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Buy and build
April 2009
by David Hutton  |  Email the author
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CAMBRIDGE, EnglandóLab21 has announced its acquisition of a majority shareholding of Ipswich-based clinical diagnostic firm Biotec Laboratories Ltd., a clinical diagnostic company with particular emphasis on infectious diseases, most notably tuberculosis (TB). According to Lab21, the acquisition will help grow the company into a major international diagnostics business through both organic growth and acquisition.

Financial terms of the deal were not disclosed, but as part of the sale, Lab21 will also acquire Biotec's Johannesburg, South Africa-based subsidiary, Biotec Laboratories SA Pty. Ltd., which is a joint venture with the Cape Biotech Trust.

According to Maddy Kennedy, CFO of Lab21, the companies have had a mutual trading relationship "in that both are suppliers and customers of the other."

Based in Cambridge, Lab21 is a provider of diagnostic products and services and Biotec has distributed some Lab21 diagnostic products in 80 countries.

Kennedy says the market as a whole is dominated by "very large numbers of very small businesses, offering an opportunity for a classic buy-and-build strategy."

With the existing relationship between the companies, Kennedy said the acquisition will strengthen the Lab21 global reach, in particular in Africa and South America and will allow it to immediately access new markets for its products.

The combined companies, according to Kennedy, will focus on "creating efficiencies between the businesses and expanding the product range and reach."

Kennedy points out that the transaction takes immediate effect, though for the immediate future, Biotec Laboratories will continue to trade as a subsidiary of Lab21 group.

In consummating the acquisition, the companies also have an eye toward the future, says Graham Mullis, CEO of Lab21.

"Our goal is to grow Lab21 into a major international diagnostics business through both organic growth and acquisition," says Mullis.

In order to be competitive in the international market, Peter Ellis, CEO of Biotec Laboratories, points out that the UK's Diagnostics sector has long needed consolidation.

Ellis also notes that the combined businesses, which have complimentary products, "provide a great platform from which to build further our infectious disease and immunodiagnostic portfolio."

"The sale of our business to Lab21 helps create a global leader in diagnostics. We are convinced that the Biotec team can play a significant role in Lab21's future expansion plans and success," adds Ellis.

The acquisition also strengthens Lab21's global reach, in particular in Africa and South America, and will allow it to immediately access new markets for its products.

Biotec Laboratories has developed proprietary phage amplification technology that is being used to develop rapid diagnostic and susceptibility tests for both active and drug- resistant TB.

The acquisition also has researchers at Lab21 looking toward the future and the prospects of working with new colleagues at Biotec, according to Dr. Berwyn Clarke, chief scientific development officer at Lab21. Clarke says his team is interested in exploring how its phage amplification technology can be used for the detection of other mycobacterium borne diseases, beyond TB.

"The combination of our technical and clinical skills, and sector experience creates a very strong R&D group that can fuel significant new product development in both immunodiagnostics and molecular diagnostics over the coming years," says Clarke.
 
Code: E040908

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