Siemens buying Varian for $16B; lawmakers slam Philips contract, plus more radiology vendor news

Siemens Healthineers plans to acquire cancer care technology company Varian for $16.4 billion in an all-cash transaction, the companies said Sunday.

In an announcement, the Germany-based imaging giant said the acquisition will create a “global healthcare leader with the most comprehensive cancer care portfolio in the industry.” Together they’ll offer the entire gamut of services from screening and diagnosis to post-treatment survivorship.

"Today's announcement represents an important milestone in our company's history, and our board is confident that this is the right path forward for Varian," Dow Wilson, president and CEO of the Palo Alto, California, company said in a statement. “Siemens Healthineers' innovative leadership in detection and diagnosis will extend our ability to serve clinicians and patients from the very first stage in the fight against cancer. And, we will be positioned to transform care for a greater number of patients worldwide,” he added later.

The partners plan to close the deal in the first half of calendar year 2021, subject to regulatory approvals and other conditions. Varian said it will operate as an independent company and retain the name for its line of cancer care products.

Congress investigates Philips contract

The Trump administration allegedly mishandled a nine-figure ventilator contract with Royal Philips, according to a report released on Friday.

It was back in April that the House Committee on Oversight and Reform launched its investigation into a deal signed with the Amsterdam-based imaging manufacturer. Leaders said the feds first inked an agreement with Philips back in 2014 to supply the nation’s stockpile with 10,000 ventilators by June 2019.

However, the Trump administration “mismanaged Philips’ repeated failures to meet contractual requirements,” according to the July 31 report. That included giving Philips three extensions, pushing delivery of the ventilators until June 2021.  And White House officials negotiated a new contract with Philips, with a price five times higher than the previous contract, costing taxpayers more than $500 million.

“The American people got ripped off, and Donald Trump and his team got taken to the cleaners,” subcommittee Chair Raja Krishnamoorthi, D-Ill., said in a statement issued July 31. “The Trump administration’s mishandling of ventilator procurement for the nation’s stockpile cost the American people dearly during the worst public health crisis of our generation.”

Philips approached the feds in January about ramping up production amid reports of the first coronavirus cases in the U.S. Trump and company, however, reportedly did not respond for six weeks and finally in March, they gave Philips yet another extension, until September 2022.

The report accused senior officials led by Peter Navarro of appearing “gullible” in their negotiations. The U.S. government ended up paying about $15,000 per ventilator, while other purchasers paid as little as $9,327.

Philips disputed the allegations in its own statement issued Friday, saying that it has been transparent and upfront about the contract.

“We do not recognize the conclusions in the subcommittee’s report, and we believe that not all the information that we provided has been reflected in the report,” said CEO Frans van Houten. “I would like to make clear that at no occasion has Philips raised prices to benefit from the crisis situation.”

The company further noted that the April contract amount of $15,000 represented a discount from $21,000 per-unit list price. And the 2014 deal under the Obama administration was “chiefly a research and development contract.”

Hologic criticizes new cancer screening guidelines

Marlborough, Massachusetts, imaging manufacturer Hologic is sharply criticizing new cervical cancer screening guidelines issued by the American Cancer Society.

Company officials said Friday that they’re disappointed that the ACS has “significantly” diverged from the consensus already established by leading governmental and medical institutions. In particular, the ACS is recommending moving away from the traditional Pap test and excluding women younger than 25 from screening.  

“It is difficult to understand why decisions are being made that continue to erode women’s access to crucial preventive healthcare,” Hologic, which makes the Pap+HPV Together test, said in a July 31 statement. “Instead of simplifying, we fear the contradictory guidelines from the ACS will sow confusion among women and their healthcare providers and dangerously impact the incredible progress society has made in preventing cervical cancer,” the company added later.

Merit Medical sales slide

Imaging manufacturer Merit Medical saw its second-quarter revenues slump amid a widespread slowdown in elective procedures during the early days of the pandemic.

All told, the Utah company—which makes disposable devices for interventional radiology and other specialties—recorded revenue of $218.4 million, down 14.5% from the same period last year.

Officials said they’ve responded by reducing headcounts, implementing “targeted furloughs,” and reducing salaries for several employee groups including executives. They’re hoping to undo some of those actions to meet demand the rest of the year.

“With COVID-19 cases increasing, the pace of recovery of elective procedures is still uncertain,” CEO Fred Lampropoulos said in a July 29 statement. “Assuming eventual progress in the fight against the COVID-19 pandemic, we believe we are well-positioned to provide new products and services as well as reliable supply of our existing products,” he added later.

GE Healthcare sees sales slide

Meanwhile, GE also saw sales slide during the early stages of the pandemic.

Its orders of $4.2 billion in the quarter that ended June 30 represented an 18% slide from the same period in 2019. And revenue dropped 21% to $3.9 billion, while the healthcare segment’s profit plummeted 43% down to $550 million.

“We had a very challenging second quarter that we met head-on, executing well operationally while we took actions to further de-risk our company,” GE Chairman and CEO H. Lawrence Culp Jr. said in a statement.