Arkray Healthcare Buying Span Diagnostics IVD Unit

Japan’s largest diagnostics company Arkray has entered into an agreement to buy out the in-vitro diagnostics business of Surat (India) -based Span Diagnostics Ltd. for nearly $16 million (Rs 100 crore), signalling a growing interest among Japanese players to scale up their presence in sectors that offer high growth potential In India.

Under the agreement, Pradip K. Desai and Sujata V. Desai, two promoters of Span Diagnostics, will join Arkray Healthcare, an affiliate of Arkray group, to help in the transition process, said industry sources close to the deal. Veeral Desai, another promoter, will continue as the managing director, said the sources. Arkray Healthcare started operations in India in 2007.

The deal, combining the synergies on both sides, will position Arkray Healthcare as the leader in the IVD (test sample of tissue or bodily fluids) market which is growing 15 percent annually, and is expected to maintain the momentum for at least another five years.

“The Indian healthcare market is expanding in a major way as hospitals are being opened in tier-11 and tier-111 towns. It opens up a huge market for diagnostics. There are not many companies producing diagnostic products in India,” said Preeti Arora, an independent  research analyst.

Faced with the prospect of a stagnating home market, Japanese companies are making substantial investments in India. A weaker Indian rupee and cheaper valuations are making India an attractive market.

“Japanese companies are increasingly willing to enter India, using Indian companies as an entry point to boost their business interest in a growing market. It not only leads to value creation for the Indian businesses which get access to the required capital and advanced technologies, it also opens up a great opportunity for the promoters of mid-sized Indian companies who are open to divest their business or unlock their value in a rapidly changing market scenario,” said Mahesh Singhi, managing director, Singhi Advisors.

Span caters to several different sections of diagnostics like Immunology, Biochemistry, Microbiology, Serology, Histopathology and instrumentation.

ARKRAY manufactures and distributes various diagnostics products including blood glucose meters, test strips, safety lancets, clinical chemistry and urine chemistry.