Unlikely Gen-Probe Bid For Innogenetics Falters

(MoneyWatch)  Gen-Probe, which a month ago launched a risky takeover bid for the Belgian diagnostics maker Innogenetics, did indeed spark a counteroffer from Dutch drugmaker Solvay Pharmaceuticals and now appears to have given up.

As bidding wars go, this one was something of a flop: The Dutch company topped Gen-Probe's ?6.10 ($9.60) per-share offer by just 6.5 percent, or ?6.50, after which Gen-Probe simply folded. Total value of the likely Solvay acquisition is now roughly ?229 million ($360.5 million).

So much for Gen-Probe's dream of making itself the largest standalone molecular-diagnostics company in the world -- not a bad goal, since these tests are increasingly important in cancer, infectious disease and other areas. But its offer was quixotic from the start, given Solvay's existing friendly takeover offer and the general weakness of the dollar against the euro, which would tend to favor the European bidder.

Gen-Probe president Carl Hull said the company would continue to look for "a foothold in Europe" over the next several years. That's important because Gen-Probe only gets about 20 percent of its sales from Europe, compared to roughly 50 percent for competitors (presumably including Roche Diagnostics, another giant in the field). Most striking to me, however, was Hull's argument that Europe represents an easier market for new diagnostic tests than the U.S.:

Sales of molecular diagnostics in Europe are increasing by 24 percent a year ?€" double the growth of the U.S. market ?€" and Gen-Probe can get its products to market faster under European regulatory procedures than in the United States, Hull said. The European patent process also moves more quickly, he said.

I was aware that many medical devices are approved more quickly in Europe than in the U.S., but the reverse has traditionally been true for drugs, and I'd assumed diagnostics were comparable. If anyone has any insight into why this might be the case, I'm all ears.