Dive Brief:
- Siemens Healthineers said Monday that it plans to close its fast track diagnostics unit in response to a significant drop in demand, becoming the latest medtech company to make cuts this year.
- The unit provides polymerase chain reaction (PCR) testing products, mainly in Europe. Demand for the products peaked during the COVID-19 pandemic but has fallen away since then.
- Closing the unit will affect around 90 employees, most of whom work in Luxembourg. Siemens, which has laid off U.S. diagnostics staff as part of a wider restructuring, is aiming to complete the closure in September.
Dive Insight:
Siemens discusses “syndromically grouped real-time PCR multiplex kits” on the fast track diagnostic page of its website. The kits serve an important clinical need, Siemens said, because they allow physicians to “order a test from the lab covering probable pathogenic causes — virus, bacteria, fungi or parasite — at the same time, in one run.” Siemens sees the tests as a way to quickly reach a diagnosis and save money.
However, the unit is a “minor player in the molecular diagnostics space,” the company said in its notice about the closure, and provides a “very small part of the overall revenue” of Siemens’ diagnostics segment.
Those factors informed Siemens’ decision to close the unit.
Siemens reached the decision after carrying out a strategic review of portfolio contributions and market opportunities. The review follows a wider restructuring of the diagnostics business. Siemens laid off 300 people in New Jersey last year as part of changes intended to achieve 300 million euros in “cost out measures” by 2025.
Executives discussed the progress of the restructuring on an earnings call in February. CEO Bernhard Montag told investors the “transformation is well on track to crystallize the full potential of the business,” adding that the restructuring has positively impacted performance in the first quarter of Siemens’ financial year. The company’s diagnostics sales grew 2% in the quarter when excluding sales of COVID-19 antigen tests.
The results followed media reports that Siemens was working with advisers to determine the future of the diagnostics segment, with the sale of the business among the options under consideration.