Becton, Dickinson (BD) management’s board approval to pursue a plan to separate BD's Biosciences and Diagnostic Solutions business from the rest of the organisation could reflect the “packaging up” of an in vitro diagnostic (IVD) business to render it an attractive acquisition target, an expert says.
Commenting on BD’s plans, Dr Andrew S. Thompson, director of therapy research & analysis in medical devices for GlobalData said: “BD only really has significant revenue in infectious disease, so it’s not well set up for the companion diagnostics market, which is really all about cancer, so it could become a target for someone strong in IVD oncology, but much less in other areas.”
Shares in BD have been gradually falling this week following the announcement of the split on 5 February. As of 7 February, shares in the NYSE-listed company were trading 6% lower compared to market open on the 5 February.
While BD has asserted that the 2025 plan will enhance strategic focus and growth-oriented investments and capital allocation for both BD and the separated business, as per the Financial Times, unnamed sources have reported that activist investor Starboard Value has taken a stake in BD and is pushing the company to sell its life sciences division.
Thompson continued: “Disentangling the businesses might also be a recognition of the different regulatory pressures.
“The IVD market is slumping a bit, post-Covid, so revenues are down. But there is a big future for IVD, given growth of companion diagnostics, which embeds any new drug with IVD.
“However, the new European IVD regulation, EU IVDR, is being phased in, and is expected to lead to significant increased regulatory costs, due to increased clinical trials requirement.
“That might make smaller companies in Europe look to exit the market, creating opportunity for acquisitions and inorganic growth.”
BD anticipates its Biosciences and Diagnostic Solutions business becoming a leader in Life Sciences Tools and Diagnostics.BD has said the separation will unlock value by positioning ‘New BD’ as a pure-play medical technology company, focused on four segments aligned to essential needs and higher-growth trends in healthcare.
The four New BD segments will include Medical Essentials, encompassing BD’s device manufacturing businesses, and Connected Care, made up of the Medication Management Solutions and Advanced Patient Monitoring businesses. BioPharma Systems, a new name for BD’s Pharmaceuticals Systems business unit, which develops drug delivery devices for the pharma industry; and interventional, which covers BD’s Interventional, which includes BD's Urology & Critical Care, Peripheral Intervention and Surgery businesses, comprise the other two segments.
