(Rewrites throughout, adds details.) By Goran Mijuk Of DOW JONES NEWSWIRES ZURICH -(Dow Jones)- Novartis AG (NVS) Monday said it will spend $470 million in cash to buy U.S.-based Genoptix Inc (GXDX) to strengthen the Swiss pharma giant's diagnostics operations that should help it improve therapies for patients. Novartis, which has the backing of Genoptix's board, said it will make a cash payment reflecting a near 30% premium to the U.S. company's recent stock price and said it expects the transaction to be closed within the next few months. "The acquisition of the Genoptix will serve as a strong foundation for our individualized treatment programs," said chief executive Joe Jimenez. "We can greatly enhance the value we add to patients, clinicians, and society". Analysts welcomed the transaction, saying that although the acquisition is modest in terms of size after the company's multi-billion takeover of eye care firm Alcon Inc, it will give Novartis a stronger position in the budding market for targeted therapies. "The acquisition of Genoptix should fortify Novartis efforts in the area of molecular diagnostics," said Andrew Weiss of Bank Vontobel. "It also shows that despite the large Alcon transaction, Novartis is still able to continue its bolt-on acquisition strategy." An increasing number of big pharmaceutical companies is trying to make therapies more effective by providing exact diagnostic tools that can establish whether a patient will respond positively to a specific treatment. These targeted therapies are often described as personalized medicine as drug treatments are adjusted to specific patient groups that share a similar genetic profile or are affected by a specific virus. A driver behind these industry efforts is to make the right therapies quickly available to patients, thereby helping reduce healthcare costs and ensure that therapies are only used with patients where treatments promise to be effective. Among the industry's leader is Switzerland-based Roche Holding AG (ROG.VX). Many of its drugs are accompanied by therapeutic tests that, for example, try to establish gene mutations that are considered to be causing cancer. The company's diagnostics tool AmpliChip CYP450, for example, can help find mutations in genes and thereby establish if a treatment for a patient is efficient. According to a study by PricewaterhouseCoopers, the core personalized medical care market, including diagnostic tests and targeted therapies, is set to grow 10% a year to $42 billion by 2015. Analysts said that Genoptix should help Novartis improve the development of new targeted therapies for patients and help it deepen its foothold in the specialized drug market. Besides its core drug division, Novartis is also running a vaccines and generics unit. The Carlsbad, California-based laboratory, which in 2009 had sales of $184 million, is specializing in diagnosing cancers in bone marrow, blood and lymph nodes. It will be included in the company's Molecular Diagnostics unit. "We are excited about becoming part of ... Novartis and continuing to enhance the value that we bring to our core community oncologist customers," said Genoptix CEO Tina Nova. "We share Novartis' strong commitment to transforming patient care, improving health outcomes for patients and enhancing the suite of diagnostic tools for our physician customers." Company website: http://www.novartis.com -By Goran Mijuk, Dow Jones Newswires; +41 43 443 8047; goran.mijuk@dowjones.com
