• by Bruce Carlson
  • November 11 2016
  • IVD

Siemens Healthineers: Divestment Makes Sense

Siemens Healthineers: Divestment Makes Sense

News came this week that Siemens plans to divest its healthcare business, Siemens Healthineers.  It's not a surprise, as the parent company has expressed a desire to focus on other areas energy, electrification, industrial automation and other areas. The move means of course that Siemens' in vitro diagnostic business would be part of the new entity.  Kalorama information estimated IVD revenues at 5.5 billion in 2015, according to The Worldwide Market for In Vitro Diagnostics.  The company did not provide an exact answer on the timing and scope of a share placement that would depend on the stock market environment.  

The Current State of Siemens' Diagnostics

Overall, we think there are many positives, not the least of which being most of Siemens Healthineers's competitors are healthcare-only companies and their corporate heads have much more to gain from in vitro diagnostics sales than simply the revenues. Siemens’ diagnostics business is No. 3 in IVD. Close competition with diagnostics companies Abbott and Danaher Corp. is expected in the coming years. The business includes products from Diagnostics Products Corp. (DPC), the Bayer Diagnostics Division (without Bayer Diabetes Care) and Dade Behring. Siemens' diagnostics division includes products for: clinical chemistry, drug testing, hematology, coagulation, immunoassay, infectious diseases, microbiology, molecular diagnostics, plasma proteins, point of care testing, blood gases/electrolytes, and urinalysis.  In addition Siemens operates a clinical laboratory and offers laboratory informatics and automation. Siemens' revenue has fallen in recent years, and the company has yet to revamp or expand its molecular diagnostics portfolio, excluding it from growth opportunities

Publicly listing the company may provide resources and independent focus that would enable its healthcare business to grow. Siemens' in vitro diagnostics have been in the number three spot for some time, with Siemens' revenues in 2015 coming in near 2012 levels. Siemens initiated the Vision 2020 plan to stimulate product development. As part of its Vision 2020 strategy Siemens AG announced in 2014 that its healthcare business would be separately managed as a company within the company with a new organizational setup.  Indeed in May 2016, Siemens Healthcare unveiled Siemens Healthineers – the new brand for Siemens’ healthcare business that emphasizes providing solutions.  

Innovation in the Medical Device & Diagnostics Industry

In recent years, Siemens took several steps. July 2014, Beckman Coulter agreed to acquire Siemens Healthcare Diagnostics’ Microscan microbiology product line that includes the MicroScan Instruments and MicroScan panels/consumables, along with data management solutions. Siemens stated the divestiture would allow the company to concentrate on its molecular business.  In April 2016, Siemens further strengthened its molecular business. Siemens Healthcare and Thermo Fisher Scientific announced collaboration that includes the integration of Thermo Fisher Scientific’s real-time PCR system into Siemens’ VERSANT kPCR Molecular Solution.  According to both the companies, this will bring a new level of innovation to the market by providing more flexibility and customization to the molecular laboratory workflow. According to Thermo Fisher, this will further brace the company’s place in molecular diagnostics.

 In the area of central laboratory automation Siemens reports it is the only single-source provider able to connect all four key laboratory disciplines—chemistry, immunoassay, hematology, and hemostasis—to the automation track.  Aptio Automation’s connectivity options include the ADVIA Chemistry XPT System, Siemens’ newest high throughput chemistry analyzer, the Sysmex CS-5100 System, a high-volume hemostasis analyzer, the Sysmex CS-2100i System, a mid-volume benchtop hemostasis analyzer. The Sysmex CS-5100 is under FDA review and not yet available for sale in the U.S.   July 2013, Siemens introduced its Aptio Automation solution, which connects with the company’s Advia Centaur XP system, Immulite systems, and Dimension integrated systems.  For the higher volume market, the Siemens Aptio Automation solution helps address the changing workload and expanding needs of ’s growing clinical laboratory, while delivering innovation for better patient care. 

 The company is striking a positive note about the announced public listing. 

 “The public listing is a key lever for reaching our strategic goal of being the enabler for healthcare providers worldwide,” Bernd Montag, CEO of Siemens Healthineers, said in a news release. “Greater entrepreneurial freedom and agility will allow us to help shape the development of the global healthcare market and the growth strategies of successful healthcare providers."

It's logical, we think.  Healthcare companies should be healthcare companies.  But the automation expertise of Siemens corporate may have left it with one parting gift. One of the pieces of its product development strategy was evident when Siemens Healthineers used the AACC Annual Meeting to unveil its Atellica Solution for automated core lab testing. The highly flexible immunoassay‐clinical chemistry system includes a bi‐directional magnetic sample conveyance system for improved speeds over conventional conveyors. Listing could allow the company to better market Atellica.