Roche buys blood diagnostics outfit for $220M
|Roche paid $220 million for Constitution Medical Investors and the company's Bloodhound platform.--Courtesy of CMI|
Roche Diagnostics ($RHHBY) is looking to up its stake in the blood testing world, spending $220 million for Constitution Medical Investors, a Boston-based hematology specialist.
Under the deal, Roche paid $220 million up front to CMI's investors, including private equity outfit Warburg Pincus, and is on the line for additional cash tied to milestones. In exchange, it gets the aptly named Bloodhound, CMI's space-saving diagnostics platform that boasts tests for blood diseases like anemia and leukemia, the company said.
"With this acquisition, we will further strengthen our commitment to hematology and drive toward integrated laboratory solutions with innovative products which deliver medical value to our customers and patients," Roche Diagnostics COO Roland Diggelmann said in a statement.
Aligning with Roche will give CMI a chance to expand its platform on the global stage, CEO and co-founder Patrick Sullivan said, leveraging the diagnostics giant's commercial heft around the globe. Sullivan founded the company with Dan Levangie, now CEO of the successful Dune Medical Devices, after the two left Cytyc, which was bought by Hologic ($HOLX) in 2007.
For Roche, the CMI buy gives it a competitive position in the lab-based blood testing market, which it estimates at around $2 billion worldwide. And snatching up another revenue-gaining product is just what the diagnostics giant needs as it shuffles its business model. Last quarter, Roche's professional diagnostics business grew 5% and tissue testing sales increased 7%, but declines in the company's long-ailing diabetes and applied science units mostly flattened revenue.
But the Swiss magnate isn't sitting on its hands, cutting payroll in one business and excising the other en masse. Roche is in the process of shedding about 100 jobs in diabetes, splitting the unit between its Indianapolis diagnostics HQ and a German R&D center. And, in April, the company unveiled plans to dissolve its applied science business, folding the still-profitable arms into other diagnostics segments and slashing 170 jobs along the way.
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