023 (By Deal Value)

RankBuyerTarget Reported Price
1DanaherAbcam$5.7 billion cash (all Abcam outstanding shares at $24.00 per share)
2Thermo Fisher ScientificOlink$3.1 billion cash (all Olink outstanding shares at $26.00 per share)
3Thermo Fisher ScientificThe Binding Site Group£2.3 billion ($2.80 billion) cash
4New Mountain CapitalRevvity (previously known as PerkinElmer)$2.45 billion cash
5WerfenImmucor$2.0 billion cash
6SD Biosensor + SJL PartnersMeridian Bioscience$1.53 billion cash + other financing
7Standard BioTools (formerly known as Fluidigm)SomaLogicMore than $1 billion all stock merger
8Thermo Fisher ScientificCorEvitas$912.5 million cash
9AbbottCardiovascular Systems (CSI)$890 million cash + stock
10Quest DiagnosticsHaystack OncologyUp to $450 million cash
Source: Company press releases.

Dealmaking trends in life sciences

Continuing recent patterns, life sciences and instrument companies drove most of the high-value diagnostics deals, accounting for seven of the top 10. No company was more active during the year than Thermo Fisher Scientific. As with so many diagnostics companies, declining COVID-19 sales and softness in the global biotechnology market made 2023 a challenging year for Thermo Fisher Scientific. But despite falling revenues, reorganization, and layoffs, the US life sciences giant made a trio of key acquisitions during the year:

    • On January 3: made a move in specialty diagnostics by closing its previously announced acquisition of blood cancer and immune system disorder assays and instruments provider The Binding Site Group for £2.3 billion ($2.8 billion at current exchange rates).2,3

    • In August: bolstered its position in biopharma and lab services by acquiring CorEvitas, LLC, a major supplier of “regulatory-grade, real world evidence for approved medical treatments and therapies,” from Audax Private Equity for $912.5 million.4

  • In October: launched a tender offer targeting next-generation proteomics firm Olink at $26 per common share, $3.1 billion in total, making it the second-largest M&A deal of the year.5

In terms of deal value, Danaher made the biggest acquisition of the year, inking an agreement to acquire protein consumables supplier Abcam for $5.7 billion. Slated to close in mid-2024, the acquisition of the firm known as the “Amazon of antibodies” will significantly lift Danaher’s capabilities in drug discovery and mapping of complex diseases.6

Lab company dealmaking

All three of the nation’s largest lab companies engaged on the M&A front in 2023. The fireworks began when Abbott announced the completion of its acquisition of Cardiovascular Systems, Inc. (CSI), a producer of medical devices for atherectomy.7 The deal bolsters Abbott’s position in the cardio device market. At $890 million, it was also the highest-priced acquisition by a lab company in 2023.8

In June, Quest Diagnostics made a big move to advance its position in personalized cancer testing by acquiring former Johns Hopkins spinoff Haystack Oncology, developer of a liquid biopsy ctDNA test enabling minimal residual disease patients to plan post-surgical treatment.9 Quest shelled out $300 million in cash up front while agreeing to pay up to $150 million more in future milestone payments.10

In 2022, Labcorp raised eyebrows by acquiring next-generation sequencing test maker Personal Genome Diagnostics in a deal worth up to $575 million.11,12 In 2023, Labcorp focused on its core lab testing business by acquiring Enzo Biochem’s clinical laboratory division for roughly $113.25 million in July and spinning off its own clinical development business into a separate entity, named Fortrea, in February.13,14

Diagnostics M&A dealmaking in 2024

Despite the challenging macroeconomy and increasingly hostile regulatory environment, a leading lab marketing analyst who spoke with G2 Intelligence on condition of anonymity believes that M&A activity will pick up in the year ahead as interest rates and inflation recede.15 According to media reports, new rules proposing to bring all laboratory-developed tests (LDTs) under FDA regulation would also likely accelerate consolidation in the lab industry.

