Engineering group Siemens is to stump up 4.2 billion euros for Bayer's diagnostics division as the former seeks to build up its capabilities in this arena and the latter looks to divest outside of the field of human and animal pharmaceuticals ahead of its merger with fellow German firm Schering AG.

Bayer Diagnostics - which had sales of 1.4 billion euros (up 8%) and a double-digit ebitda (earnings before interest, tax, depreciation and amortization) rating in 2005 - will join Siemens' new specialties in immunodiagnostics, that came from its purchase of Diagnostic Products Corp in the USA, as it looks to “create the industry's first integrated diagnostic company,” combining imaging diagnostics, laboratory diagnostics and clinical IT value chain under one roof. The combined purchases already make Siemens number two worldwide in immunodiagnostics and plans are afoot to move rapidly into molecular diagnostics, helping identify the causes of disease using genetic profiling. It already develops and manufactures positron emission tomography systems that can be used, for example, in the diagnosis of cancer and Alzheimer's, and it has new molecular contrast agents and pharmaceutical tracers in advanced development.

The transaction is expected to close in the first half of next year and Bayer says, after tax, it expects to pocket 3.6 billion euros. It also hangs on to its diabetes care division, which has diagnostic elements, and to the diagnostic imaging business of Schering AG.