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Pay to play
October 2013
by Jeffrey Bouley  |  Email the author


MARCY L'ETOILE, France—Known more for its expertise in in-vitro diagnostics, bioMérieux is paying $450 million to acquire privately held Salt Lake City-based molecular biology company BioFire Diagnostics Inc. in an effort to expand its role in the molecular diagnostics market, as well as consolidate its position as a major player in infectious disease 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 of the most notable being LightCycler, which is licensed to Roche Diagnostics. Using its expertise in polymerase chain reaction (PCR) technology, BioFire also recently developed FilmArray, a rapid molecular biology system dedicated to the diagnosis of infectious diseases.
FilmArray's new approach is based on analyzing a syndrome—that is, a set of symptoms—and, with a single reagent, identifying the disease-causing organisms responsible for this syndrome, whether they are viruses or bacteria. FilmArray is a closed system that integrates all molecular diagnostics steps—sample preparation, amplification, detection and analysis of results—into a single process. The user-friendly system makes it easier to perform molecular biology tests, thus increasing the efficiency of diagnostics from both a medical and an economic viewpoint. The company's first commercially launched solution is a respiratory panel that tests for 20 viruses and bacteria and delivers results in one hour.  
By further stimulating sales of the FilmArray system and expanding its menu, bioMérieux intends to strengthen its own position as a major player in infectious disease diagnostics, which is its core strategic focus.
"The acquisition of BioFire fits perfectly into bioMérieux's selective strategy for external growth. Following the AES purchase, which strengthened 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 and multiplex immunoassays, this new acquisition represents a decisive step for our company," according to Jean-Luc Bélingard, chairman and CEO of bioMérieux. "It enables us to reinforce our infectious disease franchise, our main area of specialization. FilmArray is the only system that makes it possible to detect disease-causing viruses and bacteria using a single reagent. As such, it eliminates the borders between different technologies, simplifying the diagnosis of infectious diseases and delivering faster results for better patient care."
BioFire CEO and founder Kirk Ririe maintains that his company and its 500 employees could not have found a better shareholder than bioMérieux and calls the acquisition an "exciting next step in the evolution of BioFire."
He expects that being under bioMérieux's umbrella will help BioFire achieve its mission of helping to make the world a healthier and safer place and to continue to support its biodefense customers in the U.S. Department of Defense and allied forces, adding that "bioMérieux's commercial network will further boost sales of our flagship product, FilmArray. In addition, the company's unique know-how in the field of infectious diseases will contribute to the development of new panels, creating very attractive prospects for the future."  
From bioMérieux's perspective, adding BioFire is synergistic, and the FilmArray system represents a key asset in the development of bioMérieux's franchise in infectious disease diagnostics, which accounts for 85 percent of sales in clinical applications. On the basis of ongoing R&D, Bélingard notes, FilmArray should make it possible to detect more than 70 disease agents responsible for respiratory, gastrointestinal and blood infections within the next three years. BioFire's solutions should, in turn, benefit from the extensive bioMérieux commercial network, particularly in North America and Europe. In addition, bioMérieux will contribute its capabilities to the automation of reagent production, thereby optimizing manufacturing costs.
"On all our markets, we now have a complete portfolio of particularly innovative technologies with two key benefits: enhanced medical value of diagnostics and optimized workflows in medical laboratories," notes Bélingard. "The Salt Lake City BioFire site will become our hub for our expansion in molecular biology."
In a note to clients after the announcement of the acquisition, Berenberg Bank wrote, "We believe that the deal has several important strategic merits for BioMérieux," pointing out that bringing in BioFire reinforces BioMerieux's molecular diagnostics business and strengthens its presence in North America. On the other hand, Berenberg Bank also noted that the deal is a pricey one, with bioMérieux paying 6.4 times the sales BioFire is expected to generate this year—and the deal is being funded through debt. Furthermore, even though BioFire should add 1 percent to 2 percent to bioMérieux's organic growth from 2015 to 2017, the acquisition will be dilutive with regard to operating income for the next couple of years.  
Under the terms of the agreement, bioMérieux will acquire 100-percent ownership of BioFire in a transaction to include the $450 million acquisition price plus BioFire's net financial debt. Completion of this acquisition remains subject to usual closing conditions, including certain regulatory approvals, but is expected to close by the end of the fiscal year or in early 2014.
Code: E101312



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