“Complying with FDA premarket and postmarket rules is costly and many smaller labs that develop LDTs simply don’t have the experience or resources to do it effectively,” he notes. As a result, labs seeking to remain active in the LDTs market may look to the large national lab firms like Quest and Labcorp to navigate the FDA process for them. This will create more opportunities for the big companies to acquire smaller labs, either in whole or just their LDT assets.

References:

    1. https://www.g2intelligence.com/ma-report-the-top-15-diagnostic-deals-of-2022/

    1. https://ir.thermofisher.com/investors/news-events/news/news-details/2023/Thermo-Fisher-Scientific-Completes-Acquisition-of-The-Binding-Site-Group/default.aspx

    1. https://newsroom.thermofisher.com/newsroom/press-releases/press-release-details/2022/Thermo-Fisher-Scientific-to-Acquire-The-Binding-Site-Group/default.aspx

    1. https://ir.thermofisher.com/investors/news-events/news/news-details/2023/Thermo-Fisher-Scientific-Completes-Acquisition-of-CorEvitas/default.aspx

    1. https://ir.thermofisher.com/investors/news-events/news/news-details/2023/Thermo-Fisher-Scientific-Commences-Tender-Offer-for-All-Outstanding-Common-Shares-and-ADSs-of-Olink/default.aspx

    1. https://investors.danaher.com/2023-08-28-Danaher-to-Acquire-Abcam

    1. https://abbott.mediaroom.com/2023-04-27-Abbott-Completes-Acquisition-of-Cardiovascular-Systems,-Inc

    1. https://www.prnewswire.com/news-releases/abbott-to-acquire-cardiovascular-systems-inc-301742551.html

    1. https://newsroom.questdiagnostics.com/2023-06-21-Quest-Diagnostics-Completes-Acquisition-of-Haystack-Oncology,-Adding-Sensitive-MRD-Liquid-Biopsy-Technology-to-Cancer-Diagnostics-Portfolio

    1. https://newsroom.questdiagnostics.com/2023-06-21-Quest-Diagnostics-Completes-Acquisition-of-Haystack-Oncology,-Adding-Sensitive-MRD-Liquid-Biopsy-Technology-to-Cancer-Diagnostics-Portfolio

    1. https://www.labcorp.com/labcorp-completes-acquisition-personal-genome-diagnostics

    1. https://www.labcorp.com/labcorp-strengthens-oncology-leadership-position-addition-personal-genome-diagnostics-provider

    1. https://www.globenewswire.com/en/news-release/2023/07/24/2709935/0/en/Enzo-Biochem-Completes-Sale-of-Clinical-Laboratory-to-Labcorp.html

  1. https://ir.labcorp.com/news-releases/news-release-details/labcorp-unveils-new-name-future-independent-clinical-development

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Here’s a summary of key strategic diagnostic deals announced in the period from late November through mid-December 2023:

Mergers, Acquisitions, and Asset Sales

Acquiring CompanyTarget(s)Deal Summary
imawarebinx health• Price: Undisclosed
• Status: Commencement of previously announced tender offer expected to close by mid-2024
• Acquisition of binx health’s at-home consumer testing business bolsters imaware’s position in home health testing market
• binx health retains its point-of-care molecular diagnostic business
Blue Water BiotechProteomedix• Price: Proteomedix shareholders to receive mix of common and preferred shares amounting to a roughly 19.9% stake in merged company
• Status: Signed merger deal with no closing date announced
• Acquisition of Swiss diagnostics firm Proteomedix and its Proclarix® prostate cancer test enables Blue Water to rebrand as oncology healthcare firm
• Blue Water to change its name to Onconetix and maintain certain Proteomedix operations in Switzerland as its European headquarters
PerkinElmerCovaris• Price: Undisclosed
• Status: Agreement to acquire with no closing date announced
• Acquisition of life science firm, including its next-generation sequencing capabilities for high-throughput sample preparation and data analysis enables PerkinElmer to enter “high-growth diagnostics end market”
AransciaYouScript (from Invitae)• Price: Undisclosed
• Status: Closed
• Acquisition of assets of pharmacogenomics decision support company pipeline from Invitae enhances Aranscia’s expertise and portfolio related to improving clinical workflows and boosting access to precision medicine

