Siemens' take over of Bayer Diagnostics gains European approval

3 November 2006

Munich, Germany. The European Commission has given Siemens approval to acquire the diagnostics division of Bayer Healthcare without restrictions.

Bayer Group announced the decision to sell its Diagnostics Division to Siemens for €4.2bn on June 29 this year. Bayer AG Management Board Chairman Werner Wenning said that the systems business of the Diagnostics Division, with its emphasis on hardware, IT networking and comprehensive equipment service, was subject to different success factors than the other Bayer HealthCare divisions and that Bayer was divesting these activities as part of the consolidation phase in the diagnostics market.

“This decision is fully in line with our strategy for systematically aligning our health care business. We are concentrating on pharmaceuticals for both humans and animals, and products that can be promoted directly to patients,” said Wenning.

The take over approval was granted by the European Commission, following the earlier approval by U.S. antitrust authorities at the beginning of October. This follows the acquisition of the U.S. firm Diagnostic Products Corporation (DPC), which was completed at the end of July. Upon completion of the Bayer acquisition, which is expected by early 2007, both companies will be merged and will operate as "Siemens Medical Solutions Diagnostics,” an U.S.-based subsidiary and part of Siemens Medical Solutions.

"This has paved the way for Siemens to create the world's first full service diagnostics company,” explained Prof. Dr. Erich R. Reinhardt, member of the Managing Board of Siemens AG and president and CEO of Siemens Medical Solutions (Med), following the Commission's decision.

The successful entry into the in-vitro diagnostics market will allow the company to combine the entire imaging diagnostics, laboratory diagnostics and clinical information technology value chain under one roof and offer its customers customized solutions. "This will further improve the quality and efficiency of healthcare,” commented Reinhardt.

The purchase price for Bayer Diagnostics is roughly €4.2 billion; in fiscal 2005 the Group generated sales of €1.4 billion and a double-digit profit margin related to earnings before interest, tax, depreciation and amortization (EBITDA). The acquisitions of Bayer Diagnostics and DPC (the latter completed in July for a purchase price of US$1.86 billion) will make Siemens Medical Solutions No. 2 worldwide in immunodiagnostics.

Bayer Diagnostics is also a world market leader in clinical chemistry with a leading position in near-patient testing, laboratory automation and haematology (blood cell diagnostics). In addition, the acquisition of Bayer Diagnostics will enable the Siemens Group to tap the rapidly growing market for molecular diagnostics based on gene analysis (nucleid acid testing).

"Molecular medicine has huge potential to detect diseases such as cancer at a much earlier stage than what is possible today," said Reinhardt. “Molecular medicine is already helping physicians choose suitable medications for a particular patient, predict the effects of those medications and personalize patients' treatments. The long-term vision is to identify and treat the molecular causes of diseases long before the patient ever experiences any symptoms, and Siemens is at the forefront of developing these molecular medicine solutions that will transform the future of healthcare.”

Sales of Bayer Diagnostics rose in 2005 by 8.4% to €1.4 billion. The division offers an extensive portfolio of in-vitro diagnostic products for evaluating and monitoring the therapy of numerous diseases, including cardiovascular disorders, kidney diseases, infections, cancer and diabetes.

The business units are Laboratory Testing, including the ADVIA Centaur® , Centaur® CP and Centaur® XP, ADVIA® Clinical Chemistry, ADVIA® LabCell® and WorkCell® Automation, ADVIA® Hematology and Clinitek® Atlas systems; Near Patient Testing with its Rapidpoint®, Rapidlab®, RapidComm™ and Clinitek® brands; and Molecular Testing with its Trugene® and Versant® lines of tests and systems.

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