By Frances Bishopp

In a move that has put Roche Holding Ltd. at the forefront of the world's diagnostics market, the Swiss pharmaceutical giant has agreed to pay approximately $11 billion to acquire Corange Ltd., the parent company of Germany's Boehringer Mannheim GmbH, one of the world's largest diagnostics companies and the controlling holder of DuPuy Inc., a leading U.S. maker of orthopedic products.

The deal, made public in Europe on Monday, came as a surprise to many of the Boehringer Mannheim employees, leaving them, according to Steve Oldham, vice president and general counsel of Boehringer Mannheim Corp. Therapeutics Division, of Gaithersburg, Md., "waiting to see what develops."

The merger must still be approved by appropriate regulatory authorities in Switzerland, the European Union and the U.S.

Corange, of Hamilton, Bermuda, holds 84.2 percent of the shares in DuPuy, of Warsaw, Ind., and is the sole owner of the diagnostics and pharmaceuticals businesses of the Boehringer Mannheim group.

DePuy employs approximately 3,000 people and in 1996 recorded sales of between $600 million and $700 million. Its products range from artificial joints and implants to orthopedic instruments and arthroscopic equipment.

Corange sold 15.8 percent of DePuy in a public offering last year. With Roche as the new majority shareholder, DePuy will continue to operate as an independent organization.

In the pharmaceuticals sector, Boehringer Mannheim posted sales of approximately $1 billion in 1996. The acquisition of this business area will strengthen Roche's market position in Europe, particularly in Germany and Italy, and in Latin America.

Martin Hirsch, director of public affairs at the Roche Pharmaceutical division, in Nutley, N.J., said with the merger, Roche will become the global leader in the in vitro diagnostics market, making it number one in clinical chemistry, number two in immunochemistry, number one in molecular diagnostics with PCR technology and number one in diabetes monitoring.

Roche purchased the PCR technology from Cetus Corp. for $300 million in 1991, when the latter merged with Chiron Corp., of Emeryville, Calif.

Roche is the maker of Valium and the AIDS-fighting drug Invirase.

Hirsch said it was premature to predict how the merger would affect Boehringer Mannheim's many biotechnology collaborations.

With some 13,500 employees, the future "Roche Boehringer Mannheim Diagnostics" will have a yearly sales potential of more than $2.5 billion. The new company will have research and development centers and large production facilities in Germany, the U.S. and Switzerland.

Boehringer Mannheim, of Mannheim, Germany, employs approximately 18,000 people, some 2,700 in the U.S. In 1956, it introduced Glucotest, the first urinary test strip for diabetics to use at home. It launched Reflotron, an on-the-spot blood-testing system, in 1985.

One of Boehringer Mannheim's biggest diagnostic sellers is a blood glucose monitor for diabetics, Accu-Chek, which gives users information on how their diet, exercise or insulin should be adjusted.

Another of its products, the Boehringer Mannheim-Hitachi analyzer, does high-volume blood and urine testing.

Boehringer Mannheim also is in the biochemicals business, supplying fine chemicals to research laboratories primarily, and the blood coagulation business, selling a monitor to help people who are on Coumadin therapy by monitoring the rate at which blood coagulates.

Oldham reiterated Hirsch's remarks that it was too early to evaluate the effect that the merger would have on Boehringer Mannheim's biotech collaborations. "I'm sure they [the collaborations] will be evaluated and a decision will have to be made individually," Oldham said. *