Jun 8, 2007 | Compliance, Legal, and Malpractice, Laboratory News
Earlier this week, Digene Corporation (Nasdaq: DIGE) announced that it would be acquired by Dutch firm Qiagen (Nasdaq: QEN) for a purchase price of approximately $1.6 billion. Digene has been involved in patent infringement lawsuits during the past year in efforts to protect its HPV patents.
It was announced on Monday, June 4, that Digene will be purchased by Qiagen, a Dutch maker of tools for gene research. This gives Quiagen access to Digene’s patented HPV test, and tests for sexually transmitted diseases. Digene’s HPV test is the only one that has been approved in the U.S. and Europe. The purchase gives Qiagen “instantaneous market and technology leadership” in molecular diagnostics and will be “a catalyst for growth,” Peer M. Schatz, CEO of Qiagen, said.
It was announced back in January that Digene was suing Third Wave Technologies (Nasdaq: TWTI) over alleged patent infringement. The suit alleged that Third Wave infringed on a biotechnology patent involving human detection of the human papilloma virus (HPV).
Third Wave countersued Digene in early March by filing an anti-trust suit that alleged that Digene “abused its monopoly power to thwart competition” in the HPV diagnostic market. The current legal action is interesting because Digene and Third Wave had earlier entered into an agreement to dismiss, without prejudice, a declaratory judgment action filed by Third Wave against Digene for the same HPV detection technology. It was January 2006 when both parties agreed to throw out that lawsuit.
Digene has also been pursuing legal action against Ventana Medical Systems (Nasdaq: VMSI) in another patent infringement lawsuit. Last month the U.S. District Court for the State of Deleware denied Digene’s motion for a preliminary injunction against Ventana. “Although we are disappointed with the court’s ruling, the denial of our preliminary injunction request was not unexpected given the pending expiration of the patents at issue in May and June,” said Daryl Faulner, President and CEO of Digene. In the ruling, the court noted that there remains a substantial question as to whether Ventana has a license to the relevant HPV patents.
Digene’s acquisition by a larger in vitro diagnostics (IVD) manufacturer is another example of the ongoing consolidation in the IVD industry. Along with the strong price Qaigen is paying, it demonstrates the high interest investors have in molecular diagnostics. Interestingly, during May, another major IVD company in cervical cancer screening was acquired. Cytyc Corporation (Nasdaq: CYTC) is being sold to Hologic (Nasdaq: HOLX) in a deal valued at $6.2 billion and expected to close during the third quarter.
Should acquisitions continue in the IVD industry at the current pace, it will certainly change the competitive landscape. Further, much of the molecular technology currently finding its way into new clinical assays has been developed by start-up companies. For that reason alone, the established IVD giants will need to scramble to develop or acquire comparable molecular technology that will help them maintain market share.
Related Articles:
Digene sues Third Wave over patent
(last article at the bottom of the page)
Digene Files Infringement Suit Against Third Wave Technologies
Third Wave files countersuit vs. Digene in patent case
Preliminary Injunction Denied in Digene’s Case Against Ventana Medical Systems
Qiagen to Buy Digene, Maker of Tests for Cancer-Causing Virus
May 22, 2007 | Laboratory News, Laboratory Sales and Marketing
In a deal made public only Sunday, Cytyc Corporation has agreed to be acquired by Hologic. Hologic will pay $6.2 billion for Cytyc, which had revenues in 2006 of $608 million. The price paid represents a 33% premium for Cytyc shares, based on prices at the close of the market on Friday.
When the deal closes, probably sometime between July 1 and September 20, another in vitro diagnostics (IVD) manufacturer will have lost its independence. In this acquisition, Hologic’s prime interest is not Cytyc’s cervical cancer screening products. Instead, Hologic is particularly interested in Cytyc’s product lines for breast cancer, including its Mammosite radiation treatment. That’s because Hologic, with annual revenues of $462.7 million in 2006, has a line of breast cancer diagnostic devices, including an imaging system.
Three things are driving this deal. First, both companies serve the same primary market: ob-gyns. Not only will this help with recognition for the combined company, but it opens up opportunities to cross sell one company’s products to other company’s customers. In particular, since 90% of the nation’s ob-gyns currently use Cytyc’s ThinPrep Pap tests, Hologic believes it can benefit from selling to these physicians.
Second, there are certain economies of scale and other savings that will be realized by combining the two companies. However, layoffs are not planned, and both companies’ CEOs have emphasized that Hologic, post-acquisition, will have 1,200 sales people to promote its products.
Third, the two companies are located within 15 miles of each other, which will help make integration easier. Hologic is based in Bedford, Massachusetts and Cytyc’s corporate office is in Marlborough, Massachusetts. It also turns out that Hologic CEO Jack Cumming and Cytyc CEO Patrick Sullivan live in the same town. Maybe that’s why Cumming’s told analysts that the two companies were “kindred spirits” because of the way their core products complement each other and the fact that so many employees of both firms live in the same region.
Once the acquisition is completed, the company will be called Hologic and Cytyc will operate as a wholly-owned division of Hologic. Cytyc CEO Sullivan is slated to become Hologic’s Chairman and Cumming will be Chief Executive Officer.
Most laboratory managers and pathologists view Cytyc as a company that has a major presence in the market for cervical cancer screening products. That is true, but in recent years Cytyc Corporation has acquired a number of technologies and companies that provide services in other areas of women’s health. Several of these new business lines are growing rapidly. For example, during first quarter 2007, Cytyc’s domestic revenues from its diagnostic products, including cervical cancer screening products, totaled $89.2 million. That was a growth rate of 11% over first quarter, 2006. By contrast, revenues from domestic sales of its surgical products totaled $59.3 million, representing a growth rate of 33% over the revenues of $44.7 million in first quarter 2006.
For first quarter 2007, Cytyc failed to post a net profit. On sales of $169.9 million for the quarter, it showed a loss of $51.2 million, compared to a profit of $29.4 million during the same period a year prior.
Related Articles:
Hologic and Cytyc to Merge Creating a $10 Billion Global Leader in Women’s Healthcare
Hologic Agrees to Acquire Cytyc
Hologic’s Expensive Match-Up
A New Test for Hologic
Cytyc Reports Record Revenue of $168.9 Million for First Quarter 2007
