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By Acquiring PAML, LabCorp will Place Itself in a Better Position in Diagnostics Business

After rival company Quest Diagnostics announced the acquisition of PeaceHealth’s outreach laboratory services, LabCorp was more or less expected to make its own big announcement. The Burlington-based company recently agreed on a deal to acquire Spokane-based pathology associates medical laboratories (PAML).  The union was widely anticipated over the past couple of months. PAML’s portfolio will certainly aid LabCorp to sustain the growing competition in the market and will further consolidate its position. PAML is a joint venture, which was started nearly 60-year ago by two of the largest healthcare societies in the U.S. Catholic Health Initiatives and Providence Health & Services.

With almost 1,600 employees and a yearly turnover of around $300 million, PAML will certainly add to LabCorp’s future business propositions. LabCorp having one of the largest network of clinical laboratories across the globe with operations in nearly 60 countries, grades amongst the top 20 players in the global clinical or medical laboratory testing market. In 1995, when Roche BioMedical merged with National Health Laboratory to form LabCorp the idea was to combine their expertise and knowledge for offering cutting-edge genomic testing and molecular diagnostics. Over the years, LabCorp emerged as an industry leader in offering advanced medical diagnostics and currently runs 36 primary laboratories in the U.S. Further, it also conducts complex testing such as oncology testing, phenotyping and human immunodeficiency virus (HIV) genotyping.

A Union of Profit 

Although the acquisition process will not be completed until 2018 but will start having an immediate effect on labCorp’s business.  PAML and its joint ventures will help expand labCorp’s geographic scope in the U.S, especially in the Pacific South, Midwest and Northwest. While LabCorp presently offers services to various Swedish Medical Center facilities in Seattle, PAML’s subsidiaries will allow it a greater access to states such as Kentucky, California, Montana, Washington, Colorado, Idaho, Utah and Oregon. Besides, LabCorp plans to offer reference laboratory and outreach testing services through PAML and its joint ventures, which in turn, will inflate the customer based for PAML.

LabCorp Leaving Very Little Room for Rivals to Expand

This new tactic by LabCorp is the outcome of the recent success enjoyed by other market contenders who have been vehemently using it, particularly Quest Diagnostics. So, following the footprints of Quest, LabCorp in the past couple of months has been making aggressive strategic acquisitions and mergers. Last year, LabCorp finalised a $371 million deal to acquire genetic testing lab Sequenom and in early January this year, it came on terms on buying several clinical laboratories from Mount Sinai – a leading New York-based health system. To recall, the company also made a strong statement in 2015 when it acquired Covance a drug development firm based in New Jersey for a whopping $5.7 billion. Further, LabCorp is reportedly planning an approximate $8 billion acquisition of Pharmaceutical Product Development LLC, this would be company’s largest acquisition so far if converted successfully.

The Race to the Finish 

LabCorp and Quest Diagnostics, two of the largest clinical laboratory companies in the US and world, have been engaged in a battle for acquisitions in recent times, each trying to outperform the other. Both the companies understand the importance of acquiring valuable assets that might gain them economies of scale in the long run, however, each follows different buying criteria. While, Quest is inclined towards investing in health system outreach laboratories, which offer diagnostics services to physicians and other providers, LabCorp is primary interest in acquiring specialty labs and other competitors to boost up its technology and further enhance its diagnostic services.

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