Medical Device Link.

Originally Published MX January/February 2004

BUSINESS NEWS

Last October, GE Medical Systems (GEMS; Waukesha, WI) announced its intent to purchase Amersham plc (London) for $9.5 billion.

The move marks GE's initial entry into the so-called passive pharmaceutical business and is certain to generate a steady flow of income by providing hospitals with a one-stop resource for both imaging systems and related media and radiopharmaceuticals.

But industry analysts also see the potential value of the deal in terms of what it means for next-generation imaging technologies and the promise of patient-personalized diagnosis.

Lauding the "resources, talents, and technologies" of the two companies, GE's CEO Jeffrey Immelt emphasized that the "combination of this technological and market knowledge will allow GE to accelerate the development of molecular imaging and personalized medicine where it will be possible to predict and treat disease with therapies tailored to the individual."

Describing the opportunity as "a new chapter in medicine," Amersham CEO Sir William Castell said, "Combined with the complementary capabilities of General Electric, this transaction enables us to accelerate the realization of our vision of personalized medicine. We will have the competencies, the marketing reach, and the financial resources to bring disease prediction, diagnosis, and personalized treatment into the mainstream of medical practice."

Although targeted radiopharmaceuticals and smart imaging agents are still in the early stages of development, several industry analysts characterized these technologies as having the ability to transform the imaging business. It was also noted that Amersham has already achieved success with genetically based diagnostic agents, a fact that was believed to be a major factor in GE's interest in the company.

The acquisition is not expected to face any undue regulatory hurdles and should be finalized in the first half of 2004. Upon completion, Castell will become CEO of GE Healthcare Technologies, a new London-based business unit formed by the acquisition. He was also named a vice chairman and member of GE's board of directors. Joseph Hogan, senior vice president of General Electric, will continue to head the GE medical business.

The Amersham Group, formed in 1997 through the mergers of Amersham International (UK), Pharmacia Biotech (Sweden), and Nycomed (Norway), employs more than 10,000 people worldwide and had 2002 sales of $2.43 billion.

Prior to its recent deal, GEMS employed 30,000 and had operations in more than 100 countries. Its 2002 revenues were $9 billion.

But the company is clearly pursuing the strategic objectives of its corporate parent, General Electric Corp. (Fairfield, CT), which has targeted the medical sector as a prime opportunity for growth. And now, with its acquisition of Amersham, GEMS has stepped over Tyco Healthcare to become the world's second-largest medical technology company—still following Johnson & Johnson, but perhaps not for long.

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