Strategic Alliances, Partnerships, and Collaborations

Partner 1Partner(s) 2+Deal Summary
EUROIMMUN (part of Revvity)Xpedite Diagnostics• Objective: Offer DNA extraction protocols for point-of-care diagnostics
• Offer users of EUROIMMUN’s EUROArray diagnostics platform Xpedite’s EUROArray SwiftX-traction Kit for rapid manual DNA extraction
IlluminaHaploX• Objective: Launch domestically produced NextSeq™ 2000Dx-CN-HAP sequencer in China
• Dynamic: Expansion of current partnership aimed at bolstering firms’ position in Guangdong-Hong Kong-Macao Greater Bay Area life sciences market
Foundation Medicine (Roche subsidiary)AnHeart Therapeutics• Objective: Develop and secure US regulatory approval for Foundation’s comprehensive genomic profiling tests as companion diagnostics for AnHeart’s investigational ROS1 inhibitor taletrectinib
• Dynamic: Drug currently being evaluated for treatment of patients with advanced or metastatic ROS1-positive non-small cell lung cancer (NSCLC) in Phase II trials
Foundation Medicine (Roche subsidiary)Pierre Fabre Laboratories• Objective: Develop Foundation’s genomic tests as companion diagnostics for therapies for patients with NSCLC
• Dynamic: Firms to seek EU regulatory approval for FoundationOne®CDx and FoundationOne®Liquid CDx as companion diagnostics for Pierre Fabre Laboratories’ BRAF/MEK inhibitor combination regimen BRAFTOVI® (encorafenib) and MEKTOVI® (binimetinib)
 PlumCareFabric GenomicsObjective: “Help create an ecosystem to enable drug discovery and development for rare diseases”
• Dynamic: Integrate the Fabric AI platform with PlumCare’s FirstSteps newborn genome screening program in Greece
GeneoscopyAdiso Therapeutics• Objective: Use Geneoscopy’s stool-based transcriptome platform to assess patient response to Adiso’s experimental treatment for inflammatory bowel disease
•Dynamic: Geneoscopy to use its platform to prospectively assess gene expression changes in stool samples from patients in Phase II clinical trial of Adiso’s ADS051
• Adiso to also use Geneoscopy platform in future trials as part of a precision immunology approach utilizing stool-derived eukaryotic RNA to assess mucosal healing and predict patient response to therapy
KromaTiDSeQure Dx• Objective: Comarket gene editing evaluation products and services
• Dynamic: Jointly offer KromaTiD’s dGH in-Site assay for single-cell, high-resolution, genome-wide DNA insert tracking; dGH SCREEN assay for de novo monitoring of structural variants throughout the genome; and Genomic Integrity Karyotyping service alongside SeQure’s NoteSeQ platform for off-target site profiling and ScopeSeQ platform for assessing gene editing outcomes
Haystack Oncology (subsidiary of Quest Diagnostics)Rutgers Cancer Institute of New Jersey• Objective: Study treatment for early-stage triple-negative breast cancer patients
• Dynamic: Researchers to use Haystack’s MRD technology to help evaluate therapeutic response and collect molecular information on individuals undergoing treatment in adjuvant setting with liposomal doxorubicin and carboplatin
Quest DiagnosticsScipher Medicine• Objective: Provide diagnostic services for individuals with rheumatoid arthritis
• Dynamic: Quest to provide RNA extraction and next-generation sequencing (NGS) services for Scipher’s PrismRA blood-based molecular assay for predicting patient response to TNF inhibitor therapy
• Quest to also provide specimen collection and transport
GenDx (part of Eurobio Scientific)OSE Immunotherapeutics• Objective: Develop companion diagnostic (CDx) test for high-resolution typing of HLA-A*02 based on GenDx’s NGSgo® kit and NGSengine® software
• Dynamic: GenDx to develop and validate NGS-based CDx to identify patients with the HLA-A*02 genotype who respond to Tedopi® epitopes, determining their eligibility for a Phase III trial of Tedopi as a second-line treatment in HLA-A*02 positive NSCLC patients
MetabolonTrajan Scientific and Medical• Objective: Jointly offer remote microsampling services for metabolomics research
• Dynamic: Comarket Trajan’s Neoteryx Mitra® collection devices, which are designed for the self-collection of 10-, 20-, and 30-microliter blood samples, for use with Metabolon’s targeted and untargeted metabolomics panels
AnchorDxDiaCarta• Objective: Develop and commercialize cancer screening products
• Dynamic: Long-term global collaboration to leverage firms’ respective proprietary technologies for DNA methylation and mutation detection, including AnchorDx’s DNA methylation-based bladder cancer early detection test
Oxford Nanopore TechnologiesNorwegian Centre for Clinical Cancer Research• Objective: Research the clinical utility of nanopore sequencing in precision cancer medicine
• Dynamic: Use Oxford Nanopore’s PromethION 24 device for research at Oslo University Hospital, focusing on central nervous system tumors and development of single-cell methods for analyzing DNA methylation, somatic, and pathogenic copy number variants, tumor heterogeneity of gene expression, and mutations and fusions
PersonalisTempus Labs• Objective: Jointly commercialize Personalis’ NeXT Personal® Dx, minimal residual disease assay
• Dynamic: Tempus to integrate whole genome-based liquid biopsy assay into its testing menu and market it to oncologists while also paying Personalis up to $12 million in milestone payments to help fund the LDT’s clinical evidence development
• Personalis to pay Tempus for the fair market value of sales, marketing, order requisition, and results delivery services and will provide Tempus warrants to purchase up to approximately 9.2 million shares of Personalis’ common stock over the next 24 months

