In Vivo and In Vitro Diagnostics Converge: Siemens buys DPC

Traditionally, diagnostic imaging and in vitro diagnostics have lived on different planets. In vivo imaging is a capital equipment business, while in vitro diagnostic businesses are built on reagents and consumables. Imaging looks for morphological changes in the body; invitro diagnostics detect analytes and markers of disease in tissues and fluids. Even the customers are different. Imaging equipment companies target radiologists, in vitro diagnostics companies sell to laboratories. So why would imaging giant Siemens AG announce, at the end of April, that it will acquire traditional in vitro diagnostics firm Diagnostic Products Corp. for $1.86 billion? [See Deal]

Siemens has a mature imaging business, so the high growth opportunities in diagnostics, with their recurring revenue streams from consumables, look attractive. But more than that, it's becoming apparent that on the molecular level, in vivo imaging and in vitro diagnostics are converging. The resolution on imaging technologies has become so fine that biological processes can be observed at cellular and molecular levels, and diseases can thus be detected even before anatomical changes are apparent. Likewise, molecular diagnostics, which can detect the genetic material of invading organisms or aberrant cells, are also sensitive and early detectors of disease