PerkinElmer inks $591M Oxford Immunotec buy to challenge Qiagen in TB market

Dive Brief:

PerkinElmer has struck a deal to buy tuberculosis test provider Oxford Immunotec for $591 million, positioning it to compete with Qiagen for the infectious disease market.
The deal will give PerkinElmer control of the T-SPOT.TB test, a diagnostic that measures T cells against Mycobacterium tuberculosis antigens to detect active and latent TB infection. Oxford Immunotec product sales hit $69.8 million in 2019, up 28% over the prior year, but were negatively impacted by COVID-19 in 2020.
The test will slot into a portfolio of other immunodiagnostics at PerkinElmer, many of which it acquired in back-to-back takeovers of Euroimmun and Tulip in 2017.

Dive Insight:

The deal marks the fourth for medtech this week, following Hologic's two acquisitions in the women's health space and Stryker's acquisition of the orthopaedic technology company OrthoSensor.

Some analysts expect a wave of dealmaking this year amid a combo of ready capital and distressed assets.

Oxford Immunotec has fared worse than many diagnostic companies in the pandemic. Sales over the first nine months of 2020 were $39.2 million, down almost 30% over the comparable period of 2019. Oxford Immunotec is applying its T-cell detection technology to the coronavirus, positioning it to help identify who is immune to the pathogen, but so far the pandemic has been a headwind.

PerkinElmer expects the downturn in Oxford Immunotec’s fortunes to be temporary, leading it to agree to pay $591 million to acquire the business. The $22 a share offer is higher than Oxford Immunotec’s stock has traded since 2014 and 28% above its closing price on Jan. 5.

In return, PerkinElmer will gain a diagnostic designed to replace the tuberculin skin test historically used to detect TB. Patients undergoing the tuberculin skin test have fluid injected under their skin and need to return to the healthcare provider to have the test read a few days later. Some people need to undergo a second test weeks later.

Oxford's test delivers results in one to two days and patients get results without a follow-up visit to the healthcare professional. The test achieved 95% sensitivity and 99% specificity in a pivotal clinical trial, leading Oxford Immunotec to claim it is the most sensitive test on the market.

Oxford Immunotec competes for the TB blood test market with Qiagen’s QuantiFERON-TB Gold in-Tube test. Some studies have found T-SPOT.TB to be more sensitive and cheaper than its rival. Oxford Immunotec values the quantified TB testing market at $1 billion, suggesting it is currently only scratching the surface of the opportunity.

PerkinElmer is now set to be the company that tries to realize that opportunity and expects the acquired assets to grow faster than its broader diagnostics franchise for the foreseeable future. The existing diagnostics franchise grew 93% in the third quarter, driven by sales related to COVID-19. Other parts of PerkinElmer’s business were negatively affected by the crisis, with non-COVID-19 immunodiagnostic sales only 80% to 90% normalized by the third quarter.

Speaking to investors on a third quarter results conference call, PerkinElmer CEO Prahlad Singh said “there are several other new immunodiagnostic assays that we are either working on in-house or also looking at inorganic opportunities."