Siemens acquisition of Dade Behring

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Siemens acquired DPC & Bayer\'s Centralized Lab Diagnostics business. Subsequently Siemens acquired Dade Behring becoming the 2nd largest Diagnostics company after Roche. Here\'s a quick update on strategy, deal mechanism, product fitment & global/ India overview.

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Siemens acquisition of Dade Behring

  1. 1. Siemens acquisition of Dade Behring Update on the Deal Mechanism Implication – Global & India
  2. 2. The news is out!!!
  3. 3. Flow of Presentation Background Deal & Mechanism Change of Guards! The New Kid on the Block! What’s in Dade Behring for Siemens? Portfolio Evaluation The New Game Plan & Impact: India What is Dade Behring India? Comments
  4. 4. Background The Siemens – Dade deal is between world’s largest clinical chemistry company and world’s only full-service diagnostics company Siemens has agreed to buy Dade Behring (DADE) for $7 billion, or $77 a share; shares at this time were around US$ 54 Dade Behring has accepted the offer with board of directors’ votes & the transaction is expected to be completed in next 3-6 months With this acquisition; Siemens will own ∼ 20% market share of IVD market India IVD market is estimated at Rs. 10 Bn with ∼ 17% growth with major shares; ∼ 77% from Chemistry & Immunochemistry business Siemens India has completed Bayer Diagnostics acquisition in 2006 Need to understand the new portfolio equation, synergies & India angle to the situation
  5. 5. Deal & Mechanism DPC 3.3 X Sales 11 X EBITDA Bayer 2.8 X Sales 17 X EBITDA Dade 3.5 X Sales 39 X EBITDA GE-Abbott 3 X Sales 15 X EBITDA The Dade deal is dubbed as ‘Horrendous’ by the analysts due to the 39X pay-out on EBITDA. However, Siemens has increased profit projections from 11 – 13% to 13 – 15% for the Healthcare business by 2010. Competing deal of GE – Abbott is already called off.
  6. 6. Was this deal required for Siemens? SIE:GR DAX:IND SMAWF:US SPX:IND NSIEM:IN SENSEX:IND Across the geographies; Dade Behring purchase has not been liked by the investors as it is expected to hit the bottom-lines Dade deal is expected to be 38% more than the market value while exorbitant with 39 times EBIDTA DAX: Frankfurt; Siemens shares have dropped by 6% to € 99.70 from € 106.04; this reduction has eroded company revenue by € 6 Bn SENSEX: Mumbai; Siemens shares have dropped by 18% to Rs. 1207 from Rs. 1478 Broadly; the deal is expected to catapult Siemens in the top 2 slots but the pay-out will take time & would compromise profitability for next two years Source: Bloomberg, 1st Aug, 07
  7. 7. Was this deal required for Dade? DADE:US SPX:IND DADE:US Last 3 Yrs Dade Behring shares have been showing gradual increase over last 3 years while it grew by 33% to US$ 74.6 from US$ 56 at NASDAQ Dade had been struggling on the new innovation in the existing portfolio & was operating in only one of the two high-growth segments of Dx business Dade had been performing well on the revenue expectations; while the shareholders have gained with the over-valuation of the stock Source: Bloomberg, 1st Aug, 07
  8. 8. Change of Guards! Pharmacy Driven In Vitro Diagnostics (IVD) Engineering Driven The series of recent deals from Siemens in IVD market have changed the historical view point towards Diagnostics industry which started as an off-shoot of Pharma companies. Now Engineering has taken a lead over Chemistry & the now industry dynamics have completely changed.
  9. 9. The New Kid on the Block! Leap to the # 1
  10. 10. What’s in Dade Behring for Siemens? Dade: Geography Split Dade: Revenue Stream Dade: Portfolio Contribution Post-inclusion of Dade, APAC focus is expected to increase with Siemens Microbiology & Hematology become leadership areas alongwith Immuno while strengthening chemistry Dade inclusion makes Siemens an only & all-in- one Dx service provider Dade: Segment Market Shares Source: Dade Behring
  11. 11. Synergistic & Comprehensive Portfolio… Finally 1↑ ! ∼ 1 ID Dx using DOA & Tx Drug Fully-integrated microtitre plates Monitoring chemistry for Available ex-US More Drugs high volume included labs 1 1 Cardiac Dx ↑&! Coag & PFT POC & LTS thru Global Alliance with Sysmex Automation 1 1 Plasma Protein Automated Testing Microbiology Immediate Testing application in covering latest Nutri & Cardiac pathogens Long term use in Proteomics Denotes competitive positions; 1 – Leader, ↑ - Growing, ! – New, ∼ - Also available
  12. 12. India gets it’s share too! 14% 13% India IVD Market Share Scenario 2006 (Figs in %) 11% 9% Leap to the # 3 8% 6% 6% 3% Transasia Roche Siemens + Abbott Siemens Nicholas J&J Dade Dade Source: Industry Estimates
  13. 13. What is Dade Behring India? Ranbaxy ties up with Dade acquires Dx assets Dade Behring India Dade Behring for a JV from Ranbaxy fully functional Annual sales Rs. 120 Mn. 1987 2000 2001 2002 2003 2004 2005 2006 2007 Ranbaxy started selling Ranbaxy sells the allied business Dade products as a with remaining IVD products to distributor in India ICICI Venture Funds Dade present in India as a wholly owned subsidiary as Dade Behring India Pvt Ltd. Okhla, Delhi with estimated annual turnover Rs. ∼ 312 Mn; 50 people, Country Manager – Dr. P. Sivakumar Virology business of Dade was with Merck which has been shifted back to Dade Routine Chemistry [3% MS] Automated & Medium range Immunochemistry [3% MS] automated instruments with the Coagulation [20% MS] Non-isotopic systems reagents Rs. 150 Mn Semi-auto/ manual instruments Rs. 110 Mn (Dimension RXL/XL/ES) Rs. 65 Mn (BNPProSpec) (Sysmex alliance) Source: Industry Estimates
  14. 14. Thank You!

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