Siemens (Munich, Germany) now can claim expanded status in the human testing space with a blockbuster-style agreement to acquire Bayer Diagnostics (Tarrytown, New York), the diagnostic unit of Bayer AG (Leverkusen, Germany), for $5.3 billion. Siemens said that the acquisition provides a strong complementary fit to its purchase, in April, of Diagnostic Products Corp. (DPC; Los Angles) for $1.68 billion. It said that by adding DPC and the Bayer unit, it would advance to the No. 2 position in immunodiagnostics worldwide behind leader Roche Diagnostics (Basel, Switzerland).

Bayer said the spin-off of the diagnostics unit would reduce debt and serve to refocus its health division. “We are concentrating on pharmaceuticals for both humans and animals, and products that can be promoted directly to patients,” said Bayer CEO Werner Wenning. The company noted that its diabetes business as well as Schering’s contrast agents business were not included in the Siemens transaction. The deal also supports financing of Bayer’s takeover of Schering (Berlin) for about EUR 3.7 billion.

Wenning also said the motive for the spin-off was “part of the consolidation phase in the diagnostics market – we are convinced that the successful laboratory equipment business has even better long-term development prospects in a company specializing in medical technology” – such as Siemens.

Dr. Klaus Kleinfeld, president/CEO of Siemens, said, “Demographic change is greatly increasing global demand for healthcare services and thereby generating excellent growth opportunities for Siemens,” and he touted the acquisition of Bayer Diagnostics as part of the company’s strategy “to create the healthcare industry’s first integrated diagnostics company by combining the entire imaging diagnostics, laboratory diagnostics and clinical IT value chain under one roof.” And Kleinfeld said the acquisition targets “promising growth fields,” driven by worldwide demand and aging demographics.

A company statement said the acquisition also allows it “to tap the rapidly growing market for molecular diagnostics based on gene analysis (nucleid acid testing). Bayer Diagnostics also is a world market-leader in clinical chemistry with a leading position in near-patient testing, laboratory automation and hematology (blood cell diagnostics).”

Dr. Erich Reinhardt, president of Siemens’ Medical Solutions Group and member of the Siemens managing board, said, “Molecular medicine is becoming increasingly important since it enables healthcare professionals to identify the causes of disease using genetic profiles. With the help of molecular medicine, it will be possible not only to predict the effects of the medications selected and tailor treatment for individual patients, but also to diagnose disease at an early stage.”

The sale – approved the evening of June 29 by Bayer’s supervisory board and subject to various approvals – is slated to close in the first half of 2007.

Hologic settles with FTC via spin-off

Hologic (Bedford, Massachusetts), a provider of diagnostic and digital imaging systems for women’s health, last month had to sign an agreement with the Federal Trade Commission (FTC) resolving a dispute with the commission regarding its acquisition of the Mammotest prone-bed breast biopsy system intellectual property (IP) acquired as part of the mammography intellectual property assets acquired from Fischer Imaging (Denver). Hologic in late 2005 acquired all of Fischer’s intellectual property and other assets related to its mammography and breast biopsy businesses, including patents, trademarks, and customer and vendor lists for Fischer’s prone stereotactic breast biopsy systems (SBBS) product, Mammotest, a deal valued at $32 million and first unveiled in June 2005.

Separately, Hologic also reported that the FTC had closed its investigation in the pending acquisition of Suros Surgical Systems (Indianapolis), a developer of devices used for minimally invasive biopsy and tissue excision. Closing of the deal – unveiled in April, in which Hologic paid $24 million, plus a two-year earn-out – remains subject to various conditions, including approval by Suros stockholders.

In its settlement with the FTC, Hologic agreed to sell all IP relating to Mammotest to Siemens (Munich, Germany) for $6.5 million in cash while retaining a royalty-free, non-exclusive, perpetual worldwide right and license to use the IP relating to Mammotest.

