From the July 23, 2007, issue of "The Gray Sheet"
The business opportunity in linking in vitro diagnostics to in vivo imaging studies is generating significant buzz, and Siemens believes it is currently the only firm positioned to drive this health care model.
The imaging systems powerhouse created an in vitro diagnostics subsidiary, Siemens Medical Solutions Diagnostics, in January with the $5.3 billion acquisition of Bayer's diagnostics division. The subsidiary also integrates in vitro firm Diagnostics Product Corp., which Siemens bought in June 2006.
According to Siemens Medical Solutions Diagnostics CEO Tony Bihl, Siemens' imaging and in vitro diagnostic capabilities, coupled with the purchase of information technology company SMS in 2000, sets the firm apart in the diagnostics arena.
"Having all of the pieces along the health care continuum and then weaving them together as a process, improving the workflow in health care and doing it with IT" will improve health care while containing costs, Bihl explained to reporters July 17 during the American Association of Clinical Chemistry annual meeting in San Diego.
Imaging and IT giant General Electric is also interested in the in vitro space. GE had planned to purchase two of Abbott's diagnostics units for $8 billion, but that deal was called off July 11.
Meanwhile, Abbott says hooking up its in vitro business with imaging and IT portfolios is no longer a top priority.
The third major imaging/IT company, Philips Medical Systems, has also said on multiple occasions it is interested in the in vitro diagnostics market, according to David O'Bryan, senior vice president at Boston Biomedical Consultants, Inc.
During its analysts' day in May, Philips presented an overview of the benefits of decentralized IVD testing, including miniature molecular platforms, and the firm has added personnel with IVD experience to its senior management team.
O'Bryan says there are other broad based IVD companies that could potentially take part in the ongoing M&A activity, including Dade Behring, whose senior management team has said the firm is well-positioned to participate in consolidation. Other opportunities beyond the major companies would require piecing together firms with narrower offerings, O'Bryan told "The Gray Sheet."
Another deal announced in May will unite in vivo and in vitro by combining women's health firms Hologic and Cytyc. Hologic is a leading mammography system maker, while Cytyc's core product is its liquid-based Pap test for cervical cancer screening. The firms' portfolios do not include IT systems, however.
IT Is The Tie That Binds, Siemens Says
Clinicians in key areas like cancer and cardiovascular disease already use both in vitro diagnostics and in vivo imaging to make treatment decisions, but Siemens wants to make the modalities more complimentary.
For example, Siemens diagnostics is working on finding new stroke markers. Currently, imaging studies like computed tomography scans are the standard of care to determine if a patient has had a stroke, but imaging can be very expensive, Bihl explained.
He suggested if you could do a diagnostic test for stroke first, it could help rule out situations where imaging is not necessary, or help determine the most appropriate imaging test to do next.
"The biggest challenge is ... there's a vision, and most people say, 'You know, that makes a lot of sense,'" Bihl explained. "But how do you translate it to the radiologists and the pathologists working together?"
Eugenio Zabaleta, a clinical chemist who works with Siemens at MedCentral Health Systems in Mansfield, Ohio, said he believes radiologists and pathologists are "natural partners" and IT will allow them to take advantage of the each other's work more efficiently.
Bihl said his diagnostics division has already been discussing the in vivo/in vitro model with Siemens colleagues in the imaging and health systems business units.
Consultant O'Bryan notes that the resources Siemens has as a company give it an advantage over more traditional diagnostics companies for realizing this business model.
Breast Cancer, Cardiovascular Are Key Opportunities
To take advantage of in vivo/in vitro synergies, the top priorities for Siemens diagnostics are in cardiology and oncology, Bihl said.
"Breast cancer is an area we think might be a very strong opportunity," Bihl said. The firm is in the early stages of looking at new screening markers for breast cancer predisposition.
Molecular assays may hold the greatest potential in this market. A gene expression test for early detection or profiling, along the lines of HER2 tests currently marketed, could be a good compliment to routine screening with mammography.
Siemens is also "highly interested" in point-of-care testing, particularly with immunoassays, Bihl said.
Investors and researchers are likewise interested in assay panel technologies that could be performed in the emergency room to test for heart damage in patients presenting with chest pain, for example.
The synergetic approach to in vivo and in vitro diagnostics may also further drive innovation, Zabaleta suggested.
Troponin tests are routinely complimented with imaging studies to confirm heart damage. Over the past several years, IVD manufacturers have worked to increase the sensitivity of troponin tests to match the diagnostic value of imaging.
"Now the cardiologists in our hospital say, okay, all of the imaging studies that we have are not enough to keep up ... We need to go for a more highly sensitive imaging technology," Zabaleta explained.
The result has been advanced imaging that can identify even "micro" myocardial infarctions. "One of the areas is pushing improvement in the other one."
Siemens is certainly the model right now for in vivo/in vitro development, but it may not hold the unique position in the space for long, as others seem likely to join the game.
"It's hard to say the velocity at which they'll move," O'Bryan said. "But all indications are that there's at least enough benefit potential that there will be continued investment by these types of companies at some point, whether it's a partnership or acquisition."
- Chloe Taft
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