Philips to acquire Witt Biomedical in move to bolster cath lab market position

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Philips Medical Systems announced last Friday a plan to acquire Witt Biomedical Corp. to boost its offerings in integrated cath lab systems. Witt is a large independent supplier of hemodynamic monitoring and clinical reporting systems for cath labs, the companies said.

Philips will acquire Witt Biomedical for approximately $165 million in the deal that is expected to close in Q2. Upon completion of the acquisition, Witt will be integrated into the Cardiovascular X-ray business unit within Philips’ Medical Systems Division.

This move reflects the current trend of cath labs being integrated with hospital IT infrastructure. The companies expect this acquisition to help them offer customers an integrated suite of technologies for the cath lab department, leading to increased sales in cardiovascular x-ray, cardio PACS, and in hemodynamic monitoring and reporting systems.

At ACC06 this week in Atlanta, company representatives indicated that Philips intends to continue to support Witt customers indefinitely, although the company will be offering integrated products which will emerge as a result of the joining. Details are still limited but it did emerge at the meeting that it is very likely that Witt’s hemodynamic tools will be added to Philip’s Xcelera Cardiovascular Information system. There was no word on Philips plan for Witt’s just-announced and still work-in-progress Equeous cardiovascular image and information management system (CVIS). Equeous means fluid or flexible and that is what the new system promises to make workflow more fluid and smooth.
           
“Through this latest acquisition, Philips is again partnering with a best-in-class company with an outstanding customer approval rating. Witt Biomedical is not only an exceptional company with an established track record in developing innovative solutions for the cath lab – it’s also a leader in its field. In 2005, the vendor reviewer KLAS ranked Witt Biomedical No. 1 in the hemodynamics and clinical reporting market,” said Jouko Karvinen, CEO, Philips Medical Systems, in a released statement. “By merging Witt Biomedical with Philips’ successful No. 1 position in the cardiovascular x-ray and cardiovascular PACS markets, we intend to obtain a leading position in the growing market for fully integrated cath labs.”
           
For Witt, the company believes the acquisition will provide a means to extend further into the global market.

In joining with Philips, “there’s clearly an opportunity for Witt Biomedical to further build on our presence beyond our base in North America,” said Witt CEO Terence Witt. “We believe this deal makes sense for our current and future customers, as we combine our respective strengths in cardiology.”
           
Last year Witt saw a growth in its sales numbers, rising some 18 percent over 2004 with a total of $49 million. Philips said it expects the acquisition to be margin accretive from 2008 onwards, with initial margin dilution.