Orion to sell diagnostics unit for $200M

Orion Diagnostica's QuikRead go point-of-care device and accompanying C-reactive protein test package. (Orion Diagnostica)

Orion is set to sell its diagnostic unit to private equity group Axcel Management for around $200 million upfront. The deal will give Axcel control of a portfolio of in vitro diagnostics and point-of-care testing systems that generated sales of $66 million last year.

Espoo, Finland-based Orion began investigating a possible sale of its diagnostic business around the start of the year. The unit is dwarfed by Orion’s pharmaceutical business—which accounted for 95% of company-wide sales last year—and has no significant synergies with its bigger sibling. That led Orion to weigh up whether it is best served by offloading the diagnostics business.

A bid from Axcel has persuaded Orion to take that course of action. Axcel won Orion over with a bid of $200 million upfront plus a variable milestone that could be worth as much as $73 million. The size of the variable milestone will depend on the return Axcel generates when it exits the business.

Axcel sees multiple opportunities to grow the businesses and thereby maximize its eventual returns.

“On the back of an attractive customer proposition and a strong market position, we see great opportunity to grow Orion Diagnostica further both geographically and by expanding its product offering,” Thomas Blomqvist, partner at Axcel, said in a statement.

Orion Diagnostica was already expanding its portfolio and geographic footprint prior to the takeover, securing FDA clearance for some tests and rolling out new products aimed at diabetes and other indications. But Orion as a whole is heavily-skewed toward local markets. Finland accounted for 30% of total sales last year. That is eight percentage points more than Orion generated in all the countries outside of Europe combined.