Dive Brief:

• Italy-based DiaSorin has struck a $1.8 billion deal to buy Luminex to grow its multiplex molecular testing business.

• The takeover will give DiaSorin control of a multiplex infectious disease testing system, a platform for running up to 12 in vitro diagnostics in parallel and an expanded footprint in the U.S.

• News of the takeover comes weeks after Roche agreed to pay $1.8 billion to buy GenMark Diagnostics for its multiplex testing capabilities. GenMark and Luminex compete with BioFire and Quidel in the multiplex testing space.

Dive Insight:

Molecular tests were a small part of DiaSorin’s business before COVID-19, accounting for 9% of sales in 2019. The introduction of a molecular COVID-19 test that delivers results in under two hours early in the pandemic changed the fortunes of the DiaSorin unit. In 2020, molecular tests revenues grew more than 300% to account for 29% of the company’s sales. 

The pandemic also rebalanced the geographic split of the business. In 2019, DiaSorin generated 29% of its sales in the U.S. and Canada, compared to 46% in Europe and Africa. Last year, North America’s share of DiaSorin sales rose to over 40%, making the region almost as significant a contributor as Europe and Africa.

Buying Luminex supports the continuation of both the changes triggered by COVID-19. Jefferies analysts said the takeover “catapults DiaSorin's presence in molecular diagnostics,” a sector in which they said it currently lacks “critical mass,” and boosts its U.S presence. 

In particular, the analysts highlighted how the acquisition moves DiaSorin into “the attractive and high growth syndromic multiplex panel testing market.” Luminex’s benchtop Verigene system enables clinicians to diagnose blood, gastrointestinal and respiratory infections using multiplex panels. The cartridges test for multiple bacteria, viruses and toxins that can affect each part of the body.  

Other companies including bioMérieux’s BioFire and GenMark sell similar panels. BioFire has a wider range of panels than Luminex or GenMark. Boosted by COVID-19, the breadth of the range helped BioFire to generate sales of more than $1 billion from its FilmArray panels last year. Luminex sales hit $417 million last year after the pandemic drove 25% growth over 2019.

DiaSorin is aiming to grow Luminex by using its global infrastructure to increase ex-U.S. revenues and using its expanded portfolio to seize value-based care opportunities. Given the growth opportunities and “typically inflated valuations across Life Sciences currently,” the Jefferies analysts called the $1.8 billion deal a “reasonable” value. DiaSorin is targeting $55 million in cost savings within three years of the deal closing. 

The cash deal is funded by debt. Jefferies noted it was a bit expected, with speculation in a Bloomberg article on February 25 and put the offer price at a 23% premium based on Luminex's closing price the day before that news.

Still, the analysts are not bullish on DiaSorin, calling its valuation too high considering the uncertainties of the COVID-19 testing market.