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The Rage to Consolidate in Diagnostics

As diagnostic industry infrastructure and R&D costs escalate and buyers gain more clout, manufacturers are looking to consolidation for long-term viability and growth. Faster growth is the motivation for market leaders, while size and operating efficiencies are driving other deals.

In January of this year, the national hospital alliance Premier Inc. announced the winners of its contract for clinical chemistry. The contract had been particularly important because it would cover all of Premier's 1,800 member hospitals, or about a third of hospitals in the US. Moreover, only one chemistry company would win—so bidders cut prices to the bone, figuring to make their money back on volume. But instead of choosing one supplier, Premier chose three, giving it the best of both worlds—heavy discounts and a choice of vendors.

Upset over the process and the pricing, each of the three winners, Johnson & Johnson Clinical Diagnostics, Corange Ltd.subsidiary Boehringer...

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