Salt Lake City-based biotech firm BioFire Diagnostics has agreed to sell to French rival BioMerieux for a reported $450 million. The deal is due to close in early 2014.
BioFire is a 23-year-old company specializing in molecular biology whose products can detect viral and bacterial infections in a single test. BioMerieux, which makes tests to detect diseases and to check the quality of food, water and cosmetics, said the buyout is aimed at consolidating its position as a major player in infectious disease diagnostics.
Analysts characterize the deal as a sign of a trend in the pharmaceutical industry toward the use of sophisticated biotechnology as a way to better identify the causes of diseases and design more targeted treatments.
However, the price for BioFire was not cheap. Berenberg Bank, which is funding the deal through debt, noted that BioMerieux is paying 6.4 times the sales BioFire is expected to generate this year. In addition, BioFire is currently operating at a loss - mainly because of funds being plowed back into research and development - and BioMerieux expects the deal to have an adverse effect on its operating income for several years.
BioFire began life as Idaho Technology Inc. in the corner of an Idaho potato equipment facility in 1990. Eventually moving to Research Park at the University of Utah, the company changed its name to BioFire Diagnostics in 2012. With recent FDA clearance of the company's FilmArray system, BioFire took a giant step in molecular diagnostics. FilmArray's comprehensive respiratory panel tests for 20 viral and bacterial targets in one 60-minute test, unique on the market can match, according to officials. The test sharply reduces the time required to identify such diseases as flu, streptococcus and drug-resistant microbes. Physicians attain answers quickly and laboratories maximize productivity and reduce costs.
BioFire is currently working on development of new diagnostic panels like a blood culture identification panel, gastrointestinal panel, meningitis panel and a lower respiratory panel.
Eric Gorrell, BioFire general counsel and spokesperson, told The Enterprise that no changes are expected to the senior management team at BioFire and that none of the current workforce will be displaced. "Our operations will remain largely the same and we will continue to deliver our products to our customers around the world," Gorrell said. "BioFire currently employs more than 500 people in the Salt Lake Valley and we anticipate that we will be adding significantly to that number over the coming months and years."
Jean-Luc Belingard, chairman and chief executive of BioMerieux, said, "This is a great complement to our business. It reflects our aim to carry out targeted, bolt-on acquisitions to give us access to technology and local markets."