GE Healthcare splurges $1bn on high-growth drug development biz

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Sell off one asset; buy some others. GE Healthcare is kicking off 2014 in aggressive style by spending $1.06bn on cell culture and other businesses from Thermo Fisher Scientific less than a week after completing the sale of its Vital Signs unit to CareFusion.

The imaging specialist has been suffering from cuts in reimbursement and hospitals’ resistance to replacing their imaging equipment in a time of austerity (EP Vantage interview – GE Healthcare adapts to painful spending cuts, October 29, 2013). Its coping strategy is focused on innovation and on repositioning its more basic systems to appeal to previously rich Western markets. But acquiring fast-growing non-core equipment could also help increase growth.

January sales

Thermo Fisher’s reasoning is simple: it had to agree to sell these units – the HyClone cell culture media and sera and its gene modulation and magnetic beads businesses – to gain European approval for its $13.6bn acquisition of Life Technologies last April (Thermo Fisher spends $14bn to finally get a Life, April 15, 2013). The three units generated combined revenue of $250m in 2013, GE said.

For GE, the technologies offer a means to expand its life sciences operations, currently worth around $4bn, and will increase the range of tools it offers to other companies for discovery and development of drugs, vaccines and diagnostics.

GE says that the HyClone cell culture media and sera products fit with its own cell biology research and biopharmaceutical manufacturing technologies. The gene modulation systems likewise marry with GE’s drug discovery systems, and the Sera-Mag magnetic beads, used in immunoassays among other things, augment GE’s existing technologies in protein analysis and medical diagnostics.

The acquisition, set to close in the first half, is designed to get GE a high-technology business delivering strong top-line growth and expanded margins.

Naturally there is a cost-saving angle to the technologies. They are intended to speed drug development, saving GE’s customers money and improving yields.

On the last day of the 2013 GE completed the sale of its Vital Signs unit, which manufactures single use products for respiratory care and anaesthesiology, to San Diego, California-based CareFusion. The smaller company paid a total of $500m for the operations, based mainly in the US and China.

January is traditionally a time for resolving to change. GE is remaking itself for 2014; it will be interesting to see whether the standard wish – for a prosperous new year – comes true.

To contact the writer of this story email Elizabeth Cairns in London at elizabethc@epvantage.com or follow @LizEPVantage on Twitter

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