The FTC charged that Hologic’s acquisition of Fischer’s SBBS business harmed American consumers by eliminating its only significant competitor for the sale of SBBS products in the U.S. “Left unchallenged, Hologic’s purchase from Fischer would have deprived American women of the benefits of competition for these critical healthcare services,” Jeffrey Schmidt, director of the FTC’s Bureau of Competition, said in a statement.

Prone SBBSs are integrated systems enabling minimally invasive breast biopsies using X-ray guidance. The FTC said that while there are other methods of performing breast biopsies, “including other minimally invasive systems and surgical biopsies, none are viable economic substitutes for prone SBBSs. Most hospitals, in fact, have the capability to perform breast biopsies using multiple methods to ensure that the most appropriate system is used for each patient’s procedure. Both the Hologic and Fischer SBBSs perform potentially life-saving services by enabling doctors to detect breast cancer at a critical early stage of development.”

The FTC said that although another firm, Giotto USA, sells a prone SBBS unit in the U.S., it is not a significant competitor, with just “minimal sales” three years into the market. And the FTC contended that Giotto would be unable to expand its U.S. sales because it does not have access to critical prone-SBBS patents and lacks the “infrastructure, track record and reputation to compete in this market.”

Additionally, it said that the strength of Hologic’s IP portfolio “effectively insulate[s] the U.S. market from new entry. In fact, Hologic’s MultiCare prone SBBS product ... could only compete in the U.S. market under a license to the Fischer patents that Hologic acquired as part of the settlement of patent infringement litigation.” It cited R&D and regulatory hurdles as other barriers to the market.

“We are pleased the Fischer dispute is behind us and even more excited that we have been cleared to proceed with our Suros acquisition,” said Jack Cumming, CEO and chairman of Hologic. “Suros represents a unique opportunity that we are looking to capitalize on with the strength of our expanded distribution and product fit.”

With the IP sale, Hologic will record an impairment charge and said the net impact of the charge and the proceeds to be received from Siemens should have a positive impact on its results.

If the FTC does not give final approval to the divestiture of IP to Siemens, the order would require Hologic to divest the assets to another FTC-approved buyer within six months. If Hologic does not complete the divestiture within six months, the commission may appoint a trustee to divest the assets.

Pump problems put Baxter under gun

Baxter Healthcare (Deerfield, Illinois) signed a consent decree with the FDA last month, agreeing to halt manufacture and U.S. distribution of all models of its Colleague Volumetric Infusion Pump and the Syndeo Patient Controlled Analgesic Syringe Pump until it corrects various manufacturing problems. With the decree – signed by Robert Parkinson Jr., company CEO/chairman, and Peter Arduni, corporate vice president and president of Medication Delivery Services – Baxter agreed to comply with the agency’s manufacturing and quality requirements by all facilities that make or distribute the Colleague and Syndeo Pumps. Baxter also must retain a consultant to conduct inspections of its infusion pump facilities and certify to FDA that corrections have been made.

In July 2005 the company also reported in eight models of the Volumetric Infusion Pump that malfunction “possibly” associated with three deaths and six serious injuries. And in September, the company reported that pump malfunctions had been “associated” with 10 serious injuries and four deaths. The agency issued a Preliminary Public Health Notification with safety recommendations for users in April.

No financial penalties were been imposed on the company, but Baxter must post a $20 million letter of credit that will be cancelled once the FDA has determined that Baxter has reconditioned or destroyed the seized pumps.

Parkinson said in a statement that the agreement with the FDA offers “a clear path to resolving the Colleague and Syndeo issues, so that we may continue to serve patients and medical professionals by delivering the quality, reliability and innovation they expect from Baxter.”

The FDA said Baxter must submit an action plan to bring the Colleague and Syndeo pumps in use in the U.S. into regulatory compliance. “Infusion pumps deliver life-saving drugs and nutrition to thousands of critically ill patients. But if they don’t work properly, patients are put at risk,” said Daniel Schultz, MD, director of the FDA’s Center for Devices and Radiological Health. “With this action today, Baxter has agreed to correct those problems. FDA’s goal is to see that the necessary corrections are made, that the public health is protected and that users have access to safe and effective pumps.”

