Pay to play

With acquisition of BioFire, bioMérieux seeks to consolidate position as major player in infectious disease diagnostics

Jeffrey Bouley
MARCY L'ETOILE, France—Known more for its expertise in in-vitro diagnostics, bioMérieux is paying $450 million toacquire privately held Salt Lake City-based molecular biology company BioFireDiagnostics Inc. in an effort to expand its role in the molecular diagnosticsmarket, as well as consolidate its position as a major player in infectiousdisease diagnostics and reinforce its leadership in microbiology.
 
Founded more than 20 years ago, BioFire has developed,produced and marketed a number of automated molecular biology systems, one ofthe most notable being LightCycler, which is licensed to Roche Diagnostics.Using its expertise in polymerase chain reaction (PCR) technology, BioFire alsorecently developed FilmArray, a rapid molecular biology system dedicated to thediagnosis of infectious diseases.
 
FilmArray's new approach is based on analyzing asyndrome—that is, a set of symptoms—and, with a single reagent, identifying thedisease-causing organisms responsible for this syndrome, whether they areviruses or bacteria. FilmArray is a closed system that integrates all moleculardiagnostics steps—sample preparation, amplification, detection and analysis ofresults—into a single process. The user-friendly system makes it easier toperform molecular biology tests, thus increasing the efficiency of diagnosticsfrom both a medical and an economic viewpoint. The company's first commerciallylaunched solution is a respiratory panel that tests for 20 viruses and bacteriaand delivers results in one hour.
 
 
By further stimulating sales of the FilmArray system andexpanding its menu, bioMérieux intends to strengthen its own position as amajor player in infectious disease diagnostics, which is its core strategicfocus.
 
"The acquisition of BioFire fits perfectly into bioMérieux'sselective strategy for external growth. Following the AES purchase, whichstrengthened our leadership in industrial applications, the purchase of ARGENE,which showed very strong organic growth of 31 percent at the end of June 2013,as well as our recently signed partnership with Quanterix in ultrasensitive andmultiplex immunoassays, this new acquisition represents a decisive step for ourcompany," according to Jean-Luc Bélingard, chairman and CEO of bioMérieux. "Itenables us to reinforce our infectious disease franchise, our main area ofspecialization. FilmArray is the only system that makes it possible to detectdisease-causing viruses and bacteria using a single reagent. As such, iteliminates the borders between different technologies, simplifying thediagnosis of infectious diseases and delivering faster results for betterpatient care."
 
BioFire CEO and founder Kirk Ririe maintains that hiscompany and its 500 employees could not have found a better shareholder thanbioMérieux and calls the acquisition an "exciting next step in the evolution ofBioFire."
 
He expects that being under bioMérieux's umbrella will helpBioFire achieve its mission of helping to make the world a healthier and saferplace and to continue to support its biodefense customers in the U.S.Department of Defense and allied forces, adding that "bioMérieux's commercialnetwork will further boost sales of our flagship product, FilmArray. Inaddition, the company's unique know-how in the field of infectious diseaseswill contribute to the development of new panels, creating very attractive prospectsfor the future."
 
 
From bioMérieux's perspective, adding BioFire issynergistic, and the FilmArray system represents a key asset in the developmentof bioMérieux's franchise in infectious disease diagnostics, which accounts for85 percent of sales in clinical applications. On the basis of ongoing R&D,Bélingard notes, FilmArray should make it possible to detect more than 70disease agents responsible for respiratory, gastrointestinal and bloodinfections within the next three years. BioFire's solutions should, in turn,benefit from the extensive bioMérieux commercial network, particularly in NorthAmerica and Europe. In addition, bioMérieux will contribute its capabilities tothe automation of reagent production, thereby optimizing manufacturing costs.
 
"On all our markets, we now have a complete portfolio ofparticularly innovative technologies with two key benefits: enhanced medicalvalue of diagnostics and optimized workflows in medical laboratories," notesBélingard. "The Salt Lake City BioFire site will become our hub for ourexpansion in molecular biology."
 
In a note to clients after the announcement of theacquisition, Berenberg Bank wrote, "We believe that the deal has severalimportant strategic merits for BioMérieux," pointing out that bringing inBioFire reinforces BioMerieux's molecular diagnostics business and strengthensits presence in North America. On the other hand, Berenberg Bank also notedthat the deal is a pricey one, with bioMérieux paying 6.4 times the salesBioFire is expected to generate this year—and the deal is being funded throughdebt. Furthermore, even though BioFire should add 1 percent to 2 percent tobioMérieux's organic growth from 2015 to 2017, the acquisition will be dilutivewith regard to operating income for the next couple of years.
 
 
Under the terms of the agreement, bioMérieux will acquire100-percent ownership of BioFire in a transaction to include the $450 millionacquisition price plus BioFire's net financial debt. Completion of thisacquisition remains subject to usual closing conditions, including certainregulatory approvals, but is expected to close by the end of the fiscal year orin early 2014.

Jeffrey Bouley

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