China Medical to buy diagnostic technology
China Medical Technologies, a Beijing-based maker of ultrasound and in-vitro diagnostic products, has agreed to buy an advanced hybridization business for US$136.8 million, hoping to use the technology to expand in the mainland.
The Nasdaq-listed firm plans to develop and commercialise the fluorescent in-situ hybridization (Fish) technology to diagnose prenatal and postnatal disorders.
With Fish, a DNA probe is labelled with fluorescent dye so that it can be seen with a microscope. Fish technology has been used in many countries for diagnostic testing but is not yet widely deployed in China.
Wu Xiaodong, chairman and chief executive at China Medical, said the technology could return results in less than 24 hours - compared with up to four weeks for karyotyping, the most comparable diagnosis alternative.
'This technology should also enable accurate diagnosis of some of the most significant disorders at a competitive cost,' Mr Wu said. China Medical said initially it would focus Fish technology-based products such as probes and a special microscope system for these probes on the prenatal diagnosis of congenital disorders. It also will apply the Fish technology to the diagnosis of cervical, breast, bladder and other major cancers.
'The company believes the diagnostic sector is in a growth phase and would like to add new products and technology in that space,' said Bo Tan, an analyst at Lehman Brothers Equity Research.
China Medical's deal with Supreme Well Investments and Molecular Diagnostics Technologies also included a further payment of US$40 million, in either cash or shares in the company, after it achieves certain business and financial milestones.
The transaction is expected to close next month. Credit Suisse Securities (USA) is exclusive financial adviser, while Morrison & Foerster is legal counsel to China Medical in the deal.
