Abbott Laboratories, Abbott Park, Ill, has entered into a definitive agreement to acquire Alere Inc, Waltham, Mass. Under the terms of the agreement, Abbott will pay $56 per common share of Alere stock, for a total expected equity value of $5.8 billion.
The acquisition is expected to advance Abbott’s global diagnostics presence and leadership significantly. When the transaction is completed, Abbott’s total diagnostics sales will exceed $7 billion annually, and the company will also become the leading provider of point-of-care diagnostics.
Divyaa Ravishankar, Frost and Sullivan.
Traditionally, Abbott’s revenues have arisen from sales of core laboratory immunoassay and blood screening products, says Divyaa Ravishankar, senior industry analyst with Frost and Sullivan, Mountain View, Calif. “The point-of-care testing and molecular businesses have not been major focus points of Abbott’s investments thus far,” she adds. “Besides its own offering of the iStat system for cardiac testing, Abbott will now have access to additional products for infectious disease, diabetes, and toxicology testing.”
According to company sources, Abbott expects the acquisition will enable it to provide new, flexible, cost-effective, high-quality products to help health systems meet growing demand in both inpatient and outpatient settings. Alere’s complementary portfolio of products will provide Abbott access to new channels and geographies, including entry into such fast-growing outlets as doctors’ offices, clinics, pharmacies, and at-home testing.
Sangeetha Prabakaran, Frost and Sullivan.
“Alere is known as a company that believes in pumping its profits from core diagnostics to fuel R&D or acquisitions,” says Sangeetha Prabakaran, transformational health program manager at Frost and Sullivan. “The company rebranded itself as a ‘rapid diagnosis’ company in 2014, after divesting its health business. After the successful launches of the CLIA-waived Alere i, a molecular diagnostics platform for influenza detection, and the Alere q, for HIV 1/2, the company consolidated its position as a leader in infectious disease testing.”
“The combination of Alere and Abbott will create the world’s premier point-of-care testing business and significantly strengthen and grow Abbott’s diagnostics presence,” says Miles D. White, Abbott chairman and CEO. “We want to offer our customers the best and broadest diagnostics solutions. Alere helps us do that.”
Point-of-care testing helps improve outcomes and increase the speed of care by bringing the test results to the physician and patient’s side in a matter of minutes. The demand for point-of-care testing is accelerating as healthcare providers and consumers look for better ways to get fast, accurate, and actionable information to guide decisionmaking. Point-of-care testing is a $5.5 billion segment and one of the fastest growing in vitro diagnostics segments, in part because many healthcare systems are increasing their reliance on these technologies to inform patient care decisions because of their ease of use, speed, and accuracy.
Upon completion of the transaction, the combined business will offer the broadest point-of-care menu of infectious disease, molecular, cardiometabolic, and toxicology testing, expanding Abbott’s platforms to include benchtop and rapid-strip tests. Abbott will be able to better serve an expansive customer base around the world while also accelerating innovation in point-of-care diagnostics. More than half of Alere’s $2.5 billion in sales are in the United States. Alere also has a growing presence in key international markets, where Abbott’s capabilities and infrastructure will drive accelerated growth of Alere’s portfolio.
“Alere has a wide foot print in Africa, China, and India, where the penetration of point-of-care testing technologies can be sensed more aggressively in the upcoming years,” says Ravishankar. “Alere’s CD4 analyzer was the first such device to provide results at the point of care, and its sales have been positively felt in HIV-affected territories.”
Namal Nawana, Alere.
“Today’s announcement marks an exciting and transformative milestone for Alere and one that provides an immediate benefit for our stockholders,” says Namal Nawana, Alere president and CEO. “Our leading platforms and global presence in point-of-care diagnostics, combined with Abbott’s broad portfolio of market-leading products, will accelerate our shared goal of improving patient care. I’d like to thank our global workforce of nearly 10,000 employees whose hard work and dedication has enabled Alere to contribute to improved patient outcomes throughout the world.”
The transaction will be immediately accretive to Abbott’s ongoing earnings per share upon close and significantly accretive thereafter, with approximately 12 to 13 cents of accretion in 2017 and more than 20 cents in 2018. The combination is anticipated to result in annual pretax synergies approaching $500 million by 2019 and increasing thereafter, including both sales and operational benefits.
Under the terms of the agreement, Alere will become a subsidiary of Abbott. Alere’s net debt, currently $2.6 billion, will be assumed or refinanced by Abbott. The transaction has been approved by the boards of directors of Alere and Abbott, but remains subject to the approval of Alere shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.
For more information, visit Abbott Laboratories and Alere.
