Deal of the Year: Cancer Genetics, Inc. Acquisition of BioServe India

Published on: Sunday, January 4th, 2015 View all Articles

Originally published by Acquisition International in Deal of the Year 2014

Panna Sharma, President and CEO of Cancer Genetics, Inc., takes us through the second of the company’s acquisitions this year: Hyderabad-based BioServe India, which brings Indian scientists, pharmaceutical companies and research institutes a “Biomaterial to Data” model that offers a full suite of molecular services and research tools to accelerate breakthroughs in genetics, drug discovery, biomarker research, and molecular diagnostics.

India’s entire healthcare and life sciences industry is in a high growth mode today, says Panna Sharma, President and CEO of Cancer Genetics, Inc., driven by a rising middle class, increasing access to genomic technologies, and an improved environment for investing in government and commercial research. “Given the current growth in India’s healthcare market, we think companies that are built to offer high-quality, unique, validated products and services will deliver tremendous benefit for shareholders and customers.”  In August, Cancer Genetics closed the announced acquisition of BioServe Biotechnologies (India) Pvt. Ltd., a premier genomics services provider serving both the research and clinical markets in India.

CGI spent a good deal of time getting to know VenturEast, the VC firm behind Bioserve Biotechnologies, says Sharma, in order to understand their views on the market and the future needs of the company. “We also wanted to have clear insight into the changes VenturEast thought were necessary in order to enable faster growth, improved positioning, and ensure Bioserve was a leader in the Indian marketplace. VenturEast continues to be a shareholder in CGI today since the deal was done largely using our public stock as currency. The founder, Rama Modali, continues to be involved in key client management and operational decisions and is helping guide the growth strategy. We closed the deal on August 18 after about seven months of discussion, dialogue and diligence on both sides.”

The Indian oncology market is currently undergoing tremendous growth. Furthermore, the incidence of cancer is increasing and the country’s middle class is growing. “As a result, there’s an emerging market of patients and clinicians who want diagnostic content that complies with the same standards of US healthcare companies,” says Sharma. “Growth is also driven in large part by an increase in public health spending and as cancer incidence increases, so too has spending on research in these areas. Patients and clinicians, as well as research organisations, need clinically validated tests that will work for India’s populations.”

With the acquisition of Bioserve India (which is to be renamed CG India), CGI is able to access the high-growth Indian healthcare and diagnostics market, increasing the company’s global presence and ability to help personalise cancer care, Sharma says. “BioServe India has the equipment and scientific experience required to integrate CGI’s DNA-FISH Probe manufacturing and proprietary FHACT® business into the Indian biotech market. The acquisition will reduce operating cost for CGI while increasing revenue.

“Because of the prominence of cervical cancer in the region, CGI’s proprietary FHACT® business has a unique market in India. CGI has partnered with Kamineni Hospitals in India for continued validation studies for FHACT® and will market FHACT® through the combined entity. India alone accounts for more than 25 percent of the deaths that occur globally from cervical cancer.

“The oncology and diagnostics market is nascent in India, and there is a significant intellectual shift going on amongst pathologists and clinicians who increasingly want genomic assessments of cancers. However, there remains significant unmet need for tests that have been clinically validated and that can be delivered with high-quality at a cost point that makes sense for the broader Indian market. Because so many shortcuts are taken to rapidly introduce cutting edge technologies into India, there is often significant compromise made on quality. We plan to respond to the need for novel, validated genomic oncology tests, while maintaining the highest global standards of quality and excellence.”

Originally published in print and online by Acquisitions International.