If corrective action is completed and Baxter has been allowed to resume manufacturing and distribution, the firm will hire an independent auditor to inspect its domestic infusion pump facilities at least once a year for at least four years. If it fails to comply with any provision of the decree, FDA said it may order the firm to again stop manufacturing and distributing, recall the products or take other action.

The agency said that its most recent inspection of Baxter’s Round Lake facility (Round Lake, Illinois), on June 20-30, 2005, revealed deficiencies with the CGMP and QS requirements for devices, including the firm’s failure to implement adequate management controls over its quality system operations and corrective and preventive actions (CAPA) procedures. During this inspection, design defects relating to the reliability of both the Colleague and the Syndeo Infusion Pumps also were revealed.

During the course of the FDA’s inspection, Baxter initiated a voluntary worldwide hold on all Syndeo Infusion Pumps due to design defects that can cause the device to stop functioning, and Baxter initiated a voluntary worldwide hold on all Colleague Infusion Pumps due to a product design defect relating to a temperature-sensitive component of a timing circuit, known as the Y2A crystal, which causes the timing circuit to fail.

The company said that it would submit to the agency a corrective action plan describing proposed upgrades and modifications for pumps currently in use.

It said that pumps “currently in the market” are safe “when operated according to the user manual and instructions contained in previous customer communications.” Baxter said that more than 200,000 Colleague infusion pumps are in use in U.S. hospitals, and that 50,000 used abroad “are not affected by this agreement.” It said deployment of Colleague modifications outside of the U.S. has begun in 30 countries and is expected to be “substantially” completed by the end of this year.

The company expects to record a second-quarter after-tax charge of up to $70 million. Excluding this charge, the announcement does not affect the company’s financial outlook for the second quarter or full-year 2006.

Prime establishes 3-Prime

Prime Synthesis (Aston, Pennsylvania), a developer of DNA synthesis support products for life science research, reported the launch of 3-Prime, a new production and distribution division, established to serve oligonucleotide researchers in the R&D synthesis markets via nucleic acid synthesis. 3-Prime said it will support DNA and RNA synthesis with products that include controlled porosity glass and Polystyrene in standard and customized chemical formats, synthesis columns, column parts and molecular sieves.

“This new division will deliver the same quality and process control features demanded by our therapeutic customers, into the research market,” said David Eyler, CEO of Prime Synthesis. “3-Prime is taking those key attributes, tailoring them and bringing them to custom oligo houses, core labs and diagnostic companies.”

Marc Rothstein, president of 3-Prime, said the unit would focus on serving “the smaller-scale synthesis community. At the same time, we’re actually enabling Prime Synthesis to continue to thrive through a concentration on its therapeutic oligo customers.”

Prime supplies DNA synthesis materials to research labs, focusing on products to improve both oligo research and production.

Laser Vaginal Rejuvenation formed

The Intimate Rejuvenation and Innovative Surgery Center (IRIS; Phoenix) reported that it has established the Laser Vaginal Rejuvenation Institute of Arizona (Chandler, Arizona). The center describes LVR as a one-hour outpatient surgical procedure that treats vaginal relaxation, a common condition caused by aging and childbirth. “One of the most common complaints gynecologists receive from their patients experiencing vaginal relaxation is that sex isn’t the same. Women say that they feel loose and have very little sensation,” said Todd Malan, a center gynecologist offering the service.

The LVR procedure decreases the internal and external diameters of the vagina and effectively enhances vaginal muscle tone, strength and control, resulting in enhanced sexual gratification for a woman and her partner. The outpatient procedure is performed using a laser, making the treatment essentially bloodless and providing rapid recovery time for the patient.

The Laser Vaginal Rejuvenation Institute of Arizona also offers Designer Laser Vaginoplasty (DLV), a group of cosmetic laser procedures, designed to repair and enhance genital structures.