Denmark's Dako shows once again why molecular diagnostics are the life sciences segment to watch this year. Agilent Technologies ($A) has inked a deal to pay $2.2 billion for the cancer diagnostic tools company in a bid to boost its growth in the space.
Basically, Agilent sees the acquisition as complimenting what it already does. The Santa Clara, CA company is known for its bio-analytical measurement business. Dako is in a similar space, as it sells antibodies, reagents, scientific instruments and software to pathology laboratories conducting cancer diagnostics. But the outfit is also working with "a number of major pharmaceutical companies" to develop companion diagnostics for specifically-targeted drug treatments. And that, in particular, is a lucrative, growing business.
"Agilent's strategy in acquiring Dako is about strengthening the company's presence in life science, and about revenue growth," Agilent President and CEO Bill Sullivan said in a statement. "Together we will be able to develop a wider range of products that help in the fight against cancer."
The deal makes sense, Bloomberg quotes Cowen & Co. analyst Doug Schenkel as saying, because "Dako is considered an attractive asset in tissue diagnostics, a market with robust underlying fundamentals."
The deal comes as Genomic Health agreed recently to work with OncoMed Pharmaceuticals to pursue companion molecular diagnostics. Qiagen ($QGEN) has pursued double-digit growth this year, thanks to a number of acquisitions in the molecular diagnostics space. Roche ($RHHBY) is still licking its wounds after its failed hostile bid for DNA sequencer/diagnostics company Ilumina ($ILMN), but future investments by Roche and other Big Pharma companies in the molecular diagnostics space are all but certain.
In acquiring Dako, Agilent will be gaining a company that generated $340 million in revenue in 2012, according to the sale announcement, and employs more than 1,000 people around the world. Agilent said it hopes to close the deal within 60 days, pending "satisfaction of customary closing conditions."
- here's the deal announcement
- read Bloomberg's take