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Sigma Aldrich Bows out of Diagnostics

Sigma Aldrich's decision to abruptly exit the clinical diagnostics business is a cautionary tale for both large companies seeking to enter diagnostics and for small companies looking for deep-pocketed saviors. In April, after selling a small immunoassay business to Ivax Diagnostics, Sigma laid off nearly all of its diagnostics division's 600 employees, effectively all but shutting down the business. Under pressure from Wall Street, it decided to cut its losses rather than sell an on-going concern.

Sigma Aldrich Corp. 's decision to exit diagnostics abruptly is a cautionary tale for large health-care companies who see diagnostics as a comparatively "easy" play that compliments their non-diagnostic core businesses, and a lesson for at least one small firm that thought it had landed a deep-pocketed savior. In April, after selling a small immunoassay product line to Ivax Diagnostics Inc. [See Deal], the life sciences company all but shut down most of its $77 million in revenues diagnostics business, laying off nearly 600 employees. Sigma continues to maintain a minimal staff to service existing customers, but has put remaining assets, including factories and inventory, up for sale.

The saga started about two years ago, when Sigma Aldrich decided to expand its small reagent diagnostics business and refocus...

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