Roche's diagnostic deal puts paid to Zeneca rumours

Swiss pharmaceutical giant Roche is to pay $11billion for the Boehringer Mannheim Group, which makes medical diagnostic equipment. The deal should scotch a persistent rumour that Roche was to buy up Zeneca.

The deal returns Roche to the top of the Swiss pharmaceutical tree, a position that it lost when its two smaller rivals, Ciba and Sandoz, combined to form Novartis. The company had a huge pile of excess cash to spend, and it was expected that it would bid for one of the few remaining medium-sized pharmaceutical companies, such as Zeneca or Astra, to challenge Novartis directly.

But instead, Roche has chosen to jump sideways into the equally competitive - but less fragmented - diagnostics sector. Boehringer Mannheim does have a pharmaceuticals division, mostly concerned with heart disease and cancer therapies and accounting for about a third of its $3.5billion annual sales. The majority of its revenues come from its diagnostics business, with many of its products based on biotechnology. The acquisition boosts Roche to joint first place in this market, level with US firm Abbott Laboratories, and sends its annual sales above FFr20billion.