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Bayer Diagnostics Gets Rolling

Bayer AG's purchase of Chiron Diagnostics for $1.1 billion in cash demonstrates its commitment to diagnostics and also indicates Chiron Corp.'s negotiating savvy. Bayer is buying Chiron Diagnostics in order to get access to its immunoassay, critical care and nucleic acid probe businesses, as well as additional sales and marketing support to help it roll out a plethora of new products in the next year. Chiron is getting out of diagnostics in order to concentrate on pharmaceuticals and doesn't yet know how it will use the money. But Chiron is retaining rights to HCV and to the blood screening business and expects the deal in its entirety to generate $2 billion for it over the next few years.

If Bayer AG 's willingness to pay $1.1 billion in cash for Chiron Diagnostics Corp.[See Deal] demonstrates its commitment to the field, the deal also indicates Chiron Corp. 's negotiating savvy. In the barest details, Bayer gets Chiron's blood-gas analyzer business, its immunoassay business, and its nucleic acid probe technologies. Moreover, it gets non-exclusive rights to some key Chiron patents for HCV and HIV testing. Bayer AG's overall ranking in life sciences moves up a notch or two, bolstering its position as an integrated health care company, while its diagnostics subsidiary jumps from being sixth in size to fourth, with sales of more than $1.8 billion.

While the deal helps Bayer Diagnostics Inc. round out its product portfolio and gain market clout, Chiron certainly is the...

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