Coronaries

Philips strengthened its position in the cath lab today with the announcement of their acquisition of Witt Biomedical (press release). Along with a hemodynamic recorder, they get one of the best clinical information systems for the cath lab. The deal is valued at $165 million. Philips already has a hemodynamic monitor from their acquisition of Agilent. And they have their own cardiovascular information system (CVIS) that includes the cath lab.

Through this acquisition, both companies expect to benefit from being
able to offer customers an integrated suite of best-in-class
technologies for the Cath Lab department, leading to increased sales in
cardiovascular x-ray, cardiology picture archiving and communication
systems (PACS), and in hemodynamic monitoring and reporting systems.
Based on company estimates, Philips in 2005 held the number one global
position in cardiovascular x-ray and in cardiology PACS. In hemodynamic
monitoring and clinical reporting systems, Witt Biomedical was the
largest independent supplier in the United States in 2005, and was the
number 2 supplier in the global market.

It will be interesting to see what Philips keeps and what they allow to fade into memory. It would be ironic if they bought a medical device vendor for their information system.

According to Witt Biomedical, the company’s unaudited results for 2005
were sales of approximately USD 49 million – representing a growth in
sales of 18% over 2004, and an operating margin of 30%. Philips expects
the acquisition of Witt Biomedical to be margin accretive from 2008
onwards, with initial margin dilution due to purchase accounting
treatment.

It's really pretty remarkable that an independent hemodynamic monitoring company lasted this long.

UPDATE: Here's a little more background on Philips past acquisitions from commenter Jim Maughan.

In 2000, PMS bought ADAC Labs for the nucmed business and sold ADAC HCIS
RIS business to Cerner for $6mm. At the same time the ADAC CIS
business, which PMS could have had for a song, was sold to Camtronics.
Apparently HCIT businesses were not part of the grand PMS strategy
then. Now they dabble with Epic and claim to be a player in the HCIT
industry. So yes, it would be ironic if PMS buys Witt for CVIS, but, as
history shows, PMS is ironically unpredictable with their acquisitions.

A strong case could be made that vendor consolidation is not in buyer's best interests, and only benefits the acquiring company (and perhaps folks like Terence Witt). It seems that more often than not, a common name plate or splash screen becomes a fig leaf to cover poor integration and product lines kept on life support until they fade away. Am I being too cynical?

The fact remains that for large vendors, it is safer to grow revenues through acquisition than to actually, you know, innovate.