Distribution, Sales, and Marketing Agreements

Product OwnerDistributorDeal Summary
Aesku.GroupThermo Fisher Scientific• Products: Aesku’s immunofluorescence products, automated instruments, and software
• Territories: US
• Exclusive
Alveo Technologies19 different distribution companies• Products: Alveo’s point-of-care molecular diagnostic products
• Territories: Europe, Middle East, Africa
Quantum-Si3Genes Distribution• Products: Quantum-Si’s Platinum protein sequencing instrument
• Territories: Czech Republic, Slovakia, Hungary
Quantum-SiELTA 90• Products: Quantum-Si’s Platinum protein sequencing instrument
• Territories: Southeast Europe
PersonalisMyriad Genetics• Products: Personalis’ ImmunoID NeXT immunogenomics biomarker discovery platform
• Territories: Undisclosed
• Myriad to market platform to pharmaceutical partners who use Myriad’s MyRisk® Hereditary Cancer Test, BRACAnalysis CDx®, and/or MyChoice® CDx assays
• Nonexclusive

Licenses

LicensorLicenseeDeal Summary
Verici DxThermo Fisher ScientificThermo Fisher gets exclusive license to develop and commercialize Verici Dx’s assay for pre-transplant risk assessment as a laboratory-developed test in the US, as well as worldwide rights to commercialize the test in other parts of the world

Government Contracts

ContractorGovt. AgencyContract Summary
Quest DiagnosticsUS Centers for Disease Control and PreventionContract of undisclosed amount calls for Quest to perform HCV antibody and molecular RNA testing on de-identified remnant specimens randomly selected from clinical test specimens to assess the burden of hepatitis C virus in US
Siemens HealthineersNational Institute of Allergy and Infectious Diseases$5.5 million, three-year contract to develop NGS-based test to guide antimicrobial treatments in sepsis patients

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